Q&A about setting up foreign-owned Limited Liability Company in Indonesia

Q&A about setting up foreign-owned Limited Liability Company in Indonesia

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Drafted by Dale Chen 20230706 v1
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Indonesia Foreign-funded Limited Liability Company
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Indonesia – Organizational Structure of Foreign-funded Companies
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What are the types of Foreign-funded Companies in Indonesia?

  1. Foreign-Owned Limited Liability Company (PT PMA): It requires at least one foreign shareholder and allows full foreign ownership in most industries, subject to certain restrictions.
  2. Representative Office (Kantor Perwakilan Perusahaan Asing or KPPA): A representative office serves as a liaison or coordination office for a foreign company in Indonesia. It cannot engage in commercial activities or generate revenue but is permitted to conduct market research, promotional activities, and other non-commercial functions.
  3. Joint Venture (Perusahaan Patungan or PT): A joint venture is a business entity formed by both foreign and Indonesian companies. The ownership structure, profit sharing, and management responsibilities are agreed upon in a joint venture agreement.
  4. Foreign Construction Service Company (BUJKA): This type of company is specifically for foreign construction service providers. It is required for foreign construction companies to engage in construction projects in Indonesia.
  5. Regional Representative Office (Kantor Perwakilan Perusahaan Perdagangan Asing or KP3A): A regional representative office is established by foreign trading companies to oversee their regional business activities in Indonesia. It serves as a hub for coordination, promotion, and market research.
  6. Foreign-Owned Bank Branch (Kantor Cabang Bank Asing or KCBA): This type of entity is applicable to foreign banks wanting to establish a physical presence in Indonesia. It operates as a branch office under the supervision of the Financial Services Authority (OJK).
  7. Foreign-Owned Insurance Company Branch (Kantor Cabang Perusahaan Asuransi Asing or KCPAA): This type of entity is for foreign insurance companies seeking to operate in Indonesia. It functions as a branch office and operates under the authority of the Financial Services Authority (OJK).

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What are the procedures for setting up the Foreign-funded Limited Liability Company in Indonesia?

  1. Investment Approval: Obtain an Investment Approval (Persetujuan Penanaman Modal) from the Indonesia Investment Coordinating Board (BKPM) or relevant government institution. This approval confirms that your proposed investment meets the necessary requirements and is permitted in the intended business sector.
  2. Company Name Verification: Verify and reserve the company name through the Ministry of Law and Human Rights (Kementerian Hukum dan HAM). The name should comply with the regulations and not be similar to existing company names.
  3. Deed of Establishment: Prepare the Deed of Establishment, which includes the company’s articles of association and other required documents. This deed must be notarized by a public notary in Indonesia.
  4. Capital Injection: Inject the required minimum capital into a local bank account in Indonesia. The amount of capital depends on the business sector and the planned activities of your company.
  5. Domicile Letter: Obtain a Domicile Letter (Surat Keterangan Domisili) from the local government where the company will be located. This letter confirms the physical address of the company.
  6. Tax Identification Number (NPWP): Obtain a Tax Identification Number (Nomor Pokok Wajib Pajak or NPWP) from the tax office. This number is required for taxation purposes.
  7. Company Registration: Register the company at the Ministry of Law and Human Rights. This registration process involves submitting all the required documents, including the Deed of Establishment, capital injection proof, domicile letter, and other relevant forms.
  8. Business License: After the company registration, you may need to obtain specific business licenses or permits depending on the industry and nature of your business activities. These licenses can vary based on the sector and may require additional applications and approvals from relevant authorities.

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What are the requirements for holding a position of director, manager/ supervisor, company secretary, etc. in Indonesia’s foreign-funded companies?

  1. Director:
    • Must be at least 18 years old.
    • Must not have a criminal record.
    • Must possess the necessary qualifications and expertise related to the position.
  2. Manager/Supervisor:
    • The specific requirements for managerial and supervisory positions can vary depending on the industry and company policies.
    • Generally, managers and supervisors should have relevant education, skills, and experience in their respective fields.
    • Some industries may have additional requirements, such as professional certifications or licenses.
  3. Company Secretary:
    • The Company Secretary plays a vital role in ensuring legal compliance and proper corporate governance.
    • The Company Secretary should have a good understanding of corporate laws and regulations.
    • There are no specific educational requirements for the Company Secretary, but having a legal or business background is beneficial.

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How long the share capital of a Indonesia Foreign-funded Limited Liability Company must be hold before it can be sold?

In Indonesia, there is no specific duration mandated for holding the share capital of a Foreign-funded Limited Liability Company (PT PMA) before it can be sold.
The decision to sell shares is typically at the discretion of the shareholders and can be carried out at any time after the company is established.

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Is a Resident Shareholders required for incorporation of Foreign-funded Limited Liability Company in Indonesia?

PT PMA requires at least 2 shareholders, can be individuals or corporations, or both.
No, for the incorporation of a Foreign-funded Limited Liability Company (PT PMA) in Indonesia, it is not required to have at least one resident shareholder.

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Is a Resident Director required for incorporation of Foreign-funded Limited Liability Company in Indonesia?

