Company Incorporation Step by Step: Indonesia
By Celestine Loh, Last updated: 2023-01-18 (originally published on 2020-06-18)
Here we’ll delve into the steps required for registering a company in Indonesia. We include all the procedures, and the estimated timelines for registering a company.
What are the Minimum Setup Requirements to Register a Company in Indonesia?
There are different forms of business entities in Indonesia, listed below are the top 2 common entities in the Indonesian business scene.
Local Company (PT PMDN)
- Local Shareholders – 2
- Local or Foreign Director, must have a Tax ID – 1
- Local Commissioner – 1
Foreign Investment Company (PT PMA)
- Local or Foreign Shareholders – 2
- Local or Foreign Director – 1
- Local of Foreign Commissioner – 1
Besides setting up a PT-company, the third common option is to set up a representative office.
There are many stages and required documents that need to be obtained and approved in order for a business entity to be set up in Indonesia. The estimated process to complete registration is roughly 2-3 months and costs around IDR 2,000,000.
A new online system, Online Single Submission (OSS), has been set up and monitored by the Coordinating Ministry for Economic Affairs (Kemenko). The OSS will facilitate the online procession of licenses that are required for business registration.
Step 1: Obtain a Company Name
The proposed company name must be obtained and cleared with a notary (authorised personnel) through a computerised processing system. The notary must also pay a fee of IDR 200,000 at an authorised bank in the process. Once the company name is approved, the notary will obtain clearance as well as a payment receipt with a unique code. The process would approximately take 1 working day.
The unique code will be the key to obtaining and reserving the company name for a maximum of 60 days.
The company name must not:
- Have been lawfully used by/ similar to any other company
- Be identical or similar to any name of a state, government, or international agency without official approval
- Fail to conform to the purposes/ objectives/ activities of the company
- Consists of a set of numbers, letters or figures that do not form any words
The Ministry of Law has to approve the proposed company as well and it takes 1 working day for the approval.
Step 2: Deed of Establishment
The deed of establishment has to be approved by the Ministry of Law and Human Rights. The application for approval of establishment must be filled up and submitted electronically along with the certificate of the bank account and an official copy of the bank transfer advice.
If it is approved, the Ministry of Law will issue the legalisation on the establishment of the company as well as announce the establishment of the company in the Supplement State Gazette within the following 14 days.
The process of application takes an estimated 3 working days.
Step 3: Application for the Certificate of Company Domicile
All Indonesian limited liability companies are required to apply for a Certificate of Company Domicile. This certificate will be issued by either the local district office or the building management company.
The application will take approximately 3 working days to be processed and the certificate will be issued. This certificate is important for the application of other documents.
Step 4: Obtain a Tax Registration Number (NPWP)
A company is required to be in possession of a valid tax ID for financial purposes and to partake in economic activities.
In order to apply for the NPWP, the company must submit the deed of establishment, identity card of one active company director and a statement letter to confirm the place of business of the company.
The application process takes roughly 2-3 working days before the NPWP is issued.
Step 5: Obtain the Business Identification Number (NIB)
This unique company profile number serves as an identification for the company for official and formal application for other permits or licenses.
Step 6: Apply for other relevant documents
Depending on the nature of the company, there might be additional operational licenses or permits required in order to officially commence business operations. It is advisable to research the different types of requirements for your business activities and to be prepared with the previously mentioned identification numbers for a smoother application process.
All companies are required to meet the accounting standards as stated by the DSAK-IAI (Dewan Standar Akuntansi Keuangan-Ikatan Akuntan Indonesia). Accounting records must be filed every fiscal year (1st January – 31st December).
Corporate Tax Requirements
The amount payable in tax is dependent on the net income that a company obtains within a fiscal year. For big companies it is around 20% while small enterprises are given a 50% tax discount rate. Additionally, there is a flat 25% tax rate on corporate income.
Annual General Meeting
Companies are usually required to hold their Annual General Meeting at least 6 months after the end of their financial year.
This article does not constitute legal advice.
The opinions expressed in the column above represent the author’s own.