OPERATION, MAINTENANCE AND TELECOMMUNICATION SERVICE EXPENSES

PERUSAHAAN PERSEROAN PERSERO PT TELEKOMUNIKASI INDONESIA Tbk AND ITS SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2016 and for the Year Then Ended Figures in tables are expressed in billions of Rupiah, unless otherwise stated 70

26. TAXATION continued

d. The components of income tax expense benefit are as follows continued: Tax Law No. 362008 which is futher regulated in Government Regulation No. 812007 as amended by Government Regulation No. 772013 and lastly by Government Regulation No. 562015 stipulates a reduction of 5 from the top rate applicable to qualifying listed companies, for those whose stocks are traded in the IDX which meet the prescribed criteria that the public owns 40 or more of the total fully paid and traded shares, and such shares are owned by at least 300 parties, with each party owning less than 5 of the total paid-up shares. These requirements must be met by a company for a period of 183 days in one tax year. The Company has met all of the required criteria; therefore, for the purpose of calculating income tax expense and liabilities for the financial reporting the year ended December 31, 2016 and 2015, the Company has reduced the applicable tax rate by 5. The Company applied the tax rate of 20 for the year ended December 31, 2016 and 2015. The subsidiaries applied a tax rate of 25 for the year ended December 31, 2016 and 2015. The company will submit the above corporate income tax computation in its income tax return “Surat Pemberitahuan Tahunan” or Annual Tax Return for fiscal year 2016 that will be reported to the tax office based on prevailing regulations. The amount of corporate income tax for the year ended December 31, 2015 agreed with what was reported in the annual tax return. e. Tax assessment i The Company In November 2013, the Company received tax underpayment assesment letters “SKPKBs” No. 000562070709313 to No. 000652070709313 dated November 15, 2013, for the underpayment of VAT for the period January to September and November 2007 amounting to Rp142 billion. On January 20, 2014, the Company filed its objection to the Tax Authorities. The Company has received the rejection of its objection through The Directorate General of Taxation “DGT” decision letters No. 2498 to 2504 and 2541 to 2543WPJ.192014 dated December 16 and 18, 2014, respectively. The Company accepted the assessment on the underpayment of VAT amounting to Rp22 billion including penalty of Rp10 billion. The accepted portion was charged to the 2014 consolidated statements of profit or loss and other comprehensive income and the portion of VAT Interconnection amounting to Rp120 billion including penalty Rp39 billion is recognized as claim for tax refund. The Company has filed an appeal to the rejection of the objection on underpayment of VAT Interconnection No. Tel. 59KU000COP-100000002015 to No. Tel. 68KU000COP-100000002015 dated March 12, 2015. As of the date of approval and authorization for the issuance of these consolidated financial statements, the appeal is still in process.