No, for the incorporation of a Foreign-funded Limited Liability Company (PT PMA) in Indonesia, it is not required to have resident director.

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Is there a company secretary required for incorporation of Foreign-funded Limited Liability Company in Indonesia?

No, for the incorporation of a Foreign-funded Limited Liability Company (PT PMA) in Indonesia, it is not required to appoint a company secretary.

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What are the qualifications of a legal representative in Indonesia Foreign-funded Limited Liability?
Can a foreigner act as a legal representative?
If yes, he/she need a place of residence in Indonesia?

  1. Qualifications:
    • Must be at least 18 years old.
    • Must have full legal capacity and not be under guardianship.
    • Must have a good reputation and not have a criminal record.
    • Should possess the necessary qualifications, expertise, and experience related to the position.
  2. Foreigners as Legal Representatives:
    Yes, foreigners can act as legal representatives (Directors/President Directors) of a PT PMA in Indonesia. There is no restriction on foreign nationals serving in this capacity.
  3. Place of Residence in Indonesia:
    It is not mandatory for a foreign legal representative to have a place of residence in Indonesia. However, it is important to note that the legal representative should be physically present in Indonesia to fulfill their responsibilities and obligations as a Director/President Director.

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Is it possible to establish a Indonesia foreign-owned company through an offshore company as holding company?

Yes, it is possible to establish an Indonesia foreign-owned company (PT PMA) through an offshore company acting as a holding company.
This structure is commonly referred to as an “Offshore Holding Company Structure” or “Holding Company Structure.”

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What are the special features of Indonesia wholly foreign-owned limited liability corporation (LLC)?

  1. Foreign Ownership: Unlike other types of companies in Indonesia, a PT PMA allows for 100% foreign ownership. This means that foreign individuals or entities can fully own the company without the need for Indonesian shareholders.
  2. Investment Approval: Before establishing a PT PMA, foreign investors need to obtain investment approval from the Indonesia Investment Coordinating Board (BKPM) or other relevant government institutions. This approval confirms that the proposed investment meets the necessary requirements and is permitted in the intended business sector.
  3. Minimum Capital Requirement: A PT PMA has a minimum capital requirement, which varies depending on the business sector and the planned activities of the company. The capital must be injected into a local bank account in Indonesia before the company registration process.
  4. Sectoral Restrictions: Certain sectors in Indonesia have specific regulations and restrictions on foreign ownership. These sectors include, but are not limited to, banking, insurance, broadcasting, and certain natural resource-related industries. Foreign investors may need to meet additional requirements or obtain special licenses to operate in these sectors.
  5. Employment of Foreign Workers: PT PMAs are allowed to employ foreign workers, subject to obtaining the necessary work permits (IMTA) and limited stay permits (KITAS) from the Indonesian immigration authorities.
  6. Special Licenses and Permits: Depending on the nature of the business activities, PT PMAs may require specific licenses or permits to operate legally in Indonesia. These licenses can vary based on the sector and may require additional applications and approvals from relevant authorities.

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Indonesia Foreign investment: permitted industries, restricted industries (licensed industries) and prohibited industries.
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Are Indonesia foreign-investment industries and products be listed in a positive or negative list?
Or are there different approaches for foreign investment from different countries?

Indonesia follows a “Positive List” approach for foreign investment.
The Positive List, officially known as the “Indonesia Investment Positive List” (Daftar Positif Investasi), identifies the sectors and industries in which foreign investment is restricted or subject to certain conditions.
This list was issued to replace the negative investment list.
The Positive List categorizes business sectors into three categories:

  1. Priority business fields are business fields that meet the criteria of being a national strategic program, capital intensive, labor intensive, high technology, pioneer industry, export orientation, and/or orientation in research, development, and innovation activities. Investors investing in priority business sectors will be provided with ease in obtaining business permits, providing supporting infrastructure, guaranteeing the availability of energy, guaranteeing the availability of raw materials, immigration, and employment. Investors in priority business sectors will also be given fiscal incentives in the form of reductions in corporate income tax (tax holiday) and investment allowances, and customs incentives in the form of import duty exemption on the import of machinery as well as goods and materials for industrial construction or expansion.
  2. The allocated business fields or partnerships with cooperatives and MSMEs are business activities that do not use technology or that use simple technology and business activities that have process specificities, are labor-intensive and have a hereditary cultural heritage. Then for business capital in this line of business it is set to be no more than 10 billion rupiah excluding the value of land and buildings.
  3. Business fields with certain requirements, namely business fields that can be cultivated by all investors including cooperatives and MSMEs that meet the requirements including investment for domestic investors; investment with restrictions on foreign capital ownership; or investment requirements with special permits.
    Indonesia generally applies the same regulations and requirements for foreign investors, regardless of their country of origin.
    However, there may be specific regulations or agreements in place that provide certain benefits or preferences for investors from certain countries, such as bilateral investment treaties or free trade agreements.

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In the positive list, what are the industries that foreign investment is allowed to invest in, which are the industries that are restricted for foreign investment (licensed industries), and the industries that are prohibited to invest in by foreign investment?
Will the positive list be different for different countries?

