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Company Registration in Indonesia

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An Overview of Company Registration in Indonesia

With an annual growth rate of 6%, Indonesia is among the world's fastest growing countries. Between the Pacific and Indian oceans is where it is situated. It has the largest domestic marketplaces in Asia, after China and India. According to World Bank reports, Indonesia's ranking in the "Ease of doing business" index for 2020 is 73rd out of 190 countries. Indonesia is a member of the G20 and the fourth-largest country in the world by population. Because of this, entrepreneurs find Indonesia to be a desirable place to start their businesses. Additionally, the services industry in Indonesia generates more than one-third of the nation's GDP. In particular, tourism is now a substantial source of income.

Company Registration in Indonesia

An Overview of Company Registration in Indonesia

Benefits of Starting a Business in Indonesia

One may start a business in Indonesia for various reasons such as:

Trade Agreement: Low or no tax trade is possible between Indonesia and the nations member to ASEAN as Indonesia is a part of it. Companies who want to expand into other Southeast Asian nations might take advantage of cheap taxes by establishing a corporation in Indonesia. You may already reach a population of over 667.3 million people by engaging in trade with ASEAN member nations. Australia and New Zealand, China, India, Japan, and South Korea are all trading partners for Indonesia through ASEAN.

Tax Benefits: The Indonesian government has reduced the corporate income tax (CIT) rate from 25% to 22%. There are now 71 double taxation treaties between Indonesia and other countries.

Special Economic Zone: Numerous SEZs have been established in Indonesia. These Special Economic Zones (SEZs) provide a range of benefits to business owners, such as tax exemptions, different kinds of subsidies, and advantages for manufacturing. Tax benefits would also be offered, such as reduced corporate income taxes and VAT exclusions.

Cheap Labor Cost: Given that over 40% of its massive population is working age, Indonesia has a sizable labor force. The country's labor costs are reasonable when compared to other countries.

Benefits of starting a Business in Indonesia

Types of Companies for Company Registration in Indonesia

There are following forms of company structure offered by Irish Laws when it comes to company registration in its land:

Types of companies for Company Registration in Indonesia

1. Perseroan Terbatas: An organization with limited liability is a Perseroan Terbatas (PT). A PT is a legally recognized organization with shares as its capital because the shareholder's obligations are restricted to the amount of unpaid shares in the company's capital, the owner's personal assets are safeguarded in the event that the business experiences financial difficulties. It is not necessary to dissolve the corporation in order to sell shares or make changes to ownership. They are further divided into two types, Local PT Company and Foreign Owned PTMA Company

2. Firm [FA]: A Firma (FA), which is a type of privately held company, can be founded by two or more Indonesian citizens. Due to FA's lack of legal separation from its owners, neither the company's nor the owners' personal assets are protected, and in the event that the business incurs debt, the partners' personal assets will be used to settle the balance.

3. Commanditaire Vennootschap (CV): An entity with limited liability is a Commanditaire Vennootschap (CV). Active partners provide funds and oversee the business, whereas quiet partners just contribute capital. There are two categories of partners. A CV is one of the most straightforward entities to establish, and there is no minimum capital needed. A CV does not, however, shield the partners' private assets from other legal entities.

4. Sole Proprietorship [UD]: Single-person businesses, or Usaha Dagang is the most basic type of corporation in Indonesia because it just needs one person to manage the enterprise. The owner and single proprietorship are equivalent legal entities. To open a UD, you would require a business license, a residence letter, an employee id number, and the name of the company.

5. Representative Office: For international businesses looking to investigate the Indonesian market, setting up a representative office in Indonesia makes sense. The representative office is limited to representing the overseas parent company's purchasing or selling agents, carrying out market research, and organizing promotional events. This company's license is set to expire in two years, and in order to continue doing business in Indonesia, it must be renewed. In Indonesia, the office cannot turn a profit; instead, the foreign parent firm handles all business dealings. Unlike other foreign-owned businesses in Indonesia, there is no minimum capital requirement. Employers from abroad are also permitted to work in representative offices.

6. Subsidiary Company: In Indonesia, subsidiaries are incorporated as limited liability companies; if the parent firm is based outside, a foreign-owned company (PT PMA) would be the most suitable structure. A subsidiary business is a distinct legal entity. Entrepreneurs create a subsidiary firm in order to enter the Indonesian market. In addition, it is regarded as a tax resident and will pay 25% corporate tax.

Documents to carry for registration process

You must have following documents if you are applying for the company registration in Indonesia:

1. Shareholder’s details [ list of their names, identity proof, documents stating their financial health, affidavit]

2. Director’’s details [ list of their names, identity proof, documents stating their financial health, affidavit]

3. Directors’ and shareholders’ passports [if foreign Nationals]

4. Acceptance copy from Ministry of law and Human Rights

5. Financial Documents of company showcasing financial health, and capital deposition

6. Memorandum of Association and Article of Association [if applicable]

7. Domicile Letter

8. Company Registered address along with proof [lease agreement, utility bills, etc]

Documents to carry for registration process

Note: Make sure that all the documents related to the company are notarized by the respective authority.

Company Registration Process in Indonesia

To register your company in Indonesia, you must follow the given step by step process:

Step 1. Choose the business name:

The Ministry of Law and Human Rights in Indonesia mandates that a corporation's name contain three separate words or more. After a name has been chosen, it needs to be reserved with the appropriate authorities.

Step 2. Documentation:

Next step is to prepare all the documents such as articles of association, memorandum of association, list of shareholders directors, members, partners, etc, for the filing of application. The articles of organization must be drafted in front of a notary public and signed by the stockholders following the reservation of the business name.

