Type of Legal Entities

The process of starting a company in Indonesia can be done by one of these 3 ways. These legal entities are: Local Company, Foreign Direct Investment Company known as a Limited Liability Company, and Representative Office.

A. Local Company (PT)

A foreigner can start doing business in Indonesia as a local citizen or a foreign investor under a local nominee arrangement as this kind of company allows only 100% local ownership. On the contrary to other legal entities, a local company is not a subject to such strict requirements and limits.

Learn how to Register a Local PT.

B. Foreign Owned Company (PT PMA)

Foreign-owned limited liability company is a legal entity that can be fully owned by foreigners. However, the maximum foreign ownership is determined by the business sector and business activities. The restrictions are listed in a regulation called the Indonesian Negative Investment List.

Learn how to Register a PT PMA.

C. Representative Office

Commonly considered as a branch of parent company overseas, it can be your first step to enter the Indonesian market. The purpose of this legal entity is marketing activity, preparing the establishment of PT PMA, or conducting market research. No direct selling or generating revenues is allowed.

Learn how to Register a Representative Office.





A Comparison table of company types in Indonesia

Foreign Limited Liability Company (PT PMA) Local Company (PT) Representative Office Activity Any business activities which are not banned by Negative Investment List. Required to invest with minimum IDR 10 billion after obtaining the Capital Investment Registration or Business License, in the first 5 years. This amount is applied to one business line and will be multiplied in accordance with how many business lines needed. Allowed to choose a maximum 3 business category without any investment plan required after obtaining all the licenses required. All business category is open. Limited to the preparation of PT PMA establishment, market research, promotion, etc. Not allowed to sign any contract, issue invoice, receive payment, or even apply for any other license, such as an import license. Need to have the exact same name as the parent company. Investment Plan Min. IDR 10 billion (USD 800.000) for each business activity – – Stakeholder Min. 2 shareholders, 1 director, and 1 commissioner All of the stakeholders can be a foreigner Local representative as the director

and/or the commissioner Min. 2 shareholders, 1 director, and 1 commissioner All of the stakeholders shall be local In the event there is no local shareholder,

director or commissioner. CEKINDO is able to provide Local Nominee Services as Shareholder (corporate or individual), Director (individual) and Commissioner (individual) 1 Chief of Representative Office Can be local or foreigner, except for Construction RO which shall have local Chief Authorized Capital Minimum IDR 10 billion (USD 800 000) as the paid-up capital injected into the company’s bank account once the company is well established Currently there is no minimum authorized capital in Local PT. To determine the size of the company the paid-up capital shall be 25% of authorized capital as follows: Small: between IDR 51 – 500 million; Medium: between IDR 500 – 10 million; Large: above IDR 10 billion No capital required Additional Requirement For a business line that shall apply for Investment Capital Registration, it is mandatory to fulfill investment plan before getting Business License and running a business. For the business line that directly apply for one-year Business License, it is allowed to start running the business or apply any further license required while realizing the investment plan. For foreigner: nominee stakeholders and its nominee agreements – Tax Obligations PPh 21 (Employee income tax) Progressive Rate

PPh 25/29 (Corporate income tax) Progressive Rate

PPh 23 (Withholding tax for service provider) 2%

PPh 26 (Withholding tax for abroad services) 20%

PPn (Value added tax) 10%, if tax subject is a registered VAT Payer

PPh article 4, clause 2 (Witholding tax for construction) 10% Same as PT PMA PPh 21 (Employee income tax) Progressive Rate

PPh 23 (Withholding tax for service provider) 2%

PPh 26 (Withholding tax for abroad services) 20%

PPh article 4, clause 2 (Witholding tax for Tax Obligations construction) 10% Mandatory Tax Report PPh 21, PPh 23, PPh 26, PPh 4 ayat 2 (Monthly Report) PPh 25/29 (Corporate income tax) [Annualy] Same as PT PMA PPh 21, PPh 23, PPh 26, PPh 4 ayat 2 (Monthly Report) Negative Investment List Negative Investment List Indonesia – – Documentation Needed Copy Valid Passport minimum 18 month from expiry date Company Legal document if the shareholder is a legal entity. (Plus Director Passport min 18 month from expiry date) Leased Agreement or Deed of sales and purchase. (only if there are plan to buy the office space) Company Address Copy Valid KTP/ Personal ID (Indonesian) & NPWP (Tax Payor ID) Company Legal document if the shareholder is a legal entity (Plus Director Valid ID) Leased Agreement or Deed of sales and purchase (only if there are plan to buy the office space) Company Address LOA (Letter of Appointment from Director of Mother Company) legalized by corresponding embassy Letter of Intent (Legalized by corresponding embassy) Letter of statement (Legalized by corresponding Embassy) Letter of Reference (Issued by Embassy) Copy Valid Passport minimum 18 month from expiry date Company Legal document if the shareholder is a legal entity. (Plus Director Passport min 18 month from expiry date) Leased Agreement or Deed of sales and purchase. (only if there are plan to buy the office space) RO Company Address *Cekindo can help drafting for point 1, 2, 3. Legal Documents Created Akta Notaris (Notarial Deed) Approval from ministry of Law and Human Rights NPWP (Company Tax Payer ID) Domicile Letter NIB Number Same as PT PMA NPWP (Company Tax Payer ID) Domicile Letter NIB Number (Special for trading rep office) Estimated Time (After Supporting Document Received) 1 – 1.5 Month 1 – 1.5 Month 1 – 1.5 Month Company Secretary Not Necessary, but it will be better if there is a company secretary

Contact Us

Cekindo registers several companies every month, and our legal team is ready to answer your questions. Fill in the form below and get the latest information on company registration in Indonesia.

Also, we will be happy to meet you in our offices located in Jakarta, Semarang, and Bali.



Full Name * Phone Number * Company Email * Your Website Inquiry Text * Surname Please leave this field empty.

Frequently Asked Questions Can I set up a locally-owned company as a foreigner? Of course. To do so, you need to engage with a local nominee service provider. Can I expand my business to Indonesia without having to establish a company? Yes, this particularly applies to import and export businesses. Instead of establishing a company, you can use an undername import service, also known as importer of record. How long does it take to do company registration Indonesia? It should take between 1 to 1.5 months. For speedy incorporation, you can choose a shelf company (ready-made company) instead. Can I set up a joint venture company for my business? Yes. A joint venture company can be in the form of PT PMA (foreign company) or PT (local company). Requirements for each establishment are different. What is Business Registration Number in Indonesia? Business Registration Number is proof that a company, regardless of type, is legally registered in Indonesia. A company that does not have a Business Registration Number may have to face dissolution. Can I set up a company in Indonesia without calling a notary or a lawyer? Yes. You can do it with the assistance of a professional consultant who usually has in-depth knowledge of company registration process in Indonesia. Do local and foreign companies pay the same tax? Yes. What is the cost for opening a company in Indonesia? It depends on the company type and area in which you want to open your company. But, the cost starts from USD 1,500 for a local company (PT) in Jakarta area.

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