RETALIX LTD.

NOTE 10 – TAXES ON INCOME (continued) :
RETALIX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
3) Following is a reconciliation of the theoretical tax expense, assuming all income is taxed at the regular tax rate applicable
to companies in Israel (2005-34%, 2004-35% and 2003-36%) and the actual tax expense:
F-41
Year ended December 31
2005 2004 2003
U.S. $ in thousands
Income before taxes on income, as reported in the income statements 20,474 6,280 10,721
Theoretical tax expense 6,961 2,198 3,860
L e s s - tax benefits arising from approved enterprise status 2,518 355 1,147
4,443 1,843 2,713
Increase (decrease) in taxes resulting from permanent differences:
Disallowable deductions 697 421 249
Tax exempt income (28) (74) (448)
Increase (decrease) in taxes resulting from different tax rates for non - Israeli
subsidiaries (16) (12) 128
Changes in valuation allowance (903) 1,118 509
Differences between the basis of measurement of income reported for tax purposes
and the basis of measurement of income for financial reporting purposes - see c.
above 1,361 (1,650) (594)
Other 358 (93) 82
Taxes on income for the reported years 5,912 1,553 2,639
i. Tax assessments
The Company has received final tax assessments through the year ended December 31, 2001. Tamar Industries M.R Electronics
1985 Ltd. received a final assessment through the year ended December 31, 2002. Kochav Orion Advertising and Information
Ltd, Orlan Orion Systems Ltd and PRS received final assessments through the year ended December 31, 1999. Retalix Italia
received final assessments through the year ended December 31, 1999. Retalix Holdings, Inc. received a final tax assessments
for the year ended December 31, 2002. The other subsidiaries have not been assessed since incorporation.