Amendment No. 3 to Agreement for Grant TF093998 Conformed

CONFORMED COPY Letter No. CD-218/PINTAR/V/2011 May 25, 2011 Mr. Rahmat Waluyanto Director General of Debt Management Ministry of Finance Jalan Lapangan Banteng Timur 2-4 Jakarta 10710 Dear Mr. Waluyanto: Re: Technical Assistance to Indonesia Tax Administration Reform under the Public Financial Management Multi Donor Trust Fund TF093998 – Amendment No. 3 We refer to the Grant Agreement dated April 22, 2009, as amended through September 6, 2010, between the Republic of Indonesia (the Recipient) and the International Bank for Reconstruction and Development (the World Bank), as administrator of grant funds provided by the Commission of the European Communities and the Netherlands Minister for Development Cooperation for the Public Financial Management Multi-Donor Trust Fund (Parent Trust Fund No. TF070661), for the above- captioned project (the Grant Agreement), and to your letter, dated May 9, 2011, requesting cancellation of $700,000 of the Grant and corresponding amendment of the Grant Agreement. The World Bank has agreed with your request, and, accordingly, proposes to amend the Grant Agreement as set out below. 1. The amount of the Grant is reduced by the cancelled amount of seven hundred thousand United States Dollars (US$700,000). The total amount of the Grant, following the cancellation, is one million six hundred forty three thousand two hundred United States Dollars (US$1,643,200). All terms and conditions applicable to the Grant, as set out in the Grant Agreement, remain in full force and effect. 2. Part 1 of the Project (Automation and Clean Up of Tax Data) as described in Section 2.01 of the Annex to the Grant Agreement will no longer be part of the Project and is hereby deleted and the subsequent Parts re-numbered accordingly. In addition, a new sub-activity is added to the Implementation Support activities (re-numbered Part 2) to provide for capacity building and training related to the Project objectives. Section 2.01 of the Annex is amended and restated as set out below: ISEB Tower 2, Jl. Jend. Sudirman Kav. 52-53, Jakarta 12190 • Telephone (62-21) 5299 3000 • Facsimile: (62-21) 5299 3110 P.O. Box 1324/JKT, Jakarta 10013 • Telex: IBRDIA 60086 • Headquarters: The World Bank, Washington DC, USA Mr. Rahmat Waluyanto 2 of 3 May 25, 2011 “(i) Part 1 — Diagnostic Measure. Carrying out of diagnostic measures and program definitions to strengthen criminal investigations of tax fraud, and scoping of a reform project with the Directorate of Intelligence and Investigation focusing on: (a) optimization of the organizational structure of the Directorate of Intelligence and Investigation; (b) improvement of human resource management; and (c) support for investigation technology requirements, for improved tax administration/and improved tax compliance. (ii) Part 2 — Implementation Support. Providing implementation support, capacity building and training to strengthen the capacity of the DGT to carry out procurement activities and tax-related research and analysis, including tax reform, taxpayer risk assessment, tax gap and sector compliance analysis, and impact evaluation of tax policy changes. (iii) Part 3 — Knowledge Management. Adoption of knowledge management concepts as one of the key strategic action plans, including the development of knowledge management analysis document and implementation roadmap to enhance productivity and effectiveness in the areas of audit, tax administration, tax compliance and investment climate by offering improved customer service to businesses. (iv) Part 4 — Procurement Assistance. Provision of technical and procurement support during the PINTAR contract selection process to the procurement committee established under PINTAR.