v3.26.1
TAXES ON INCOME
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
TAXES ON INCOME
NOTE 13:-
TAXES ON INCOME

 

  a.
Tax laws and tax rates applicable to the Group companies:
 
The Company:
 
The Company is taxed at the regular corporate tax rate for Canadian companies domiciled in Ontario at 26.5%.
 
Non-Canadian subsidiaries taxation:
 
Non-Canadian subsidiaries are taxed according to the tax laws in their respective country of domicile. The tax rates of the Company's non-Canadian subsidiaries range between 19%-30%.
 
  b.
Tax assessments:
 
Senstar Technologies Corporation has not received final tax assessments since its incorporation. Senstar Technologies Ltd. received final tax assessments in Israel through the 2024 tax year. The remaining subsidiaries have not received final tax assessments since their incorporation. However, the assessments of these subsidiaries are deemed final through the range between the 2019-2023 tax years.
 
  c.
Reconciliation between the theoretical tax expense, assuming all income is taxed at the Canadian statutory rate for 2025 and 2024 and the Israeli statutory rate for 2023, and the actual tax expense, is as follows:

 

   
Year ended December 31,
  
   
2025
    
2024
    
2023
  
Income (loss) before taxes as reported in the statements of operations
  
$
3,081
    
$
4,614
    
$
(1,329
)
 
   
Amount
    
%
    
Amount
    
%
    
Amount
    
%
  
Canadian Federal Statutory Tax Rate
  
$
770
      
25.0
    
$
1,154
      
25.0
    
$
(306
)
    
(23.0
)
Provincial and Local Income Tax, Net of Federal Income Tax Effect
    
(29
)
    
(0.9
)
    
(1
)
    
-
      
-
      
-
  
Foreign Tax Effect
                                                
United States of America
                                                
Changes in valuation allowance
    
(59
)
    
(1.9
)
    
(59
)
    
(1.3
)
    
145
      
10.9
  
Tax rate differences in subsidiaries and benefit from reduced tax rates
    
(16
)
    
(0.5
)
    
(7
)
    
(0.2
)
    
21
      
1.6
  
Foreign tax credits      57       1.8       138       3.0       -       -  
Other
    
(19
 )    
(0.6
 )    
-
      
-
      
6
      
0.5
  
Germany
                                                
Changes in enacted tax rates
    
73
      
2.4
      
-
      
-
      
-
      
-
  
Tax rate differences in subsidiaries and benefit from reduced tax rates
    
13
      
0.4
      
18
      
0.4
      
20
      
1.5
  
Non-deductible professional fees
    
80
      
2.6
      
-
      
-
      
-
      
-
  
Israel
                                                
Withholding tax undistributed earnings
    
-
      
-
      
(424
)
    
(9.2
)
    
-
      
-
  
Non-deductible professional fees
    
-
      
-
      
(101
)
    
(2.2
)
    
-
      
-
  
Canada
                                                
Tax rate differences in subsidiaries and benefit from reduced tax rates
    
-
      
-
      
-
      
-
      
(42
)
    
(3.2
)
Investment tax credits
    
-
      
-
      
-
      
-
      
(83
)
    
(6.2
)
Other
    
-
      
-
      
-
      
-
      
(34
)
    
(2.6
)
Other Foreign Jurisdiction
                                                
Other
    
4
      
0.1
      
(5
)
    
(0.1
)
    
(13
)
    
(1.0
)
Provision for uncertain tax position
    
(1,183
)
    
(38.4
)
    
757
      
16.4
      
140
      
10.5
  
Non-deductible stock compensation
    
129
      
4.2
      
12
      
0.3
      
-
      
-
  
Non-deductible professional fees
    
48
      
1.6
      
138
      
3.0
      
191
      
14.4
  
Taxable capital gains
    
65
      
2.1
      
-
      
-
      
-
      
-
  
Non-deductible other
    
13
      
0.4
      
12
      
0.3
      
-
      
-
  
Changes in valuation allowance
    
39
      
1.3
      
240
      
5.2
      
142
      
10.7
  
Investment tax credits
    
(156
)
    
(5.1
)
    
(154
)
    
(3.3
)
    
-
      
-
  
Withholding tax undistributed earnings
    
27
      
0.9
      
292
      
6.3
      
(260
)
    
(19.6
)
Other
    
8
      
0.2
      
(33
)
    
(0.7
)
    
33
      
2.5
  
                                                 
Taxes on income (tax benefit) in the statements of operations
  
$
(136
)
          
$
1,977
            
$
(40
)
        
 

(*)    Based on the Canadian statutory income tax rate of 25% for 2025 and 2024 and the Israeli statutory income tax rate of 23% for 2023.

 
  d.
Taxes on income (tax benefit) included in the statements of operations:
 
   
Year ended December 31,
  
   
2025
    
2024
    
2023
  
                 
Current
  
$
(507
)
  
$
1,739
    
$
(239
)
Deferred
    
371
      
238
      
199
  
                         
   
$
(136
)
  
$
1,977
    
$
(40
)
 
   
Year ended December 31,
  
   
2025
    
2024
    
2023
  
                   
Domestic (*)
  
$
325
    
$
1,049
    
$
(28
)
Foreign
    
(461
)
    
928
      
(12
)
                         
   
$
(136
)
  
$
1,977
    
$
(40
)
 