  1. Closed Sectors: These are sectors where foreign investment is entirely closed or prohibited. Foreign investors are not allowed to engage in these sectors.
  2. Restricted Sectors: These are sectors where foreign investment is allowed, but subject to certain limitations, conditions, or requirements. These restrictions can include maximum foreign ownership limits, partnership requirements with local partners, or other specific conditions.
  3. Open Sectors: These are sectors where foreign investment is allowed without specific restrictions or limitations. Foreign investors are free to invest and operate in these sectors, subject to general regulations and requirements.
    Regarding different approaches for foreign investment from different countries, Indonesia generally applies the same regulations and requirements for foreign investors, regardless of their country of origin.
    However, there may be specific regulations or agreements in place that provide certain benefits or preferences for investors from certain countries, such as bilateral investment treaties or free trade agreements.

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In the negative list, what are the industries that foreign investment is allowed to invest in, the industries that are restricted to foreign investment (licensed industries), and the industries that are not allowed to invest in foreign investment?
Will the negative list be different for different countries?

In Indonesia, the foreign investment regime is based on a “Positive List” approach rather than a “Negative List” approach.

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What are the restriction on foreign investment in Indonesia? For instance, what is the minimum share capital amount?
What are the rules for foreign shareholding ratio? Other?
Are they different for different countries?

  1. Minimum Share Capital: The minimum share capital requirement for a foreign-owned limited liability company (PT PMA) in Indonesia varies depending on the business sector and the intended activities. The amount of minimum capital is determined by the Indonesian government through relevant regulations or sector-specific regulations.
  2. Foreign Shareholding Ratio: The maximum foreign shareholding ratio allowed in a PT PMA depends on the business sector and activities. Some sectors have specific restrictions on foreign ownership, while others allow 100% foreign ownership.
  3. Local Partner Requirements: In some sectors, the Negative List may require foreign investors to have a local partner or establish a joint venture with an Indonesian entity. These requirements may include a minimum Indonesian ownership percentage, partnership agreements, or specific conditions for the involvement of local partners.
  4. Investment Approvals: In some cases, foreign investment in Indonesia requires investment approvals from the Indonesia Investment Coordinating Board (BKPM) or other relevant authorities. The approval process involves assessing the proposed investment against the applicable regulations and criteria.
    Regarding differences for different countries, the general regulations, and requirements for foreign investment in Indonesia apply to all foreign investors, regardless of their country of origin.
    However, certain bilateral or regional agreements may provide specific preferences or benefits for investors from certain countries.
    These agreements can influence investment conditions, market access, and regulations for investors from those specific countries.

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What are the licensed industries in Indonesia?
What is the difference between the industries that allow foreign investment, the industries that restrict foreign investment (licensed industries), and the industries that do not allow foreign investment?

  1. Banking and Finance: Foreign banks and financial institutions are required to obtain specific licenses from the Financial Services Authority (OJK) to operate in Indonesia.
  2. Insurance: Foreign insurance companies are required to establish a joint venture with an Indonesian partner and obtain a license from the OJK to operate in the insurance sector.
  3. Telecommunications: Foreign investment in the telecommunications sector is allowed but subject to certain limitations and conditions, including restrictions on foreign ownership and licensing requirements from the Ministry of Communication and Information Technology (KOMINFO).
  4. Education: Foreign investment in the education sector is allowed but may require partnerships with Indonesian entities, specific licensing, and compliance with educational regulations.
  5. Healthcare and Pharmaceuticals: Foreign investment in healthcare services, hospitals, and pharmaceutical industries may require specific licenses and compliance with regulations from the Ministry of Health.
    The industries that allow foreign investment refers to sectors where foreign investors can freely invest and operate without significant restrictions or specific licensing requirements.
    On the other hand, industries that do not allow foreign investment are sectors where foreign investors are entirely prohibited from engaging in investment activities.
    These sectors may include defense, military-related industries, certain aspects of media, and strategic natural resources.

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Indonesia-Foreign-funded Limited Liability Company document certification.
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What are the relevant investment documents required to establish a Foreign-funded Limited Liability Company in Indonesia?
Are there different documents for different countries?

  1. Deed of Establishment: This document outlines the establishment of the PT PMA and includes essential information such as the company name, business activities, shareholders, and capital structure.
  2. Articles of Association: Also known as the Bylaws, this document contains detailed provisions regarding the company’s internal governance, rights and obligations of shareholders, management structure, and other operational matters.
  3. Investment Approval: Foreign investors need to obtain an investment approval from the Indonesia Investment Coordinating Board (BKPM) or other relevant authority. The approval confirms the eligibility and feasibility of the proposed investment.
  4. Shareholders’ Agreement: This document specifies the rights and responsibilities of the shareholders, including matters related to share transfers, profit distribution, decision-making processes, and dispute resolution.
  5. Capital Injection Statement: This document confirms the transfer of the agreed-upon capital into the company’s bank account in Indonesia.
  6. Tax Registration: The PT PMA must obtain a taxpayer identification number (NPWP) and register for tax purposes with the tax authorities in Indonesia.
  7. Business Licenses and Permits: Depending on the nature of the business activities, the PT PMA may need to obtain specific licenses and permits from relevant government agencies or authorities. These can include sector-specific licenses, operational permits, or environmental permits.
    While the overall process and documents required are generally the same for foreign investors regardless of their country of origin, there might be additional requirements or documents specific to certain countries.
    These could include documents related to bilateral investment treaties, free trade agreements, or other specific agreements between Indonesia and the foreign investor’s country.

