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Company Registration in Indonesia: A Complete 2024 Guide

Company registration in Indonesia

Embarking on the journey of company registration in Indonesia is a crucial step for entrepreneurs aiming to expand their business in Southeast Asia’s burgeoning market. Navigating through the process, from understanding the latest requirements at the company registration office to obtaining a registration certificate, is essential for establishing a legitimate business presence. This crucial inception phase not only lays the groundwork for your venture but also impacts your business’s operational capabilities and legal recognition.

In this comprehensive guide, we will delve into the nuances of various legal entities and provide a step-by-step walkthrough of the registration process, ensuring you are well-equipped with the knowledge to secure your business registration effectively. Our discussion will extend to key requirements needed for a successful registration of a company and the post-registration formalities to adhere to, ensuring a smooth transition into Indonesia’s dynamic market environment. Through this exploration, our aim is to impart clarity and ease the complexity associated with establishing a corporate entity in Indonesia.

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Understanding the Types of Legal Entities in Indonesia

In Indonesia, entrepreneurs can choose from several legal entities, each with specific characteristics and regulations. We will explore the primary types: PT (Local Company), PT PMA (Foreign-Owned Company), Representative Office (KPPA), and Joint Ventures and Partnerships.

PT (Local Company)

A Perseroan Terbatas (PT) is a locally owned limited liability company. This entity is ideal for Indonesian nationals as legislation requires that all shareholders be Indonesian citizens. PTs are favored for their flexibility and protection of personal assets against company liabilities.

PT PMA (Foreign-Owned Company)

The PT PMA allows foreign investors to own company shares, operate businesses, and sponsor foreign employees in Indonesia. It is subject to the Negative Investment List, which dictates the sectors open to foreign investment and those that are restricted.

Representative Office (KPPA)

A KPPA acts as a liaison for its parent company, handling market research and other non-commercial activities within Indonesia. It cannot engage in profit-making activities but is useful for foreign companies assessing market conditions or establishing a presence before launching a PT PMA.

Joint Ventures and Partnerships

These arrangements allow foreign and local companies to collaborate, sharing resources and risks. Often used to navigate sectors with restrictions on foreign ownership, joint ventures require careful planning and flexible agreements to adapt to Indonesia’s dynamic market conditions.

Step-by-Step Guide to Registering a Company

1. Get the Deed of Establishment

Deed of EstablishmentStart by choosing a legal company name, which must consist of at least three different words as per Indonesian law. Engage a notary to draft your Articles of Association, detailing your company’s name, location, capital, and business activities.Both you and your shareholders must sign the Deed of Establishment in the presence of a notary, who will then submit it for approval by the Indonesian Ministry of Justice and Human Rights.

2. Acquire a Company Tax Number (NPWP)

NPWP Badan UsahaFollowing the approval of your Deed of Establishment, apply for a company tax number at your local office. This NPWP is essential for tax purposes and will be sent to your company’s address.In Jakarta, a domicile letter is no longer required with the new law passed in May 2019.

3. Obtain a Business Registration Number (NIB)

Contoh NIBWith the Online Single Submission (OSS) system, you can easily obtain your NIB, which also serves as your Importer Identification Number. This process simplifies the administrative procedures, allowing you to also register for health and social security programs and participate in business tenders in Indonesia.

Key Requirements for Company Registration

To register a company in Indonesia, several key requirements must be met:

1. Minimum Capital Requirements

For a PT PMA, the minimum authorized capital is IDR 10 billion, with at least 25% paid-up. This capital must be verified through a Capital Statement Letter or deposited directly into the company’s bank account.

2. Shareholders and Directors

A PT must have at least two shareholders and one director, while a PT PMA can be established with just one shareholder under the new Job Creation Law. Directors and commissioners must meet specific legal criteria, including not having been responsible for a bankruptcy or convicted of financial crimes in the last five years.

3. Company Name Restrictions

The company name must be unique and adhere to Indonesian regulations, containing at least three words and not including numbers or symbols that don’t form words. It should not mimic the names of government bodies or other registered companies without approval.

4. Articles of Association

The Articles of Association must outline the company’s objectives, capital details, and the roles and procedures for the Board of Directors and shareholders’ meetings. Amendments to the Articles require approval from a General Meeting of Shareholders and, in some cases, the Minister of Law and Human Rights.

Post-Registration Formalities

1. Obtaining Additional Licenses

Once your company is registered, securing additional licenses is crucial for legal operations. Depending on your industry, you might need specific permits like the industrial business license for manufacturing or a construction business license. Engage directly with the Ministry of Investment for sectors not covered by the Online Single Submission (OSS) system.

2. Tax Reporting and Compliance

We must adhere to Indonesia’s tax regulations by ensuring timely tax reporting and compliance. This involves monthly or annual tax payments and filings, which can be done electronically through designated banks or the Directorate General of Taxes. Late filings or payments incur penalties, emphasizing the importance of meticulous financial management.

3. Maintaining Company Records

It is mandatory to maintain accurate company records, including financial documents like the annual balance sheet and profit and loss statements. These records must be retained for ten years, ensuring they are available for audit purposes or legal needs. Proper documentation supports not only regulatory compliance but also strategic business planning.

Conclusion

Through the exploration of Indonesia’s company registration process, it becomes evident that setting up a business in this vibrant market requires careful planning and adherence to legal requirements. From choosing the right legal entity to completing post-registration formalities, entrepreneurs are equipped with a roadmap to navigate the complexities of establishing a corporate presence in Indonesia. This guide has aimed to demystify the steps and requirements, making the journey toward business ownership in Indonesia less daunting.Understanding the regulatory landscape and successfully registering a company opens doors to numerous business opportunities in Southeast Asia’s largest economy. The significance of this process extends beyond legal compliance, serving as the foundation for sustainable business growth and market engagement. Companies are encouraged to maintain diligence in their operations and explore further support for a seamless transition into the Indonesian market. For personalized assistance in navigating these challenges, Associe.co.id is ready to help you establish a new company in Indonesia with a free consultation, ensuring your venture’s successful inception and long-term prosperity.

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