Step 3. Application Filing:

Once all the documents are prepared, file the application with the Ministry of Law and Human Rights. Once filed, After the article of association is approved, the Ministry will issue a document of incorporation, which is official proof that the government has accepted your company as a genuine enterprise.

Step 4. Domicile Letter:

If a corporation is located outside of the Jakarta region, it is necessary to obtain a letter of domicile from the local government office. Once you have obtained the establishment deed, you may use it for further compliance fulfillment.

Step 5. TAX Registration:

In order to open a business bank account, fulfill tax obligations, and get extra permissions in Indonesia, you need to apply for a taxpayer registration number (NPWP) from the relevant tax body.

Step 6. Business Identification Number [BIN]:

In order to apply for operational, commercial, and business permits, a company must provide its 13-digit business identification number (NIB), which serves as its identity. The Online Single Submission (OSS) system is the means by which the business identity number can be obtained.

Step 7. Bank Account & Licenses:

Lastly, you must have to open a bank account and then deposit your paid up capital in that account. Depending on the type of firm and its operations, different business license requirements apply. Depending on the kind of business you are doing, you have to file licensing applications before you can start operations.

Types of taxes applicable in Indonesia

Following are certain types of taxes applicable on businesses operating in the Indonesia:

Types of taxes applicable in Ireland

Corporate Income Tax: Ordinary corporate income tax is applied at a rate of 22% to both domestic and foreign incomes when a corporation earns more than IDR 50 billion yearly. Reduced revenue businesses pay less in taxes. If public companies achieve certain standards, such as a minimum listing criteria of 40%, they can receive a tax discount of 3% off the ordinary rate, making their overall tax rate 19%.

Value Added Tax: Government regulations can cause the VAT rate in Indonesia to fluctuate between 5% and 15%, though the ordinary rate is typically 11%. The import of commodities is subject to an 11% VAT, whilst the export of goods is free from it.

Social Security Contributions: Ensuring that employees are enrolled in the Social Security program is the responsibility of the employers. The percentage of normal earnings that is used to calculate employer premium contributions might vary from 0.24% to 4%.

Regional Taxes: Numerous local taxes and fines may fall under the purview of a corporate taxpayer. The maximum rates range from 0.2% to 75% of the various reference values that the municipal governments in question have selected.

Why Choose RegisterKaro for Company Registration in Indonesia?

RegisterKaro has been one stop solution for Indonesia Company Registration for the varied ranges of benefits such as:

Pool of Experts: RegisterKaro holds a large pool of experts from all over the world. Our team of experts makes sure that your work is taken care of in the most effective manner possible.

Cost-effective: RegisterKaro Indonesia Company Registration Related services are of premium quality at the most efficient rate, which suits the client's pocket, making sure that quality service is not the only thing the client gains on our platform.

Client-oriented approach: Our team of experts is well trained and equipped with a client-oriented approach, keeping in mind that the process must be client-centric, focusing on meeting all the requirements of their business and, therefore, satisfying their needs.

Process Alteration: For the fact that we focus on a Client-centric approach, we keep our process structurization open for the client to alter it as per their need, requirements, and vision. For us, obtaining the best results is the focus, along with the Client satisfaction.

Trusted partner of 10000+ Clients: RegisterKaro has earned the trust of more than 10000+ clients who have availed our services. Their trust in us from a term in continuity is proof of our services backed by quality and assurance.

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FAQs

How much does it cost to register a company in Indonesia?

The incorporation of a PT firm in Indonesia may cost about IDR 17,000,000. On the other hand, PT PMA firm incorporation could cost up to IDR 30,000,000.

Can foreigners set up a company in Indonesia?

Yes, foreigners can register a company in Indonesia. However, based on the nature of the business and the nationality of the foreigner, other rules and specifications may apply. It frequently entails forming a partnership with a local organization or a PT PMA (Foreign-Owned Limited Liability Company).

How do I verify a company in Indonesia?

The simplest method is to search for a company name at https://companieshouse.id. If the firm is not present, it is either not yet registered or is undergoing a reorganization.

How much is Indonesian company tax?

For the fiscal year 2023, Indonesia has set a corporate income tax rate of 22%. The Harmonized Tax Law, which has completely redesigned the nation's tax code, governs the system. Indonesia's tax system has been redesigned under Law No. 7/2021, often known as the Harmonized Tax Law (HTL).

Is Indonesia a good country to start a business?

With a middle class that is expanding, a population of over 270 million, and a nominal GDP of over USD 1 trillion, Indonesia is a very alluring place to launch a business because of its sizable, easily accessible, and expanding market.

How long does it take to register a company in Indonesia?

Establishing a PT PMA typically takes One to six months. A PT PMA needs a minimum capital of IDR 110 billion and requires a flat deposit of IDR 10 billion upfront. To establish a foreign owned company (PT PMA), the following paperwork is needed- Approved name of the company.

Can you own a company in Indonesia?

Foreigners are prohibited from opening any company structure that is permitted by Indonesian law. In reality, there are just three company forms that would enable you to operate a business in Indonesia as a foreigner and generate revenue from it.

What is LLC in Indonesia?

The most popular kind of company entity utilized by locals to conduct business in Indonesia is the Indonesian LLC (Perseroan Terbatas). I) At least one director, two native Indonesian shareholders, and one commissioner are necessary for an Indonesian PT where the commissioner may not be a resident of the area.

Why start a business in Indonesia?

With a GDP of US$1319.10 billion in 2022, Indonesia has one of the biggest economies in all of Asia. Numerous economic prospects are made possible by the nation's abundance of natural resources and raw commodities, which include gas, oil, palm oil, and coffee.