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http://www.thejakartapost.com/news/2009/05/06/germany-asks-indonesia-abolish-tax-aid-projects.html


Germany asks Indonesia to abolish tax on aid projects
The Jakarta Post ,  Nusa Dua, Bali   |  Wed, 05/06/2009 9:20 AM  |  Headlines 



Germany has demanded Indonesia abolish the tax slapped on its technical 
assistance projects in the country while promising to scale up its assistance 
in the future. 

Indonesian Finance Minister Sri Mulyani Indrawati said Tuesday that the head of 
the German delegation to the 42nd annual Asian Development Bank (ADB) meeting, 
Karin Kortmann, told her the tax slapped on projects funded by German technical 
assistance grants was not in line with international practice and asked the 
minister to abolish it. 

Sri Mulyani, however, said that she could not yet abolish the tax because it 
was governed by the country's income tax law, which did not differentiate 
income tax from grant projects. 

Nevertheless, Sri Mulyani promised to look into the matter, noting Germany's 
250 million Euro a year assistance to Indonesia. 

Besides meeting with Kortmann, Sri Mulyani also met Tuesday with head of the UK 
delegation and representatives of the International Finance Corporation (IFC) 
and the Japan Bank for International Cooperation (JBIC). 

In a meeting with head of the UK delegation Michael Foster, Sri Mulyani said 
that Indonesia would continue to play its active role in the G20, which 
provides a forum between developed and developing countries. 

Relating to the ADB's presidential election, Sri Mulyani explained that she 
would agree to any chosen candidate as long as he or she is capable and can be 
trusted. 

Sri Mulyani also expressed hope the UK could continue providing grants to 
Indonesian students wishing to study in the UK, especially those taking local 
government finance as their major. 

With regards to her meeting with IFC representatives, Sri Mulyani said the 
corporation promised her it would scale up its activity in the country, 
especially in areas of green house emissions and rural income programs. 

The IFC will also help Indonesia strengthen its financial system by sharing 
best practices. 

It stated its interest in putting investing in toll road infrastructure and 
buying equity in Indonesian banks. 

Sri Mulyani also received positive results during her meeting with JBIC 
representatives, who promised to help Indonesia tackle the impacts of the 
global financial crisis. The JBIC assistance will include bilateral support via 
US$1.5 billion in samurai bonds and trade finance facilities. 

In the meeting, the JBIC also stated its interest in providing financing 
facilities to develop infrastructure.

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