ÇELEBİ AR19-270720 (1)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR THE YEAR ENDED 31 DECEMBER 2019 ÇELEBİ HAVA SERVİSİ ANONİM ŞİRKETİ (Amounts expressed in Turkish Lira (“TL”) unless otherwise indicated.) Convenience Translation into English of Consolidated Financial Statements Originally Issued in Turkish 108 Çelebi Ground Handling Inc. 2019 Annual Report Reconciliation of tax expenses presented in consolidated statements of income for the periods ended at December 31, 2019 and December 31, 2018 are as follows: 2019 2018 Profit before tax in the financial statements 216.512.750 214.812.101 Expected tax expense according to parent company tax rate (20%) (47.632.805) (47.258.664) Differences in tax rates of subsidiaries (13.843.746) (2.449.658) Expected tax expense of the Group (61.476.551) (49.708.322) Non-deductible expenses (3.670.537) (2.686.122) Reductions 9.883.693 11.929.539 Retained earnings offset 4.924.560 8.041.890 Other tax payables liabilities (*) (5.091.905) (4.449.869) Tax incentive effect (**) 8.636.453 24.224.796 Investments accounted using the equity method effect 7.025.257 7.972.687 Deferred tax income calculated over unused previous years’ losses 16.094.789 - Other 4.126.548 (1.686.429) Grup’un cari dönem vergi gideri (19.457.693) (6.361.830) (*) Consists of innovation and other local taxes calculated over the period profit which companies are obliged to pay in accordance with the tax system in Hungary. (**) The Company was entitled to receive a corporate income tax incentive from the Ministry of Economy for its investments in Istanbul Airport. At present, TL 217.352.779 of the total investment amounting to TL 54.338.195 has been granted and TRY 21.476.946 of this amount has been deducted from the temporary tax amount calculated. The remaining amount of TL 32.861.249 has been recognized as deferred tax asset in the current period. Deferred Taxes The Group calculates deferred tax assets and liabilities on temporary differences on statement of financial position items arising from different evaluation of financial statements prepared in accordance with CMB and statutory accounting standards. In general, such temporary differences are resulted from accounting of income and expenses in different reporting periods in accordance with Tax laws and CMB accounting standards. Rates for deferred tax assets and liabilities calculated by liability method over temporary differences to be realized in future periods are 20% or 22%, 9% or 10%, 31,925% and 29,12% - 34,94% for Turkey, Hungary, Germany and India respectively.