The process of forming, setting up or establishing a legal entity in Indonesia cannot be captured in a few words or just an overview. The Permit House always strives to a personal contact to get a clear picture of the wishes and ideas of the expat when talking about investing in Indonesia.
Which legal entities are possible, and which one is the right one for your plans:
- Representative Office (KPPA)
- Local limited liability company (PT. PMDN)
- International limited liability company (PT. PMA)
- Foundation (Yayasan)
Whether you are an Investor or Director as well or a Chef Representative, all must be sure to get the correct stay permit, in accordance with Indonesian Immigration law.
As getting a basic idea or a first impression about the paperwork involved and the steps to follow when setting up a PMA below a brief overview of:
Establishing a Limited Liability Company in Indonesia
A description of the two possibilities most used by expats, the Indonesian limited liability company with local shareholders called, PT. PMA
- The legal entity is called PT PMA (or Perseroan Terbatas Penanaman Modal Asing)
- Minimum required capital is IDR. 10.00.000.000.-. which must be fully paid-up.
- Paid up capital can be made in cash or other assets. Cars, goods etc.
- At least two shareholders mandatory, who can be foreigners
- Capital brought in by the shareholders, as foreign direct investment.
- A shareholder with a minimum value of IDR.1.000.000.000, – acting as director, can apply for an Investor ITAS. Valid for 2 years. No need for a work permit!
- The company will obtain all the official documents like Deed and Ministerial Approval (SK) OSS account with NIB, SIUP, LOD (letter of domicile), BPJS certificate (Insurance) NPWP, EFIN (online tax registrations) and WLK (workers registration report).
- A foreigner not shareholder can act as director and obtain all permits to stay, work and travel safely and compliant in and out Indonesia (work permit – ITAS – MERP – Civil registrations).
- Costs: USD 3.500, – or IDR. 45.000.000 (all in; notary, government dues and agency fees)
- Time needed to establish: 5 – 6 weeks
Most common Steps and documents needed when setting up a PMA:
- Draft the purpose or goal of the company, make first draft of Articles of Association
- Discuss the availability of funds.
- Discuss the negative list for special requirements regarding the respective lines of businesses for PMA
- Approval of name by Ministry of Justice
- Collect passport, KTP, NPWP, address abroad, email, telephone and CV etc. of all stakeholders (shareholders, commissioners and Directors
- Check addresses and relation to intended company (virtual) address
- Check SPT01 tax returns of last two full years
- Complete the draft of Articles of Association
- Notarial deed of establishment
- Approval of Ministry of Justice regarding the deed (SK Kehakiman)
- Application for investment approval with OSS, the Online Submission System
- Wait for NIB (business license and registration) and NIB letters.
- Tax registration letter, Tax Identification Card (NPWP), Tax registration statement letter
- Online tax account set up (EFIN)
- Online registration with local PTSP
- Online LKPM registration (for PMA)
- Letter of domicile
- BPJS certificate for health insurance
- WLK (Workers registration report)
Possible reporting, tax and insurance obligations after company is established:
- LKPM investment reports (quarterly)
- Annual statements (for tax and other departments depending on kind of business)
- Manpower reports, obligated when foreign workers are used
- BPJS health insurance premium (depending on the class – 3 levels – 4% over salary))
- BPJS employment insurance premium (basic protections about 6% over salary)
- Corporate income tax (25%)
- Value Added Taxes (10 %)
- Withholding tax over salaries (from 5% to 30% over top income)
- Luxury goods sales (10-75% depending on item)
- Land and building taxes (if applicable)
- Local government taxes (dependable where you start up)
(Disclaimer: This completes the general information, based on today’s knowledge and always subject to sudden changes implemented by the respective government agencies. This is only an overview aiming to give a better understanding. It is not meant to be complete and a guaranteed description of the whole process or a legal advice. Each case has its specific sidelines, which are only fully known, once we start the (preparation of the) application)