Note 13: Income taxes

a. The provision for income taxes from continuing operations is comprised of:

Income (loss) before income taxes:

	Year ended December 31,
	2017			2016			2015
United States (U.S.)	$	(77,654	)	$	(80,972	)	$	(55,087	)
Non-U.S.		29,157			(40,492	)		(52,060	)
	$	(48,497	)	$	(121,464	)	$	(107,147	)

Income taxes expense:

	Year ended December 31,
	2017			2016		2015
Current:
U.S.	$	8,491		$	6,501	$	891
Non-U.S.		5,028			3,863		3,678
Total current		13,519			10,364		4,569
Deferred:
U.S.	$	(3	)	$	1	$	-
Non-U.S.		(351	)		16		(135	)
Total deferred		(354	)		17		(135	)
Total income taxes provision	$	13,165		$	10,381	$	4,434

b. For purposes of comparability, the Company uses the notional U.S. federal income tax rate of 35% when presenting the Company's reconciliation of the income tax provision. The Company is a resident taxpayer in Jersey and as such is not generally subject to Jersey tax on remitted foreign earnings. A reconciliation of the provision for income taxes compared with the amounts at the notional federal statutory rate was:

	Year ended December 31,
	2017			2016			2015
U.S statutory income taxes rate		35.0	%		35.0	%		35.0	%
Non-deductible expenses		(6.8	)		(2.5	)		(2.4	)
Foreign taxes rate differential		15.1			(14.2	)		(19.2	)
Change in valuation allowance (1)		(11.9	)		(30.0	)		(18.2	)
State income taxes (1)		18.7			2.3			1.8
Share based compensation		(4.5	)		1.2			-
Change in unrecognized taxes expense		(0.8	)		(0.7	)		(1.2	)
Other (1)		(71.9	)		0.4			0.1
Effective taxes rate		(27.1	)%		(8.5	)%		(4.1	)%

_____________________________

(1)

For additional information, see the table below reflecting the net impact of the TCJA.

The Company's tax rate is affected by the tax rates in the jurisdictions outside the U.S. in which the Company operates. The jurisdictional location of earnings is a significant component of our effective tax rate as the tax rates outside of the U.S. are generally lower than the U.S. tax rate of 35% and the relative amount of losses or income for which no tax benefit or expense was recognized due to a valuation allowance.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “TCJA”) was signed into law making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017. On the same date, Staff Accounting Bulletin No. 118 ("SAB 118") was issued to address the application of US GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. In accordance with SAB 118, we have determined that the $34.8 million of the deferred tax expense recorded in connection with the remeasurement of certain deferred tax assets and liabilities earnings was a provisional amount and a reasonable estimate at December 31, 2017. This remeasurement was fully offset by a valuation allowance resulting in no impact to the Company’s income tax expense for the year ended December 31, 2017. The Company’s subsidiary in the United States does not have any foreign subsidiaries and, therefore, the remaining provisions of the TCJA have no material impact on the Company's results of operations. Additional work is necessary for a more detailed analysis of our deferred tax assets and liabilities as well as potential correlative adjustments. Any subsequent adjustment to these amounts will be recorded in the quarter of 2018 when the analysis is complete.

The table below reflects the net impact of the TCJA:

	Year ended December 31, 2017
	ETR before TCJA			US Tax Cuts & Jobs Act Impact			Reported ETR
U.S statutory income taxes rate		35.0	%		0.0	%		35.0	%
Non-deductible expenses		(6.8	)		0.0			(6.8	)
Foreign taxes rate differential		15.1			0.0			15.1
Change in valuation allowance		(83.4	)		71.5			(11.9	)
State income taxes		12.8			5.9			18.7
Share based compensation		2.0			(6.5	)		(4.5	)
Change in unrecognized taxes expense		(0.9	)		0.1			(0.8	)
Other		(0.9	)		(71.0	)		(71.9	)
Effective taxes rate		(27.1	)%		0.0	%		(27.1	)%

c. 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 and liabilities are as follows:

	December 31,
	2017			2016
Deferred tax assets:
Allowance for doubtful accounts	$	6,797		$	18,770
Revenue recognition		60,099			46,953
Net operating loss carryforwards		972			577
Share based compensation		7,544			3,510
Deferred revenue		1,340			879
Other temporary differences		1,147			1,481
Total gross deferred taxes assets	$	77,899		$	72,170
Less: valuation allowance		(75,804	)		(70,061	)
Total deferred taxes assets	$	2,095		$	2,109
Deferred tax liabilities:
Fixed assets		1,486			1,789
Total gross deferred taxes liabilities	$	1,486		$	1,789

Net deferred taxes assets	$	609		$	320

d. Carryforward loss:

As of December 31, 2017, one of the Company's Luxembourg subsidiaries has $3.6 million of net operating loss carry forwards (NOLs) available for utilization in future years.

e. A reconciliation of the beginning and ending balances of uncertain tax benefits is as follows:

	December 31,
	2017		2016			2015
Balance at beginning of the year	$	2,400	$	1,565		$	308
Additions for taxes positions related current year		55		1,088			848
Additions for taxes positions related to prior years		372		58			409
Reduction related to lapse of applicable statute of limitations		-		(311	)		-
Balance at the end of the year	$	2,827	$	2,400		$	1,565

The Company recognizes interest and penalties related to unrecognized tax benefits in tax expense. During the years ended December 31, 2017, 2016 and 2015, the Company accrued $125, $ 31 and $26, respectively, for interest and penalties expenses related to uncertain tax positions.

The Company's Israeli subsidiary is currently under an income tax audit for the tax years 2013 through 2016. There are no other ongoing income tax audits.