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What are the procedures for the certification of documents related to the investment of Foreign-funded Limited Liability Company in Indonesia?
Are there different document authentication procedures for different countries?

  1. Document Preparation: Prepare the necessary investment documents, such as the Deed of Establishment, Articles of Association, investment approval, shareholders’ agreement, and other relevant documents as required by Indonesian regulations.
  2. Notarization: The documents need to be notarized by a qualified notary public in the country where the documents are executed. This ensures the authenticity and legal validity of the documents.
  3. Legalization/Apostille: After notarization, the documents may require legalization or an apostille certification depending on the country of origin. Legalization is a process where the documents are authenticated by the embassy or consulate of the Republic of Indonesia in the country where the documents are executed. The apostille certification is applicable if the country is a party to the Hague Apostille Convention, simplifying the authentication process.
  4. Translation: If the original documents are not in Indonesian, they must be translated into Indonesian by a sworn translator recognized by the Indonesian government.
  5. Submission to Relevant Authorities: Submit the certified and translated documents to the relevant Indonesian authorities, such as the Indonesia Investment Coordinating Board (BKPM) or other related agencies, along with other required forms and applications.
    The document authentication procedures may vary depending on the country of origin.
    Some countries may require additional steps or have specific requirements for document authentication.

R-id-llc-4 Indonesia – Bank Account Opening of Foreign Subsidiaries
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What is the sequence steps of set up a Foreign-funded Limited Liability Company in Indonesia with share capital paid in place and opening a bank account? Which one should come first?

  1. Company Establishment: The first step is to establish the PT PMA by preparing the necessary documents, such as the Deed of Establishment and Articles of Association. This involves specifying the company’s name, business activities, shareholders, and capital structure.
  2. Capital Injection: Once the company is established, the next step is to inject the share capital into the company’s bank account in Indonesia. This requires transferring the agreed-upon capital amount from the shareholders’ personal or designated accounts to the PT PMA’s bank account.
  3. Bank Account Opening: After the capital injection, the PT PMA can proceed with opening a bank account in Indonesia. The company needs to choose a bank and submit the required documents, such as company documents, identification of shareholders and directors, and proof of capital injection.
    While both steps, capital injection and bank account opening, are essential for the establishment of the PT PMA, the sequence may vary depending on the specific circumstances and bank requirements.
    In some cases, it may be necessary to open the bank account first before injecting the capital, while in others, the capital injection may need to be completed before the bank account can be opened.

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What are the usual KYC regulations when opening a bank account with a Foreign-funded Limited Liability Company in Indonesia?

  1. Identification Documents: The bank will require identification documents of the company’s shareholders, directors, and authorized signatories. This typically includes valid passports or national identity cards.
  2. Proof of Company Existence: Documents proving the existence and legal status of the PT PMA, such as the Deed of Establishment, Articles of Association, and investment approval from the relevant authorities.
  3. Proof of Address: The bank may require proof of the company’s registered address, such as utility bills or lease agreements.
  4. Tax Identification Number (NPWP): The PT PMA should have obtained a Tax Identification Number (NPWP) from the Indonesian tax authorities, and this number may need to be provided to the bank.
  5. Business Activities and Source of Funds: The bank may request information regarding the nature of the company’s business activities and the source of funds that will be deposited into the account.
  6. Signatory Authorization: The PT PMA should provide documentation that authorizes specific individuals to act as signatories on behalf of the company.

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Will the bank require an Indonesia local director when opening a bank account for a Indonesia wholly foreign-owned limited liability company (LLC)?

Some banks may require the appointment of a local director as a signatory for the bank account, while others may not have such a requirement.
In Indonesia, there is no specific legal requirement for a local director in the company’s structure.
The banks may require that the Director/President Director of the company or the power of attorney appointed by the Director/President Director to be physically present at the bank for the bank account opening process.

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Will the bank require foreign legal representative have to be physically present for the bank interview, when opening a bank account with a Foreign-funded Limited Liability Company in Indonesia?

The requirement for the foreign legal representative to be physically present for a bank interview when opening a bank account with a Foreign-funded Limited Liability Company (PT PMA) in Indonesia can vary depending on the bank’s policies and procedures.
Some banks may require the physical presence of the legal representative, while others may allow alternative arrangements such as a video conference or the appointment of an authorized representative.

R-id-llc-5 Indonesia – Staff Work Permit, Visa, and Residence
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Can a Foreign-funded Limited Liability Company in Indonesia send expatriates to Indonesia as the Investor’s role?
What are the application requirements, documents and procedures for the work permit, visa, and residence permit?
Are there differences in different countries?

