Indonesia is frequently underestimated as the target jurisdiction for running a business. Still, it has rather developed financial market and can open numerous opportunities for businessmen in other fields also. This short overview may help you with considering Indonesia as an option for realization your business objectives.
Forms of Legal and Business Presence
If you intend to establish your business and legal presence in Indonesia, you may do this in the next forms:
- Limited Liability Company (LLC) – a vehicle where the liability of founders (shareholders) is limited to the amount of their funds invested in this company. The minimum equity capital for this entity constitutes IDR 2,5 billion (around 177,000 USD) for LLC with the foreign ownership. This entity can be formed by two shareholders at least.
- Public Limited Liability Company (also may be a Publicly-Listed Company) – a vehicle designated mostly for public offerings of shares for raising capital. The minimum number of shareholders of this entity is 300. If the entity intends to be listed, the number of shareholders should be at least 1,000. The minimum amount of the statutory capital is IDR3 billion (approximately USD 212,000) for both a public limited company and publicly-listed company.
- Representative Office – Indonesian legislation allows establishing a business presence for corporate entities only for conducting promotional and marketing activities. This vehicle may be suitable only if you want to test business opportunities that Indonesia offers. For more substantial transactions, LLC may be required.
- Joint Venture – an agreement between the foreign and local companies that regulate the joint conduction of business operations. This vehicle may be especially suitable if you intend to conduct business in Indonesia.
Establishing partnerships in Indonesia is not allowed for non-residents.
Registration Requirements and Steps
If you consider an option of opening a company in Indonesia, LLC for instance, you may need to pass these preliminary steps:
- Defining your business priorities in Indonesia.
- Selecting your business name and verifying such.
- Collecting information about founders and beneficiary owners.
- Opening a bank account for depositing at least 25% of the company’s chartered capital.
- Drafting and notarizing statutory documents of the prospective entity.
- Submitting documents for the approval of the company’s articles of association to the Ministry of Law and Human Rights.
- Arranging the registered address for a future company – obtaining a certificate of domicile.
- Registration for tax purposes.
- Registration of the company in the Company Registry through the Online Single Submission system. As a result of such submission, the applicant will get a business registration number and a business license for a newly-formed company.
- Registration for social security purposes.
Legal and Regulatory Framework
The legal and regulatory framework of this country may be generally considered as favourable. The registration procedure is quite straightforward and has been simplified. Still, you should keep in mind certain restrictions for doing business by foreigners in certain areas. Indonesia has its local list of such types of activities that is updated from time to time. If you have any specific request, Prifinance specialists may consult you more precisely.
The procedure of establishing and running a company in Indonesia is regulated by the Civil and Commercial Codes, the Company Act. If you intend to form an entity here, you may need to deal with the Ministry of Law and Human Rights, the Ministry of Manpower and Transmigration.
Advantages of the Jurisdiction
If you consider an option of company formation in Indonesia, you may potentially enjoy these benefits the jurisdiction offers:
- One of the largest labour markets in Asia with qualified employees
- Developed financial sectors
- Availability of approximately 12 special economic zones
- Zero exchange control
Opening company in Indonesia may also turn out to be beneficial for your global business because of these tax advantages:
- Corporate income tax (CIT) rate – 22 %
- Personal income tax (PIT) rate – 30 %
- VAT – 10 %
- Capital gains tax rates – (i) corporate – as the basic CIT rate and (ii) individual – as the ordinary PIT rate.
- Withholding tax rates for non-residents – (i) dividends – 20 % (ii) interests – 20 % (iii) royalties – 20 %.
How Prifinance Specialists May Help You
If you think about Indonesia as your target jurisdiction, Prifinance specialists may consult you a more precisely on the peculiarities of the incorporation procedure, requirements for registration documents, conduct this registration, and open a bank account. Our professionals will be also glad to assist you with resolving other matters that may potentially arise. Reach us shortly for more precise discussions.