What Happens When a Representative Office Closes in Indonesia?

When a Representative Office (KPPA) in Indonesia closes, the process is straightforward. Unlike limited liability companies, a KPPA does not require a complex liquidation process. Instead, the office simply submits a closure request through Indonesia’s OSS (Online Single Submission) system.

But while the administrative steps are simple, the closure marks a strategic inflection point for many foreign companies: should they exit, or take the next step and go commercial?

Understanding the Closure of a Representative Office

A Representative Office (KPPA) in Indonesia serves as a non-commercial setup, enabling foreign companies to operate locally for purposes such as research, brand promotion, and coordination, without engaging in revenue-generating activities.

Closure of representative offices may be necessary when:

• The representative office has completed its intended role in market analysis or research.
• The headquarters intends to transition into a fully operational commercial business.
• The validity period has ended with no intent to extend.
• Regulatory changes require restructuring.

Also read: How Long Can a Representative Office Operate in Indonesia?

Step-by-Step Closure Procedure

Closing a Representative Office involves:

1. Preparing documents (including the head’s identity and closure statement from HQ).
2. Submitting the closure form via OSS.
3. Verification by BKPM (3 working days).
4. Issuance of closure and NIB revocation letters.
5. Revocation of NPWP (within 12 months for corporate entities).
6. De-registration from BPJS (social security).

This administrative process is relatively simple compared to the dissolution of a PT (Perseroan Terbatas), which requires shareholder resolutions, court announcements, tax clearance, and liquidator reports.

What Happens After Closure?

Once the representative office is formally closed:

• The company no longer holds legal status in Indonesia.
• All tax obligations must be finalized.
• Business licenses and identification numbers are revoked.
• The parent company must cease all in-country operations under the KPPA name.

What Are Your Options Post-Closure?

For foreign companies intending to remain active in Indonesia, there are several strategic options beyond a representative office:

1. Establish a PT PMA (Foreign-Owned Company)

This is the most frequently chosen path for foreign companies seeking to conduct full-scale business activities in Indonesia.

Advantages:

• Full legal and commercial authority.
• Revenue generation and hiring capabilities.
• 100% foreign ownership in most open sectors.

Considerations:

• Minimum IDR 10 billion in investment (USD 1 million).
• Requires capital deposit and various permits.

Also read: How to Transition from a Representative Office to a PT PMA in Indonesia: InvestinAsia’s Guide

→ Learn more about PT PMA registration

2. Form a Joint Venture

Joint ventures allow foreign firms to partner with Indonesian entities, especially in sectors with foreign ownership caps.

Advantages:

• Leverage local market expertise.
• Navigate restricted sectors.

Best for: Industries like film, pharmaceuticals, and logistics where local majority ownership may be mandated.

Also read: 5 Advantages of Joint Ventures for Businesses

3. Set Up a New Business Entity

Sometimes, restructuring the business into a new form—such as a different type of representative office or limited liability company—can be the right move. Indonesia allows different rep office types, such as:

• KP3A (Foreign Trade Office)
• BUJKA (Construction)
• Power Sector Rep Offices

Also read; The Types of Companies and Business Entities in Indonesia

→ Explore company registration options with InvestinAsia

Closing Is a New Beginning

Closing a representative office in Indonesia is often a strategic decision that signals a new phase in a company’s regional growth. It’s not just the end of an administrative phase, but the start of a strategic shift. If your business is ready to go beyond market exploration and into revenue-generating operations, transitioning to a PT PMA is your next logical step.

InvestinAsia provides end-to-end support—from representative office closure to PT PMA registration, license acquisition, and local compliance. With deep regulatory expertise and fast turnaround, we’re your trusted partner in expanding operations in Indonesia.

👉 Transition to a PT PMA with InvestinAsia

FAQs

Which documents are required to officially close a representative office in Indonesia?

You’ll need the head office’s closure statement, NPWP, final reports, and internal appointment letters.

How long does the closure process take?

Initial verification takes up to 3 business days. It may take up to 12 months to fully revoke the NPWP (Tax Identification Number).

Do I need to pay tax after closure?

All pending tax responsibilities must be cleared before the NPWP can be cancelled.

Can a KPPA be extended?

Yes, under Regulation 13, KPPA permits can be extended beyond 5 years if justified by the parent office.

What’s the difference between KPPA and PT PMA?

A KPPA cannot engage in commercial activities, while a PT PMA is a full-fledged company with the right to generate revenue.