Yes.

  1. Investment Plan and Approval:
    • The PT PMA should have a valid investment plan approved by the Indonesia Investment Coordinating Board (BKPM) or the relevant authorities.
  2. Work Permit (IMTA):
    • The PT PMA needs to apply for a work permit (Izin Mempekerjakan Tenaga Kerja Asing or IMTA) from the Ministry of Manpower.
    • The application should include the expatriate’s personal information, job description, employment contract, and other relevant documents.
  3. Limited Stay Visa (VITAS):
    • Once the work permit is approved, the expatriate can apply for a Limited Stay Visa (Visa Tinggal Terbatas or VITAS) at an Indonesian embassy or consulate abroad.
    • The required documents usually include a valid passport, the approved work permit (IMTA), a sponsor letter from the PT PMA, and other supporting documents.
  4. Stay Permit Card (KITAS/KITAP):
    • Upon arrival in Indonesia with the VITAS, the expatriate must complete the process to obtain a Stay Permit Card (Kartu Izin Tinggal Terbatas or KITAS) or Permanent Stay Permit Card (Kartu Izin Tinggal Tetap or KITAP).
    • The process involves medical check-ups, biometric data collection, and submission of additional documents, such as a lease agreement, proof of address, and sponsorship from the PT PMA.
    • The KITAS is initially valid for one year and can be extended annually, while the KITAP is valid for five years and can be renewed.
    Specific requirements and procedures may vary depending on the expatriate’s country of origin and the latest regulations issued by the Indonesian government.

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Can a Foreign-funded Limited Liability Company in Indonesia send expatriates to Indonesia as the employee role?
What are the application requirements, documents and procedures for the work permit, visa, and residence permit?
Are there differences for different countries?

Yes.

  1. Work Permit (IMTA):
    • The PT PMA needs to apply for a work permit (Izin Mempekerjakan Tenaga Kerja Asing or IMTA) from the Ministry of Manpower.
    • The application should include the expatriate employee’s personal information, job description, employment contract, and other relevant documents.
  2. Limited Stay Visa (VITAS):
    • Once the work permit is approved, the expatriate employee can apply for a Limited Stay Visa (Visa Tinggal Terbatas or VITAS) at an Indonesian embassy or consulate abroad.
    • The required documents usually include a valid passport, the approved work permit (IMTA), a sponsor letter from the PT PMA, and other supporting documents.
  3. Stay Permit Card (KITAS/KITAP):
    • After arriving in Indonesia with the VITAS, the expatriate employee must complete the process to obtain a Stay Permit Card (Kartu Izin Tinggal Terbatas or KITAS) or Permanent Stay Permit Card (Kartu Izin Tinggal Tetap or KITAP).
    • The process involves medical check-ups, biometric data collection, and submission of additional documents, such as a lease agreement, proof of address, and sponsorship from the PT PMA.
    • The KITAS is initially valid for one year and can be extended annually, while the KITAP is valid for five years and can be renewed.
    The specific requirements and procedures may vary depending on the expatriate employees’ countries of origin and the latest regulations issued by the Indonesian government.

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What are the evaluation factors or requirements for a Foreign-funded Limited Liability Company in Indonesia when applying work permit, visa, and residence permit?
What is the relationship with the salary, capital, and turnover of Foreign-funded Limited Liability Company?
Are there differences for different countries?

  1. Minimum Salary: The expatriate employee’s salary must meet or exceed the prevailing minimum wage set by the local government in the area where the company is located. The minimum wage varies in different regions of Indonesia.
  2. Investment Value: The company is required to meet the minimum investment value as specified by the Indonesian government. The exact amount varies depending on the industry sector and location of the business.
  3. Capitalization: The company is required to have a minimum of paid-up capital as stipulated by the prevailing regulations. The amount depends on the business activities and industry sector.
  4. Education and Experience: The expatriate employee must possess the necessary education and experience relevant to the job position. The educational background and work experience will be evaluated to ensure they align with the requirements of the position.
  5. Local Employment Plan: The company is required to submit a plan demonstrating its commitment to local employment and training and development of Indonesian employees.
  6. Skill Transfer: The company is expected to demonstrate how the employment of expatriates will contribute to the transfer of skills, knowledge, and technology to Indonesians.
  7. Tax and Legal Compliance: The company must comply with tax regulations and have a valid taxpayer identification number (NPWP). It should also be in compliance with all relevant Indonesian laws and regulations.
    Specific evaluation factors and requirements may vary depending on the expatriate’s country of origin and the latest regulations issued by the Indonesian government.

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Indonesia- Registered Address and Operating Address of Foreign-funded Limited Liability Company in Indonesia.
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What are the regulations on the registered address during the company registration and future operating address of a Foreign-funded Limited Liability Company in Indonesia?

