PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2010, 2009 AND 2008
Expressed in millions of Rupiah, unless otherwise stated
Appendix 5108 29. TAXATION continued
c. Tax expense - Current year continued
The above corporate tax calculation for the year ended 31 December 2010 was a preliminary estimate made for accounting purpose and is subject to revision when Bank Mandiri submits its
annual tax return.
The calculations of income tax for the years ended 31 December 2009 and 2008 conform to the Bank’s annual tax returns.
Under 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.
On 2 September 2008, the Government has enacted amendment to the income tax law with effect from 1 January 2009, that the income tax for Corporation will be set to a fix rate as 28
starting in 2009 and further reduced to 25 starting in 2010. The change in tax rate has resulted to the adjustment in the calculation of deferred tax.
Starting 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 10 June 2009, which was amended by Regulation of the Minister of Finance No. 57PMK.032010 dated 9 March 2010.
d. Tax expense - Deferred
The reconciliation between estimated income tax expense, calculated using applicable tax rates based on commercial income before tax expense, with estimated income tax expense as
reported in the consolidated statements of income for the years ended 31 December 2010, 2009 and 2008 are as follows:
2010 2009
2008
Consolidated income before tax expense and minority interests
13,972,162 10,824,074
8,068,560 Less: Income before tax expense of Subsidiaries-
after elimination 460,469
234,496 141,244
Income before tax expense and minority interests- Bank Mandiri only
13,511,693 10,589,578
7,927,316
Estimated income tax expense based on applicable tax rates
3,377,923 2,965,081
2,378,177 Decrease in deferred tax arising from reduction in
tax rates and recognition of temporary differences not yet recognised in prior year
1,040,280 580,442
184,952 Tax effect permanent differences:
Non-deductible incomenon-taxable expenses 139,360
41,828 56,861
Losses from overseas branches 13,012
742 18,710
Others 1,540
44,660 10,640
Recovery of loans -
25,663 34,845
915,472 469,033
236,318 Tax expense - Bank Mandiri only
4,293,395 3,434,114
2,614,495 Tax expense - Subsidiaries
309,541 191,472
138,749 Tax expense - consolidated
4,602,936 3,625,586
2,753,244 Less: Current tax expense - consolidated
3,026,466 3,479,867
4,711,894
Deferred tax expensesbenefit - consolidated 1,576,470
145,719 1,958,650
PT BANK MANDIRI PERSERO Tbk. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2010, 2009 AND 2008
Expressed in millions of Rupiah, unless otherwise stated
Appendix 5109 29. TAXATION continued
e. Deferred tax assets - net
Deferred tax arises from temporary differences between book value based on commercial and tax calculation are as follows:
2010 2009
2008 Bank Mandiri
Deferred tax assets: Loans write-off
2,536,635 2,894,873
3,605,776 Allowance for impairment loan losses
1,061,120 1,239,895
777,476 Allowance for impairment losses on financial assets
earning assets other than loans 672,978
609,493 872,525
Allowance for personnel expenses 626,272
769,586 665,157
Allowance for estimated losses arising from legal cases net of provision for deferred tax asset of Rp24,253 for the year
ended 31 December 2008 143,670
105,056 25,073
Allowance for possible losses on other assets 40,365
100,000 -
Estimated losses on commitments and contingencies 92,016
81,641 87,889
Allowance for possible losses on abandoned properties 43,937
47,095 10,641
Allowance for possible losses on repossessed assets 29,977
29,205 6,675
Accumulated losses arising from difference in net realisable value of abandoned properties
2,587 3,306
5,963 Accumulated losses arising from difference in
net realisable value of repossessed assets 2,532
2,541 2,926
Unrealised losses from marketable securities and Government Bonds available for sale
- 86,947
66,233 Deferred tax assets
5,252,089 5,969,638
6,126,334
Deferred tax liabilities: Unrealised gainslosses on increasedecrease in
market value of marketable securities and Government Bonds fair value through profit or loss
27,235 3,899
- Net book value of fixed assets
23,450 25,697
44,464 Unrealised losses from marketable securities and
Government Bonds available for sale 126,624
- -
Deferred tax assets - Bank Mandiri only 5,328,028
5,940,042 6,081,870
Provision for decrease in deferred tax assets 1,065,606
- -
Net deferred tax assets - Bank Mandiri only 4,262,422
5,940,042 6,081,870
Net deferred tax assets - Subsidiaries 138,666
74,043 42,049
Total consolidated deferred tax assets – net 4,401,088
6,014,085 6,123,919
Deferred tax assets are calculated using applicable tax rate or substantially enacted tax rate at balance sheet dates.
As disclosed in Note 60, after completion of the Limited Public Offering with Pre-emptive Right Issue, the shareholder’s ownership composition of the Bank is 60 owned by the Republic of
Indonesia and 40 owned by the public. The public ownership of 40 is one of the main requirement which should be met by the Bank to get a 5 reduction in income tax rates from 25
to 20. The other requirements, among others, to have at least 300 shareholders who hold less than 5 of the Bank’s shares, for at least 183 calendar days of each fiscal year. These
requirements are in accordance with the regulation No. 238PMK.032008 dated 30 December 2008 regarding “Procedures for implementing and supervising the granting of reduction of the tax rate of
income tax resident corporate taxpayers in the form of public-listed company” PMK 238. Fulfilment of the 40 of public ownership criteria makes it highly probable the Bank will obtain the 5
reduction in income tax rates starting fiscal year 2011 to become 20. Therefore, as at 31 December 2010, the Bank has booked a provision for impairment in deferred tax assets in amount
of Rp1,065,606 as all of the deferred tax assets will be realised in 2011 or onwards with income tax rates of 20.
Management believes that it is possible that future taxable income will be available against the temporary difference, which results in deferred tax assets, can be utilised.
