Foreign company registration options in Indonesia.

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Foreign company registration options in Indonesia

This is the ultimate guide to the foreign company registration options in Indonesia.

Foreign company registration options in Indonesia are limited to two types of entities which are the representative office and subsidiary company. Foreign investors who want to enter the Indonesian market may choose to set up one of the two.

Let’s have a more detailed look at the two entities and their requirements.

Representative office

A representative office in Indonesia is suitable for foreign companies that want to explore the Indonesian market.

The representative office can only conduct market research, promotional activities and act as buying or selling agents for the foreign parent company. The license for this company will expire after two years and needs to be renewed in order to carry on business in Indonesia.

The office must not produce any profit in Indonesia, and all commercial transactions must be managed by the foreign parent company. There is no minimum capital required, unlike other foreign-owned companies in Indonesia. Representative offices also allow the employment of both local and foreign employees.

There are three types of representative offices in Indonesia:

  1. Foreign representative office
  2. Foreign construction representative office
  3. Foreign trade representative office

1. Foreign representative office

Activities of foreign representative offices:

  • Role as a supervisor, coordinator and manage the interest of the company in Indonesia or overseas
  • Not conducting activities that earn profits or entering contracts and purchase of goods or services with domestic companies
  • Not participate in other forms of a company that is in Indonesia

Required documents

  • Letter of appointment from the foreign parent company
  • Article of association of the foreign parent company
  • Copy of passport for foreigners or copy of identification card number and tax number for Indonesian citizens who will be appointed as the Head of Representative Office
  • Letter of intent and letter of statement regarding the stay and only work as the Representative Office Executive position without conducting other businesses in Indonesia

Permits/licenses to be obtained

  • Letter of approval issued by the Investment Coordinating Board (Badan Koordinasi Penanaman Modal – BKPM)
  • Business Registration Number issued by OSS
  • Business License issued by OSS
  • Domicile letter issued by the local government
  • Taxpayer registration number from the tax office
  • Company registration certificate from the company registration office

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2. Foreign construction representative office

Activities of foreign construction representative office:

  • Construction service work
  • Handling construction projects that are high risk, high technology or have high costs through joint operation
  • Conducting construction work with the permission of the Office of Foreign Construction Representatives

Required documents

  • Copy of article of association of the foreign parent company
  • Construction services business license from the country of origin
  • Letter of recommendation from the Indonesian Embassy
  • Copy of valid construction service permit of the foreign parent company
  • Letter of appointment regarding the Chief Representative Office by the foreign parent company
  • Record of latest and audited financial statements of the foreign parent company
  • CV of Head of Representative Office
  • Copy of Head of Representative Office’s passport for foreigners or identification card or tax number of Indonesian citizens
  • Letter of domicile from building management or local official

Permits/licenses to be obtained

The construction representative office must obtain a license of foreign construction representative office in order to conduct activities in Indonesia. It is valid for three years and can be renewed.

3. Foreign trade representative office

Activities of foreign trade representative office:

  • Introducing, promoting and improving marketing of products that are produced by foreign companies
  • Providing information or instruction on the usage and import of products to the company or user
  • Conducting market search and supervising the sales of the product regarding the promotion of products in Indonesia
  • Conducting market search concerning the supplying of products from Indonesia
  • Concluding contracts with Indonesian companies on behalf of the principal company

Permits/licenses to be obtained

The trade representative office must have a foreign representative office trade business licence (Surat Izin Usaha Perwakilan Perdagangan (SIUP3A)).

There are four types of SIUP3A:

  1. Temporary SIUP3A
  2. Permanent SIUP3A
  3. Extension SIUP3A
  4. Modification SIUP3A

Required documents

Temporary SIUP3A

  • Application form
  • Letter of intent, letter of appointment, letter of statement and letter of reference must be legalised by the Indonesian Embassy
  • Representative office work plan
  • CV of Head of Representative Office
  • Diploma certificate
  • Copy of passport for foreigner or copy of identification card for Indonesian citizen
  • Application signed by the company management

Permanent SIUP3A

  • Letter of domicile from local sub-district office or statement of office space from building management
  • Approval of appointment of the foreign trading company representative
  • Copy of ITMA
  • Domicile permit from the chief village

Extension SIUP3A

  • Copy of ITMA
  • Statement of the total assistant workers, foreign workers: Indonesian workers = 1:3
  • Copy of company registration certificate
  • Report on the activities of the representative office

Modification SIUP3A

  • Application form
  • Letter of intent, letter of appointment, letter of statement and letter of reference must be legalised by the Indonesian Embassy
  • Representative office work plan
  • CV of Head of Representative Office
  • Diploma certificate
  • Copy of passport for foreigner or copy of identification card for Indonesian citizen
  • Application signed by the company management

Subsidiary company

Subsidiary companies in Indonesia are set up as limited liability companies, and if the parent company is a foreign company, the most appropriate type would be a foreign-owned company (PT PMA).

Subsidiary companies are a separate legal entity. Business owners establish a subsidiary company to gain access to the Indonesian market. It is also considered as a tax resident and will be taxed at a corporate tax rate of 25%.

The minimum requirement for a foreign-owned company is:

  • Two foreign individuals or corporations, or a combination with local shareholders;
  • At least one local director; and
  • One foreign or local commissioner.

Required documents

  • Principle license and business license from BKPM
  • Legalisation of the legal entity status of PT PMA by the Ministry of Law and Human Rights
  • Domicile letter from the local district authority
  • Tax identification number and taxable entrepreneur confirmation from the tax office
  • Company registration certificate from the agency for integrated licensing services
  • Manpower report and company welfare report from the sub-department of the Ministry of Manpower

Conclusion

Once you have selected the foreign company option, feel free to get in touch with Acclime to help set up your desired entity in Indonesia.

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