  1. Registered Address: The registered address is the official address of the company as recorded in its legal documents and official records. It is the address where the company’s legal correspondence and official notifications will be sent. The registered address must be a physical address within Indonesia.
  2. Office Space Requirement: The PT PMA is required to have a physical office space in Indonesia. The office should be suitable for conducting business activities and must comply with local zoning and building regulations.
  3. Commercial Building or Virtual Office: The PT PMA can either rent or own a commercial building to establish its office. Alternatively, it can use a virtual office service that provides a registered address and limited office facilities for administrative purposes.
  4. Confirmation of Office Address: During the company registration process, the PT PMA needs to provide the address of its intended office location. This address will be verified by the relevant authorities.
  5. Change of Address: If the company intends to change its registered or operating address in the future, it must follow the prescribed procedures and notify the relevant authorities. The change of address must be updated in the company’s legal documents and official records.

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What are the specific regulations or requirements of a registered office address for a permitted industry of an LLC in Indonesia?

  1. Physical Address: The registered office address must be a physical address and cannot be a PO Box. It should be a location where the company can conduct its business operations.
  2. Zoning and Permits: The registered office address must comply with local zoning regulations and have the necessary permits and licenses to operate the business activities associated with the permitted industry.
  3. Local Government Requirements: Some local governments may have specific requirements for the registered office address of certain industries. For example, certain industrial sectors may require the company to be located within designated industrial zones or specific areas.
  4. Accessibility and Legitimacy: The registered office address should be easily accessible and demonstrate the legitimacy of the company’s operations. It should be a location where the company can effectively communicate with authorities, clients, and stakeholders.

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Amount of investment, registered capital, and government fees for Foreign-funded Limited Liability Company in Indonesia.
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Are there any regulations on authorized share capital, registered share capital and paid-up share capital of a Foreign-funded Limited Liability Company in Indonesia?
Is there any requirement for minimum funds to be in place within a certain period?

The Indonesian government does not specify a minimum amount for authorized share capital or registered share capital.
Regarding the paid-up share capital, there is a requirement to have a minimum paid-up capital within a certain period.

  1. Conventional PT PMA: For a conventional Foreign-funded Limited Liability Company (PT PMA), the minimum paid-up capital requirement is IDR 10 billion. This requirement applies to most industries and business activities.
  2. Certain Industries: Some specific industries or sectors may have higher minimum paid-up capital requirements. For example, industries such as banking, insurance, financial services, and telecommunications may have higher capital requirements due to their nature and regulatory considerations.
    25% needs to be paid-up capital upfront.

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What is the relation between government fees with authorized share capital, registered share capital, and paid-up share capital of a Foreign-funded Limited Liability Company in Indonesia?

The government fees for establishing a PT PMA are generally based on the authorized share capital. The higher the authorized share capital, the higher the government fees are likely to be.
The government fees for establishing a PT PMA are not directly related to the registered share capital or paid-up share capital.

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Application of Certificate Number for a Foreign-funded Limited Liability Company in Indonesia
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What are the company certificate numbers needed to apply with the relevant legal entities for a foreign-funded Limited Liability Company in Indonesia?

  1. Deed of Establishment (Akta Pendirian): This is a notarized document that serves as the company’s founding document. It contains information about the shareholders, directors, and basic company details. The deed of establishment will be issued a unique registration number by the notary.
  2. Taxpayer Identification Number (Nomor Pokok Wajib Pajak, NPWP): This is a unique tax identification number issued by the Indonesian Tax Office (Direktorat Jenderal Pajak) to individuals or companies for tax purposes. You will need to obtain an NPWP for your PT PMA.
  3. Business Identification Number (Nomor Induk Berusaha, NIB): The NIB is a unique identification number issued by the Investment Coordinating Board (BKPM) to companies operating in Indonesia. It consolidates various licenses and permits required to establish and operate a business in the country.
  4. Company Registration Certificate (Tanda Daftar Perusahaan, TDP): The TDP is a certificate issued by the local government or the local office of the Ministry of Trade. It confirms the registration of your company and provides important details such as the company’s name, address, and business activities.
  5. Company Domicile Letter (Surat Keterangan Domisili Perusahaan, SKDP): The SKDP is a letter issued by the local administrative authority or sub-district office confirming the physical address of your company’s office or place of business.
  6. Company Registration Certificate (Surat Keterangan Terdaftar, SKT): The SKT is a certificate issued by the relevant professional association or licensing authority, depending on your business sector. It confirms that your PT PMA is registered and eligible to operate in a specific industry.

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What are the certificate application for the Foreign-funded Limited Liability Company in Indonesia as a tax entity?

  1. Taxpayer Identification Number (Nomor Pokok Wajib Pajak, NPWP): This is a unique tax identification number issued by the Indonesian Tax Office (Direktorat Jenderal Pajak) to individuals or companies. To obtain an NPWP, you will need to complete the application form, provide required documents such as the company’s deed of establishment, identification documents of shareholders and directors, and other supporting documents as specified by the tax office.
  2. Value Added Tax (VAT) Registration (Pendaftaran Penyetoran Pajak Pertambahan Nilai, PPN): If your PT PMA engages in activities subject to value-added tax, you will need to apply for VAT registration. This involves completing the VAT registration form, providing relevant supporting documents, and submitting the application to the tax office.
  3. Withholding Tax Registration (Pendaftaran Penyetoran Pajak Penghasilan, PPh Pasal 21, 22, 23, 26): If your PT PMA is required to withhold and remit income tax on behalf of employees or certain transactions, you will need to register for withholding tax obligations. The specific sections of withholding tax (PPh Pasal) that apply to your business will depend on the type of income and transactions involved.
  4. Corporate Income Tax Return (SPT Tahunan Pajak Penghasilan Badan): As a tax entity, your PT PMA will be required to file an annual corporate income tax return. This return reports the company’s income, expenses, and calculates the tax liability. You will need to complete the corporate income tax return form (SPT Tahunan PPh Badan) and submit it to the tax office.

