MILLI REASURANS ANNUAL REPORT 2018

Millî Reasürans Türk Anonim Şirketi NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2018 (Currency: Turkish Lira (TL)) (Convenience Translation of Financial Statements and Related Disclosures and Footnotes Originally Issued in Turkish, See Note 2.1.1) 33 Employee benefit expenses As of December 31, 2018 and 2017, employee benefit expenses are disclosed as follows: December 31, 2018 December 31, 2017 Wages and salaries 179.381.299 151.637.041 Employer’s share in social security premiums 40.460.148 32.708.900 Pension fund benefits 5.044.995 4.021.799 Other 14.842.516 12.858.706 Total (Note 32) 239.728.958 201.226.446 34 Financial costs Finance costs of the period are presented in “Note 4.2 - Financial Risk Management ” above. There are no finance costs classified in production costs or capitalized on tangible assets. All financial costs are directly recognized as expense in the consolidated statement of income. 35 Income tax Income tax expense in the accompanying consolidated financial statements is as follows: December 31, 2018 December 31, 2017 Current tax expense provision: Corporate tax provision (106.996.427) (96.767.913) Deferred taxes: Origination and reversal of temporary differences (4.635.421) 18.150.973 Total income tax expense/(income) (111.631.848) (78.616.940) A reconciliation of tax expense applicable to profit from operating activities before income tax at the statutory income tax rate to income tax expense at the Group’s effective income tax rate for the year ended December 31, 2018 and 2017 is as follows: Profit before taxes 2018 2017 529.665.325 Tax rate (%) 353.095.170 Tax rate (%) Taxes on income per statutory tax rate 116.526.372 22,00 70.619.034 20,00 Tax exempt income (60.400.133) (11,40) (43.989.864) (12,46) Non-deductible expenses 55.505.609 10,48 51.987.770 14,72 Total tax expense recognized in consolidated profit or loss 111.631.848 21,08 78.616.940 22,27 36 Net foreign exchange gains Net foreign exchange gains are presented in Note 4.2 - Financial Risk Management above. Millî Reasürans Annual Report 2018 Consolidated Financial Statements and Independent Auditors’ Report / 241