ESTIMATED LOSSES ON COMMITMENTS AND CONTINGENCIES continued

PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2008 and 2007 Expressed in millions of Rupiah, unless otherwise stated 85

27. TAXATION continued c. Tax expense - current continued

Under the Indonesian taxation laws, Bank Mandiri and its Subsidiaries submit tax return on the basis of self assessment. The tax authorities may assess or amend taxes within 5 years after the date of the tax filings. In September 2008, the Government announced the changes of Law No. 7 Year 1983 regarding “Income Tax” which will be effective on January 1, 2009 which is Law No. 36 Year 2008 regarding revision for the fourth time of Law No. 7 Year 1983 on Income Tax. The revised Law stipulates changes in corporate tax rate from a marginal tax rate to a single rate of 28 for fiscal year 2009 and 25 for fiscal year 2010 onwards.

d. Tax expense - deferred

The reconciliation between estimated income tax expense, calculated using applicable tax rates based on commercial income before tax expense, and estimated income tax as reported in the statements of income for the years ended December 31, 2008 and 2007 are as follows: 2008 2007 Consolidated income before tax expense and minority interests 8,068,560 6,333,383 Less: Income before tax expense of Subsidiaries after elimination 141,244 134,525 Income before tax expense and minority interests - Bank Mandiri only 7,927,316 6,198,858 Estimated income tax expense based on standard statutory rates 2,378,177 1,859,640 Decreaseincrease of deferred tax from changes of taxes rates and recognition of temporary difference not recognized in prior years 184,952 - Tax effect of permanent differences: Non-deductible expenses 56,861 15,731 Losses from Hong Kong branch 18,710 - Others 10,640 4,537 Recovery of credit 34,845 27,274 236,318 7,006 Tax expense - Bank Mandiri only 2,614,495 1,852,634 Tax expense - Subsidiaries 138,749 133,258 Tax expense - consolidated 2,753,244 1,985,892 Less: Current tax expense - consolidated 4,711,894 2,686,154 Deferred tax benefit - Consolidated 1,958,650 700,262