MAROC_TELECOM_REGISTRATION_DOCUMENT_2017

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FINANCIAL REPORT Consolidated financial statements at 31 December 2015, 2016 and 2017

24.2 OTHER FINANCIAL INCOME AND EXPENSE

(in MAD million)

2017

2016

2015

Foreign-exchange gains and losses

5

5

-46

Other financial income (+) Other financial expenses (-)

84

83

34

-89

-211 -124

-113 -126

OTHER FINANCIAL INCOME AND EXPENSES

-1

“Other financial expenses” decreased by 122million dirhams. In 2015 and 2016, the Group paid registration fees related to the acquisition of the new MOOV subsidiaries, hence this variation.

“Other financial income” takes into account revenues from non- consolidated investments and the proceeds from their disposal.

NOTE 25 — TAX EXPENSE

Like all Moroccan corporations (sociétés anonymes), Maroc Telecom is subject to income tax. “Income tax expense” includes current and deferred taxes.

Deferred tax reflects temporary differences between the carrying value of assets and liabilities and their tax-base value.

The following table shows Maroc Telecom Group’s payable and deferred taxes for the years ended 31bDecemberb2015, 2016, and 2017:

(in MAD million)

2017

2016

2015

Income tax expense

3,199

3,221

3,373

Deferred tax

-2

146 -20

-133

Provisions for tax

11

-88

Current tax

3,208

3,347

3,152

33%

34%

32%

Consolidated effective tax rateb (a)

(a) Tax expense/pretax earnings.

(in MAD million) Net earnings

2017

2016

2015

6,579 3,197

6,628 3,367

6,577 3,240

Income tax expense

Provision for tax Pretax earnings

11

-20

-88

9,787

9,975

9,729

Moroccan statutory tax rate Theoretical income tax expense Impact of changes in tax rate

31%

31%

30%

3,034

3,092

2,919

-91 265

-80 334

-65 298

Other differencesb (b)

Effective income tax expense

3,208

3,347

3,152

(b) Other net differences mainly include withholding tax of MADb235bmillion of Maroc Telecom.

A provision for tax was recognized for the subsidiary Sotelma in the amount of MAD 11 million.

In 2017, following the outcome of the tax audit covering fiscal years 2011, 2012, 2013 and 2014, the Sotelma subsidiary paid a sum of MAD 19 million.

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MAROC TELECOM ____ 2017 Registration Document