(*) Domestic refers to Canada for 2025 and 2024 and to Israel for 2023.
 
  e.
Deferred income taxes:
 
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets are as follows:
 
   
December 31,
  
   
2025
    
2024
  
Deferred tax assets:
              
             
Operating losses carry forwards
  
$
725
    
$
2,091
  
Capital losses carry forwards
    
37
      
1,327
  
Tax Credits
    
195
      
367
  
Right of use liability
    
145
      
140
  
Property, plant and equipment
    
183
      
178
  
Deferred revenue
    
113
      
129
  
Reserves
    
76
      
1,184
  
                 
Total deferred taxes before valuation allowance
    
1,474
      
5,416
  
Valuation allowance
    
(602
)
    
(3,970
)
                 
Deferred tax assets, net:
    
872
      
1,446
  
                 
Deferred tax liabilities:
                
                 
Intangible assets
    
(261
)
    
(269
)
Right of use asset
    
(145
)
    
(140
)
Tax credits
    
(55
)
    
(43
)
Undistributed earnings of subsidiaries
    
(320
)
    
(279
)
                 
Deferred tax liabilities:
    
(781
)
    
(731
)
                 
Net deferred tax assets
  
$
91
    
$
715
  
                 
Domestic (*)
  
$
(153
)
  
$
(179
)
                 
Foreign
  
$
244
    
$
894
  
 
(*) Domestic refers to Canada.
 
As of December 31, 2025, the Company currently plans to repatriate a portion of its foreign earnings from its foreign subsidiaries in the foreseeable future. As a result, the Company has recognized a deferred tax liability consisting of potential withholding and distribution taxes of $0.32 million as of December 31, 2025.
 
The Company’s repatriation plans are subject to change, and any material adjustments to the deferred tax liability resulting from changes in repatriation plans or tax laws will be reflected in future periods. The Company’s intention to repatriate foreign earnings reflects its strategic business decisions regarding the utilization of funds. Management continues to monitor changes in tax law and other factors that could impact the timing or amount of repatriation
 
The Company provided valuation allowance for a portion of the deferred tax regarding the carryforwards losses and other temporary differences that management believes are not expected to be realized in the foreseeable future (see Note 13g).
 
  f.
The domestic and foreign components of income (loss) before taxes are as follows:
 
   
Year ended December 31,
  
   
2025
    
2024
    
2023
  
                   
Domestic (*)
  
$
798
    
$
2,367
    
$
(992
)
Foreign
    
2,283
      
2,247
      
(337
)
                         
   
$
3,081
    
$
4,614
    
$
(1,329
)
 
(*) Domestic refers to Canada for 2025 and 2024 and to Israel for 2023.
 
  g.
Net operating carryforward tax losses:
 
As of December 31, 2025 Senstar Technologies Corporation has estimated total available carryforward operating tax losses of $1,024 (2024 - $866) which may be used to offset against future taxable income, for a period of 20 years. These losses begin to expire starting 2043. A full valuation allowance on these carry forward tax losses due to the uncertainty of their future realization . As of December 31, 2025 the Company's foreign subsidiaries have estimated total available carryforward operating tax losses of $1,399 (2024 - $7,571) which may be used to offset against future taxable income, for periods ranging between 1 year to unlimited time for the realization of such tax losses.
 
As of December 31, 2025 the Company recorded a net deferred tax asset after valuation allowance in the amount of $263 (2024 - $855) for its subsidiaries' carryforward tax losses.
 
Utilization of U.S. net operating losses (federal and state net operating losses) may be subject to annual limitation due to the "change in ownership" provisions of the Internal Revenue Code of 1986 and similar state provisions.
 
  h.
Uncertain tax positions:
 
As of December 31, 2025 and 2024, balances in respect to ASC 740, "Income Taxes" amounted to $178 and $1,874, respectively. A reconciliation of the beginning and ending amount of unrecognized tax positions is as follows:
 
   
December 31,
  
   
2025
    
2024
             
Balance at the beginning of the year
  
$
1,874
    
$
1,113
  
                 
Additions based on tax positions taken related to the current year
    
5
      
1,335
  
Reduction related to expirations of statute of limitations
    
(131
 )    
(578
)
Reductions related to settlements of tax matters
    
(1,579
)
      
Foreign currency translation adjustments
    
9
      
4
  
                 
Balance at the end of the year
  
$
178
    
$
1,874
  

Although the Company believes that it has adequately provided for any reasonably foreseeable outcomes related to tax audits and settlement, there is no assurance that the final tax outcome of its tax audits will not be different from that which is reflected in the Company's income tax provisions. Such differences could have a material effect on the Company's income tax provision, cash flow from operating activities and earnings in the period in which such determination is made.

  i.
Supplemental disclosure for taxes in cash flow
 
   
Year ended December 31,
  
   
2025
    
2024
    
2023
  
                   
Supplemental disclosures of cash flows activities:
                  
                   
Cash paid (refund) during the year for:
                  
Federal tax
  
$
720
    
$
(474
 )  
$
-
  
Provincial tax
    
617
      
(406
 )    
-
  
United States tax
    
127
      
35
      
24
  
Canada
    
-
      
-
      
359
  
Israel
    
748
      
-
      
-
  
   
$
2,212
    
$
(845
 )  
$
383
  
 
* The company was domiciled in Canada in 2025 and 2024, in 2023 the company was domiciled in Israel.