Tax expense TAXATION a. Taxes payable

PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2007 and 2006 Expressed in millions of Rupiah, unless otherwise stated 81

27. TAXATION continued 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, 2007 and 2006 are as follows: 2007 2006 Consolidated income before tax benefitexpense and minority interests 6,333,383 2,831,196 Less: Income before tax expense of Subsidiaries after elimination 134,525 66,696 Income before tax bebefitexpense and minority interests - Bank Mandiri only 6,198,858 2,764,500 Estimated income tax expense based on standard statutory rates 1,859,640 829,333 Tax effect of permanent differences: Non-deductible expenses 15,731 99,757 Losses from Dili branch - 1,463 Others 4,537 58,479 Loans write back and recovery 27,274 711,339 Provision for deferred tax assets - 65,402 7,006 486,238 Tax expense - Bank Mandiri only 1,852,634 343,095 Tax expense - Subsidiaries 133,258 65,629 Tax expense - consolidated 1,985,892 408,724 Less: Current tax expense - consolidated 2,686,154 1,675,010 Deferred tax benefit - consolidated 700,262 1,266,286

e. Deferred tax assets

The tax effects from significant temporary differences between commercial and tax bases are as follows: 2007 2006 Bank Mandiri Deferred tax assets: Loans write-offs 2,276,445 1,611,806 Allowance for possible losses on earning assets other than loans 659,274 690,742 Provision for personnel expenses 599,122 447,177 Allowance for possible loan losses 429,374 513,987 Estimated losses on commitments and contingencies 140,394 153,657 Allowance for possible losses arising from legal cases - net provision deferred tax asset Rp38,926 and Rp65,402 for the years ended December 31, 2007 and 2006 22,614 29,302 Provision for abandoned properties 13,833 - Accumulated losses arising from difference in net realizable value of abandoned properties 8,774 8,627 Provision for repossessed assets 7,150 - Accumulated losses arising from difference in net realizable value of repossessed assets 3,135 3,135 Unrealized loss for Securities and Government Bonds available for sale 1,521 - Deferred tax assets 4,161,636 3,458,433 PT BANK MANDIRI PERSERO TBK. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Years Ended December 31, 2007 and 2006 Expressed in millions of Rupiah, unless otherwise stated 82

27. TAXATION continued e. Deferred tax assets continued

2007 2006 Deferred tax liabilities: Net book value of premises and equipment 81,161 75,256 Mark to market of securities 7 4,346 Unrealized gain for Securities and Government Bonds available for sale - 98,387 Net deferred tax assets - Bank Mandiri only 4,080,468 3,280,444 Net deferred tax assets - Subsidiaries 15,979 15,007 Total deferred tax assets 4,096,447 3,295,451 28. OTHER LIABILITIES 2007 2006 Rupiah: Provision for post-employment benefits Note 42 784,938 689,654 Provision for free of service period benefits Note 42 655,489 489,650 Accrued bonus, employee incentives, leave and holiday 647,930 399,635 Payable to customer 557,822 664,689 Guarantee deposits 527,347 306,880 Unearned income 351,257 333,089 Provision for possible losses on legal cases Note 56e 204,611 301,046 Others 2,681,784 2,248,471 Total Rupiah 6,411,178 5,433,114 Foreign Currency: Guarantee deposits 565,340 312,870 Unearned income 199,043 185,487 Inter-branch accounts - net 159,328 69,040 Provision for possible losses on legal cases Note 56e 1,131 15,181 Others 2,288,011 954,604 Total Foreign Currency 3,212,853 1,537,182 9,624,031 6,970,296 Movements of provisions for possible losses on legal cases for the years ended December 31, 2007 and 2006 were as follows: 2007 2006 Balance at beginning of year 316,227 471,706 Reversal during the year Note 37 106,619 154,427 Others 3,866 1,052 Balance at end of year 205,742 316,227 Includes effect of foreign currency translation. Management believes that the provision for possible losses on legal cases is adequate.