ESTIMATED LOSSES ON COMMITMENTS AND CONTINGENCIES continued

PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2016 and for the year then ended Expressed in millions of Rupiah, unless otherwise stated 146

33. TAXATION continued d. Tax expense - current continued

The tax on Bank Mandiri and Subsidiaries Group’s profit before tax differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits on the consolidated entities are follows: Year ended December 31, 2016 2015 Consolidated income before tax expense and noncontrolling interest 18,572,965 26,369,430 Tax calculated at applicable tax rates 4,010,865 5,368,896 Income tax effect of: Bank Mandiri - Income not subject to tax and final tax 213,279 503,341 - Expense not deductible for tax purposes 203,513 156,932 9,766 346,409 Subsidiaries 78,297 194,545 Total tax effect 88,063 151,864 Income tax expense 3,922,802 5,217,032 According to the taxation laws of Indonesia, Bank Mandiri and Subsidiaries submit the Annual Corporate Income Tax Returns to the tax office on the basis of self assessment. The Directorate General of Taxation may assess or amend taxes within 5 five years from time when the tax becomes due. Starting from 2009, Bank Mandiri has recognised written-off loans as deduction of gross profit by fullfiling the three requirements stipulated in UU No. 36 Year 2008 and Regulation of the Minister of Finance No. 105PMK.032009 dated June 10, 2009, which was amended by Regulation of the Minister of Finance No. 57PMK.032010 dated March 9, 2010. Based on UU No. 36 Year 2008 regarding Income Tax, Government Regulation No. 81 Year 2007 dated December 28, 2007 which is subsequently replaced by Government Regulation GR No. 77 Year 2013 dated November 21, 2013 and GR No.56 Year 2015 dated August 3, 2015 regarding Reduction of Income Tax Rate for Listed Resident Corporate Tax Payers and Regulation of the Minister of Finance No. 238PMK.032008 dated December 30, 2008 regarding Procedures for Implementing and Supervising the Granting of Reduction of Income Tax Rate for Listed Resident Corporate Tax payers, a public listed company can obtain a reduction of income tax rate by 5 lower from the highest income tax rate by fulfilling several requirements at least 40 of the total paid-up shares are listed and traded in the Indonesia Stock Exchange, the shares are owned by at least 300 parties and each party can only own less than 5 of the total paid up shares. The above requirements must be fulfilled by the tax payer at the minimum 183 one hundred and eighty three calendar days in a period of 1 one fiscal year. Tax payer should attach the certificate from Securities Administration Agency in the Annual Corporate Income Tax return by attaching form X.H.1-6 as regulated in Bapepam-LK Regulation No. X.H.1 for each respective fiscal year. PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2016 and for the year then ended Expressed in millions of Rupiah, unless otherwise stated 147

33. TAXATION continued d. Tax expense - current continued

Based on Certificate No. DEI2017-0154 dated January 5, 2017 regarding Monthly Stock Ownerships of Publicly Listed Companies Report and the Recapitulation form No X.H. 1-2 dated December 31, 2016 from PT Datindo Entrycom Securities Administration Agency to Bank Mandiri, it was stated that the Bank has fullfilled the requirements to obtain the income tax rate reduction to become 20 based on GR No. 77 Year 2013 and GR No. 56 Year 2015. In accordance with Minister of Finance Regulation No. 238PMK.032008, FSA previously “Bapepam-LK” will then later submit the information regarding the fulfillment by the Bank to the Tax office. Therefore the Bank’s corporate income tax for the year ended December 31, 2016 are calculated using the tax rate of 20. The Bank believes that it can fulfill the requirements to obtain the reduction in income tax rate for the year ended December 31, 2016. The calculation of income tax for the year ended December 31, 2016 as described above will be the basis for filling the Annual Tax Return SPT of Corporate Income Tax.

e. Deferred tax assets - net

Deferred tax arises from temporary differences between book value based on commercial and tax are as follows: December 31, 2016 Beginning balance Credited charged to consolidated statement of profit or loss and other comprehensive income Charged to equity Ending balance Bank Mandiri Deferred tax assets: Loans write-off until 2008 1,248,713 42,501 - 1,206,212 Provision for post-employment benefit expense, provision for bonuses, leave and holiday THR entitlements 1,068,972 138,191 40,044 1,247,207 Allowance for impairment loan losses 1,111,707 1,149,720 - 2,261,427 Allowance for impairment losses on financial assets other than loans 426,812 17,795 - 444,607 Unrealised losses on decrease in fair value of marketable securities and government bonds available for sale 375,769 - 105,624 270,145 Allowance for estimated losses arising from legal cases 107,646 56,566 - 51,080 Estimated losses on commitments and contingencies 74,146 35,517 - 38,629 Allowance for possible losses on abandoned properties 29,819 692 - 29,127 Allowance for possible losses on repossessed assets 1,994 - - 1,994 Accumulated losses arising from difference in net realisable value of repossessed assets 1,969 - - 1,969 Unrealised losses on decrease in fair value of marketable securities and government bonds - fair value through profit or loss 4,657 1,153 - 3,504 Accumulated losses arising from difference in net realisable value of abandoned properties 189 15 - 174 Deferred tax assets 4,452,393 1,169,262 65,580 5,556,075 Deferred tax liabilities: Unrealised gain on BOT transactions 21,828 21,828 - - Net book value of fixed assets 111,884 8,602 - 120,486 Deferred tax assets - Bank Mandiri only 4,318,681 1,182,488 65,580 5,435,589 Net deferred tax assets - Subsidiaries 515,841 554,512 Total consolidated deferred tax assets - net 4,834,522 5,990,101