In achieving the stipulated vision and mission, the Directorate General of Taxes (DGT) requires support from various parties, both domestic and foreign. The support for the DGT from abroad may take the form of direct grants. In connection with grants, the Minister of Finance Regulation No. 99/PMK.05/2017 concerning the Administration of Grant Management (MoF Reg. 99/2017) stipulates that grants must be outlined in a grant agreement.
In this respect, the Director General of Taxes has released the Director General of Taxes Decree No. KEP-529/PJ/2020 concerning the Administration of Foreign-Sourced Direct Grant Management within the Directorate General of Taxes (KEP-529/2020). This regulation has been released to realize good governance and orderly administration.
This regulation outlines the definition of foreign-sourced direct grants (direct grants), i.e. all state revenues in the form of foreign exchange, foreign exchange in rupiah denomination, rupiah, goods, services, and/or securities obtained from foreign grantors that do not need to be repaid and are not implemented through a planning mechanism.
A foreign direct grantor (direct grantor) refers to the party giving direct grants that may originate from a foreign country, institutions under the United Nations (UN), multilateral institutions, foreign financial institutions, foreign non-financial institutions, national financial institutions domiciled and conducting business outside the territory of the Republic of Indonesia, and individuals.
Based on KEP-529/2020, a direct grant is used to finance technical assistance. Technical assistance refers to assistance from experts and is actually related to the development of institutional capacity and human resources within the DGT that is funded by direct grants. Technical assistance funded by direct grants must support the implementation of the DGT’s Strategic Plan programs and other strategic programs in accordance with the Minister of Finance's policies.
In further detail, technical assistance in activities financed by direct grants may cover five activities. First, the assistance provided by experts assigned to the DGT for a certain period. Second, domestic seminars/workshops/training by experts provided by direct grantors. Third, seminars/workshops/training/study visits conducted abroad. Fourth, DGT employee apprenticeship activities in overseas taxation institutions (secondment). Fifth, other forms of capacity building approved by the DGT and direct grantors.
Through KEP-529/2020, the Director General of Taxes also stipulates the party authorized to sign direct grant agreements. Two parties are authorized to sign direct grant agreements, which are stipulated based on the value of the grant. First, the Director General of Taxes shall sign direct grant agreements starting from IDR10 billion in value. Second, the DGT Secretary shall sign direct grant agreements of less than IDR10 billion in value.
KEP-529/2020 states that the signing of direct grant agreements is beyond the Director General of Taxes’ authority. However, insofar as the DGT constitutes one of the beneficiaries, the Director General of Taxes is involved in the preparation of the direct grant agreement.
Furthermore, issued on 29 December 202, the Director General of Taxes Decree specifies the administrative process for direct grant management within the DGT. The administrative process ranges from the stage of revenue planning, organization and implementation, administration of foreign business travels, to monitoring and evaluation. On another note, there is a chart depicting each stage in the administration process of direct grant management as well as the terms of the direct grant agreements.