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What are the certificate application for Foreign-funded Limited Liability Company in Indonesia in relation to withholding tax on salary and employee benefits?

  1. Taxpayer Identification Number (Nomor Pokok Wajib Pajak, NPWP): As mentioned before, obtaining an NPWP is essential for your PT PMA. It serves as the unique tax identification number for both the company and its employees.
  2. Employer Registration (Pendaftaran Pengusaha/Pengusaha Pemberi Kerja): This is the registration process to become a registered employer. You will need to apply for an employer registration certificate at the local tax office responsible for your company’s jurisdiction.
  3. Employee Registration (Pendaftaran Pegawai/Pekerja): After completing the employer registration, you will need to register your employees with the tax office. This involves providing employee details, such as their full name, NPWP, and salary information.
  4. Monthly Tax Return (SPT Masa PPh Pasal 21/26): This is the monthly tax return for withholding tax on employee salaries (PPh Pasal 21) and benefits (PPh Pasal 26). As an employer, you are responsible for calculating and withholding the correct amount of income tax from your employees’ salaries and remitting it to the tax office. You will need to complete the monthly tax return form (SPT Masa PPh Pasal 21/26) and submit it along with the tax payment to the tax office.
  5. Annual Employee Income Tax Return (SPT Tahunan PPh 21): This is the annual employee income tax return, which reports the total income and taxes withheld for each employee throughout the tax year. It summarizes the individual tax obligations of employees and reconciles the annual withholding tax. You will need to provide the annual employee income tax return form (SPT Tahunan PPh 21) to the tax office.

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What are the other independent certificate numbers or application, or declaration related to the government’s jurisdiction for Foreign-funded Limited Liability Company in Indonesia?

  1. Business License (Izin Usaha): Depending on the nature of your business activities, you may need to obtain specific business licenses or permits from the relevant government agencies or authorities. The requirements for business licenses can vary based on the sector or industry in which your PT PMA operates.
  2. Investment Registration (Pendaftaran Investasi): The Investment Coordinating Board (BKPM) oversees investment-related matters in Indonesia. Depending on the scale and nature of your investment, you may need to register your PT PMA with the BKPM and obtain an investment registration certificate.
  3. Environmental Permit (Izin Lingkungan): If your business activities have an impact on the environment, you may be required to obtain an environmental permit from the Ministry of Environment and Forestry (Kementerian Lingkungan Hidup dan Kehutanan) or the relevant regional environmental agency.
  4. Import License (Izin Impor): If your PT PMA engages in import activities, you may need to obtain an import license from the Ministry of Trade (Kementerian Perdagangan) or the Directorate General of Customs and Excise (Direktorat Jenderal Bea dan Cukai).
  5. Export License (Izin Ekspor): If your PT PMA engages in export activities, you may need to obtain an export license from the Ministry of Trade or the relevant authority.
  6. Labor and Manpower Declaration: PT PMAs are required to comply with labor and manpower regulations, including submitting periodic reports and declarations to the Ministry of Manpower (Kementerian Ketenagakerjaan) or the relevant regional manpower agency.
  7. Intellectual Property Registration: If your business involves intellectual property, such as trademarks or patents, you may need to apply for intellectual property registration with the Directorate General of Intellectual Property (Direktorat Jenderal Kekayaan Intelektual) or the relevant agency.

R-id-llc-8-50
To summarize: Which of the following certificate numbers do Foreign-funded Limited Liability Company in Indonesia need to apply for?
National (federal) company certificate number, provincial (state) company certificate number, national (federal) tax certificate number, provincial (state) tax certificate number, national value-added tax certificate number, provincial (state) value-added tax certificate number, social insurance card number, medical insurance card number, pension certificate number, other funds such as housing fund certificate number, labor union certificate number, import and export certificate number, and franchise industry certificate number.

