14. INCOME TAXES 

Components of the Company’s loss from continuing operations before income taxes are as follows:

The components of the income tax (provision) benefits are as follows:

The Company operates in U.S., Israel and Canadian tax jurisdictions. Its income is subject to varying rates of tax, and losses incurred in one jurisdiction cannot be used to offset income taxes payable in another. A reconciliation of the income tax rate with the Company’s effective tax rate and income tax provisions are as follows:

The income tax benefit for the years ended December 31, 2017 and 2016 related to the deferred tax assets recorded for the increase in net operating loss carry forwards in the acquired company subsequent to the VBI-SciVac Merger. In 2015, the income tax benefit related to the deemed interest on the related party loans.

The Canadian statutory income tax rate of approximately 26% is comprised of federal income tax at approximately 15% and provincial income tax at approximately 11%. The Israel statuary income rate is approximately 25%. On December 22, 2017, the United States enacted tax reform legislation through the Tax Cuts and Jobs Act, which significantly changes the existing U.S. tax laws, including a reduction in the corporate tax rate from 35% to 21%, a move from a worldwide tax system to a semi-territorial system, a change in the treatment of operating loss carryforwards generated subsequent to 2017 fiscal year as well as other changes. As a result of enactment of the legislation, the Company recorded a one-time change to its deferred tax assets and related valuation allowance. As the Company has a full valuation allowance such change did not impact the Company’s results of operations or financial position.  

The deferred tax asset (liability) consists of the following:

As of December 31, 2017 the Company has U.S. federal net operating loss carryovers (“NOLs”) of approximately $35.3 million (2016 - $30.8 million) including $29 million related to the acquisition of VBI, available to offset taxable income which expire beginning in 2026. The NOL’s related to the acquisition of VBI may be subject to limitations under Internal Revenue Code Section 382 and similar state income tax provisions should there be a greater than 50% ownership change as determined under the regulations. The Company plans on undertaking a detailed analysis of any historical and/or current Section 382 ownership changes that may limit the utilization of the net operating loss carryovers.

As of December 31, 2017, the Company also has Canadian net operating loss carryovers of approximately $44.9 million (2016 - $31.0 million) available to offset future taxable income which expire beginning in 2024. As at December 31, 2017 the Company also has Israel net operating loss carryovers of approximately $44.9 million (2016 - $32.0 million) respectively, which can be carried forward indefinitely.

At December 31, 2017 the Company has $5.0 million (2016 - $3.7 million) of investment tax credits available to carry forward and reduce future years’ Canadian income taxes which expire beginning in 2026.

As of December 31, 2017, the Company has unclaimed research and development expenses in Canada of approximately $17.0 million (2016 - $14.4 million) which are available to offset future taxable income indefinitely.

At December 31, 2017, the Company had NOL’s aggregating approximately $125.1 million. The NOL’s are available to reduce taxable income of future years expire as follows: