The economic growth in Indonesia is significantly developing—making it a promising land for foreign stakeholders to start a business. However, it can be a challenging process for foreigners who see a huge opportunity to start a company in Indonesia. The unfamiliarity of the country’s legal requirements and regulations can be one of the problems.
This article will cover thorough information on how to register a company in Indonesia. We will guide you on how to set up a company in Indonesia as a foreigner. Hopefully, this article can be a useful resource for you to get started.
Type of Company in Indonesia
Before discussing about how to set up a company in Indonesia, you need to know about the types of companies here.
PT
PT is Indonesia’s acronym for “Perseroan Terbatas” or a Limited Liability Company. This business type is the well-known top choice among foreign investors who want to establish their business in Indonesia. This is set up as part of a cooperative agreement, with a designated amount of authorized capital separated into shares.
This type of company requires 1 local director, 2 local shareholders, and 1 international or domestic commissioner.
PMA
PMA is Indonesia’s acronym for “Penanaman Modal Asing”, also known as a Foreign Owned Company. It can be owned partially or wholly by foreign investors. This legal business type can only be established by foreign investors in Indonesia in compliance with the Foreign Capital Investment Law and with the Capital Coordinating Board of Indonesia’s approval.
Also read: What is a PMA Company in Indonesia? Guide for Foreigner
KPPA
KPPA stands for “Kantor Perwakilan Perusahaan Asing” in Indonesian term or a representative office. It is a business entity representing foreign companies requiring 3-4 weeks to complete the application process. This type of company is perfect for foreign shareholders who want to learn to do research in the Indonesian market or other business-related objectives.
This company acts as purchasing and marketing agent for the parent company. Nevertheless, it is only allowed to operate in specific business sectors: gas, mining, oil, banking, trading, and services.
KP3A
This type of business entity serves as a market representative office of the foreign parent company in Indonesia. They have the authority to conduct business activities in the local market.
Also read: The Types of Companies in Indonesia: 2023 Complete Guide
The Requirements to Establish a Company in Indonesia
Below are some of the requirements for the Indonesia business registry.
PT PMDN
The requirement needed to set up a PT are:
- A commissioner
- One director
- Two shareholders
The estimated amount of investment:
- Small-sized business : 50 million Indonesian Rupiah
- Medium-sized business : 500 million Indonesian Rupiah
- Large-sized business : 10 billion Indonesian Rupiah
Check our package for Local PT company set up.
PT PMA
To establish PT PMA, it requires:
- A commissioner
- One director
- 2 shareholders
The minimum investment plan value for All business operations is around 10 billion Indonesian Rupiah.
Check our package for PMA registration in Indonesia.
Also read: How to Set Up PMA Company in Indonesia: Guide for Foreigner
KPPA
Here is the requirement needed to create KPPA:
- A minimum of 1 CEO is needed
- The CEO should not be the director
- Company address in a commercial building.
Check our package for opening a KPPA in Indonesia.
Documents Required for Indonesia Company Incorporation
These are the documents required for Indonesia company incorporation:
PT & PT PMA (Foreign, Local Legal Body, and Personal Foreigner)
PT and PT PMA share the same document requirements. It consists of three types of documents: company, shareholder, and personal.
Company Documents:
- A document signed by each shareholder (Power of Attorney) for the aims of the submission document
- Shareholder documents
- The property rental agreement was made between the company and the building management.
- Official statement of building domicile from management
- A receipt for the payment of building and land tax (PBB) consisting of the approved payment for the recent year.
- A certificate of ownership (IMB)
- Minimal three photos from the company (Company workspace, corporate signage, and front desk)
- A document certifying the company’s domicile, which has been acknowledged and confirmed by the building management.
- Corporate letterhead and a sample of the company seal
- A duplicate of the company’s Articles of Association and any amendments in either English or Bahasa Indonesia.
- Company application certificate
- The structure of the Executive Boards
Documents for Directors and Commissioners:
- For foreigners: Photocopy of a valid passport with a minimum of 18 months remaining before expiration and at least four blank pages
- For local: Identification card & Taxpayer Identity Number
- Family card
- Stamp of Indonesian visa
- Director’s residential statement from hotel or apartment
- Current passport-sized photo with a red background for every Board of Director
Also read: How to Set Up a PT Company in Indonesia: Guide for Foreigner
KPPA
KPPA requires two types of documents: company and CEO documents.
Company Documents
- Company Articles of Association from the parent/holding company consisting of the Board of Directors structure, shareholders, registered location, and scope of business.
- Letter of Appointment (LoA) signed & sealed by the top executive of the holding/ parent company
- A letter of acceptance from the proposed Chief Representative Officer (CRO) for the position of CRO, duly signed and stamped with Material 6000 stamp duty if signed in Indonesia.
- Letter of Intent (LoI) signed and sealed by the holding or parent company
- Letter of Reference (LoR)
- Other required documents are similar to the requirement to set up PT and PT PMA, such as an official statement of building domicile, recent receipt payment of building and land tax, IMB, three photos from the company, a document of company’s registered address, company letterhead, and a sample of the stamp of the company.
- The documents needed for the Chief Representative Officer are all similar to those requirements for directors and commissioners for PT and PT PMA.
Also read: What is Company Incorporation: Definition and Advantages
Step-to-Step Procedure on How to Start a Company in Indonesia
Here are eight procedures required to set up a company in Indonesia as a foreigner. One to two months are estimated to complete the overall registration process.
1. Register the name of the company
The first step is to apply for a company name. Ensure to create a distinct name from other companies, represent the company’s objective, and form a set of legible words. Avoid names that are identical to a name of a country, international agency, and government without legal authorization.
Commonly, it takes one working day to obtain the approval. Subsequently, a unique code will be provided to reserve the name for up to 60 days.
2. Request for Deed of Establishment
After submitting the bank account certificate and an authorized copy of the bank transfer advice, the Deed of Establishment can be filed online.
When your application is approved, you will be granted official recognition of the company’s establishment. Once approved by the Ministry of Law and Human Rights, you may publicly announce the establishment within 14 days. Please kindly note that before submitting the documents, it is necessary to have them notarized.
3. Apply for the Domicile Certificate of the Company
The third step in the process is to obtain the Certificate of Company Domicile, which is mandatory for all limited liability companies in Indonesia. Moreover, this certificate plays a significant role in the process of registration of other files.
4. Acquire a tax registration number (NPWP)
After you have completed the third step and have obtained a Certificate of Company Domicile, a valid tax ID (or NPWP in Indonesia) must be acquired from the domestic tax authority for financial purposes.
Here are some documents you need to apply for tax ID:
- Deed of Establishment
- The director’s ID card
- Letter of confirmation of business location
- A domicile documentation for company taxation may be granted, but it is not obligatory.
You can obtain the certificate of domicile from either the local government or the building administration in the area where the office is located. Along with a registration number, VAT (Value Added Tax) will be provided.
Also read: Corporate and Company Structure in Indonesia
5. Obtain your business ID number (NIB)
NIB is a distinctive number that serves as your company’s identification, similar to an ID card. You can get the NIB from the Online Single Submission (OSS). The package will also include you registering to Badan Penyelenggara Jaminan Sosial (BPJS), Ketenagakerjaan, and BPJS Kesehatan.
Depending on the type of business entity you want to establish, you need to prepare all other necessary supplementary documents or licenses before starting the business.
7. Acquire work visas
The next step on how to open a company in Indonesia is acquire visas. Before working in your company, both domestic and foreign workers will need to obtain work visas, known as KITAS. These visas are available in the form of either single-entry or multiple-entry business visas.
8. Open a business bank account
Opening a corporate bank account will help to place the invested capital after combining your company.
Upon completing these 8 steps, the company is considered registered. Nonetheless, there are three more processes you have to take: submitting a labor report, applying programs for workers’ social security, and obtaining insurance healthcare coverage for employees.
Establishing a business requires a complex process. For further information on starting a company in Indonesia, immediately visit InvestinAsia website. They consist of professionals who will provide you with guidance and support for you to begin the business in the most efficient ways.
Also read: 12 Pro Tips for Choosing Your Company Name
Other Things to Know Before Starting a Company in Indonesia
Beside knowing how to establish company in Indonesia, here are some FAQs about how register a company here.
How much does it cost to register a company in Indonesia?
For foreigners who want to invest in PT PMA in Indonesia, it must have a minimum investment of 10 billion Indonesia Rupiahs. Moreover, a minimum paid-up capital requirement of 2.5 billion Indonesian rupiahs is mandatory for foreigners seeking to establish a foreign-owned PMA company in Indonesia.
Can foreigners set up a company and own 100% of a business in Indonesia?
A PT can only be owned by Indonesian citizens following Indonesian law. However, foreigners can establish a company in Indonesia by making a partnership with locals to invest in PT PMA.
How much is income tax for companies in Indonesia?
In Indonesia, the standard rate of corporate income tax (CIT) is 25%. Nonetheless, for the fiscal year 2020/2021, it is reduced to 22%. Besides, starting from the year 2022 and onward, it will be further decreased to 20%.
In conclusion, setting up a company in Indonesia (especially as a foreigner) can be a challenging and complex process, especially for foreigners. This article provides a useful and simple guide to follow, starting from what kind of business entity you want to establish, the important requirement to set up a company, all the crucial documents and licenses needed, and the sequential eight procedure to register your company. Are you ready to start your company in Indonesia?
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