  1. National (Federal) Company Certificate Number: This refers to the company registration certificate issued at the national level.
  2. National (Federal) Tax Certificate Number: This is the Taxpayer Identification Number (NPWP) issued by the Indonesian Tax Office at the national level.
  3. National Value-Added Tax Certificate Number: This refers to the registration for value-added tax (VAT) at the national level.
  4. Social Insurance Card Number: This is the number associated with the company’s social insurance registration, which covers programs such as health insurance (BPJS Kesehatan) and work accident insurance (BPJS Ketenagakerjaan).
  5. Medical Insurance Card Number: This is the number associated with the company’s medical insurance registration, typically provided by the national health insurance program (BPJS Kesehatan).
  6. Pension Certificate Number: This is the number associated with the company’s participation in the national pension program (BPJS Ketenagakerjaan).
  7. Other Funds: This category includes certificates associated with other funds, such as the housing fund certificate (BPJS Ketenagakerjaan’s housing program) or labor union certificate, if applicable.
  8. Import and Export Certificate Number: If the PT PMA engages in import and export activities, it may require an import and export certificate issued by the Ministry of Trade or relevant authorities.
  9. Franchise Industry Certificate Number: If the PT PMA operates within the franchise industry, it may require a franchise industry certificate.

R-id-llc-9
Incorporation procedures of Indonesia-Foreign-funded Limited Liability Company and key matters
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What are the procedures of setting up a Foreign-funded Limited Liability Company in Indonesia? Documents required? Competent Government unit? Websites?

  1. Investment Plan: Prepare an investment plan outlining the objectives, scope, and projected financials of your PT PMA.
  2. Choose a Business Sector: Determine the business sector and activities in which your PT PMA will operate. Certain sectors may have additional requirements or restrictions.
  3. Obtain Approval from the Indonesian Investment Coordinating Board (BKPM): Submit your investment plan and other required documents to the BKPM for approval. The BKPM is the competent government unit responsible for handling foreign investment in Indonesia.
  4. Deed of Establishment: Engage a notary to draft and notarize the Deed of Establishment (Akta Pendirian), which includes the company’s articles of association, shareholders’ information, and other relevant details.
  5. Capital Injection: Deposit the minimum required capital into a local Indonesian bank account under the PT PMA’s name. The capital amount varies depending on the business sector.
  6. Obtain a Tax Identification Number (NPWP): Apply for a Taxpayer Identification Number (NPWP) at the tax office in your PT PMA’s registered domicile.
  7. Business License: Apply for a business license or permit from the relevant government agency or authority responsible for your specific sector or industry.
  8. Company Registration: Register your PT PMA with the local government office or the Ministry of Trade (if applicable). You will receive a Company Registration Certificate (Tanda Daftar Perusahaan, TDP) upon successful registration.
  9. Other Licenses and Permits: Depending on the nature of your business activities, you may need to obtain additional licenses or permits from relevant government agencies or authorities.
  10. Compliance with Labor and Employment Regulations: Ensure compliance with labor and employment regulations, such as obtaining necessary work permits and registering employees with social security programs.
    Official websites of the BKPM (www.bkpm.go.id) and the Ministry of Trade (www.kemendag.go.id).
    These websites provide comprehensive guidelines, forms, and procedures for establishing a PT PMA in Indonesia.

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What are key consideration matters of when deciding to set up foreign-funded limited liability company in Indonesia?

  1. Investment Climate: Evaluate the overall investment climate in Indonesia, including factors such as political stability, economic growth, legal framework, and government policies related to foreign investment.
  2. Market Potential: Assess the market potential and demand for your products or services in Indonesia. Consider factors such as market size, competition, consumer behavior, and growth prospects.
  3. Regulatory Environment: Understand the regulatory environment in Indonesia, including foreign investment regulations, licensing requirements, and compliance obligations. Be aware of any sector-specific regulations and restrictions that may apply to your business.
  4. Industry Opportunities: Identify industry opportunities and growth sectors in Indonesia that align with your business goals. Consider industries that receive government support, have favorable market conditions, or demonstrate potential for expansion.
  5. Local Partnerships: Determine whether partnering with local individuals or companies can provide advantages such as market knowledge, networks, and regulatory expertise. Local partnerships can also help navigate cultural nuances and establish relationships with stakeholders.
  6. Financial Considerations: Assess the financial viability and feasibility of your business venture in Indonesia. Consider factors such as start-up costs, capital requirements, potential return on investment, and access to financing or investment opportunities.
  7. Human Resources: Evaluate the availability of skilled labor, talent pool, and workforce regulations in Indonesia. Consider the cost and availability of hiring and retaining qualified employees, as well as compliance with labor laws and regulations.
  8. Infrastructure and Logistics: Assess the quality of infrastructure, transportation networks, and logistics capabilities in the areas where you plan to operate. Consider factors such as access to ports, airports, roads, and utilities that are critical for your business operations.
  9. Intellectual Property Protection: Understand the intellectual property rights protection and enforcement mechanisms in Indonesia. Assess the importance of protecting your trademarks, patents, copyrights, or trade secrets, and consider the steps needed to safeguard your intellectual property.
  10. Risk Management: Evaluate potential risks and challenges associated with doing business in Indonesia, including political, legal, operational, and financial risks. Develop risk management strategies to mitigate these risks and ensure business continuity.

Contact Us

Jakarta Evershine BPO Service Limited Corp.
17D, Oriental Kenzo Apartment C, No. 48 Dongzhimen Outer St.,
Dongcheng Dist., Beijing, Indonesia
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Dale Chen, Principal Partner/CPA in Taiwan+China+UK will be accountable to your case.
Email address:dalechen@evershinecpa.com
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