On December 22, 2017, the U.S. Tax Cuts and Jobs Act of 2017 (the “TCJA”) was signed into law resulting in significant changes from previous tax law. Some of the more meaningful provisions which will effect the Company are:

 

The Company has made a reasonable estimate for the measurement and accounting of certain effects of the TCJA which have been reflected in the consolidated financial statements for the year ended December 31, 2017. The items reflected as provisional amounts include:

A reduction in the U.S. federal corporate tax rate from 35% to 21%.

 

The TCJA is not expected to have an adverse material effect on the Company's consolidated financial statements for the year ended December 31, 2017.

 

 

Corporate tax rate in Israel in 2016 was 25% and 2017 was 24%.

 

In December 2016, the Israeli Parliament approved the Economic Efficiency Law (Legislative Amendments for Applying the Economic Policy for the 2017 and 2018 Budget Years), 2016 which reduces the corporate income tax rate to 24% (instead of 25%) effective from January 1, 2017 and to 23% effective from January 1, 2018.

 

 

Ltd. has accumulated net operating losses for Israeli income tax purposes as of December 31, 2017 in the amount of approximately $40,369. The net operating losses may be carried forward and offset against taxable income in the future for an indefinite period.

 

As of December 31, 2017, the Company had a U.S. federal net operating loss carryforward of approximately $7,187 that can be carried forward and offset against taxable income and that expires during the years 2031 to 2035. Utilization of U.S. loss carryforward may be subject to substantial annual limitation due to the "change in ownership" provisions of the Internal Revenue Code of 1986 and similar state provisions. The annual limitations may result in the expiration of losses before utilization.

 

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets are as follows:

 

		December 31,
		2017			2016
Deferred tax assets:
Net operating loss carry forward		$	10,794		$	9,944
Temporary differences			620			445
Deferred tax assets before valuation allowance			11,414			10,389
Valuation allowance			(11,414)			(10,389)
Net deferred tax asset		$	-		$	-

 

The deferred tax balances included in the financial statements as of December 31, 2017 are calculated according to the tax rates that were in effect as of the reporting date and do take into account the potential effects of the reduction in the tax rate.

 

The net change in the total valuation allowance for the year ended December 31, 2017 was an increase of $1,025 and is mainly relates to increase in deferred taxes on net operating loss for which a full valuation allowance was recorded. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences and tax loss carryforward are deductible. Management considers the projected taxable income and tax-planning strategies in making this assessment. In consideration of the Company's accumulated losses and the uncertainty of its ability to utilize its deferred tax assets in the future, management currently believes that it is more likely than not that the Company will not realize its deferred tax assets and accordingly recorded a valuation allowance to fully offset all the deferred tax assets.

 

  

		Year ended December 31,
		2017			2016
Domestic		$	5,144		$	3,972
Foreign			10,599			6,915
		$	15,743		$	10,887