Our company formation specialists assist foreign companies interested in opening a branch/ subsidiary in Indonesia.
| Quick Facts | |
|---|---|
| Applicable legislation | Indonesian law |
Best used for | Banks and other financial institutions |
Minimum share capital | No |
| Time frame for the incorporation (approx.) | 30 days |
| Management | Foreign |
| Legal representative required | Local representative appointed for the branch |
| Local bank account | Yes |
| Independence from the parent company | No. It performs the same business activities. |
| Liability of the parent company | Fully liable for its Indonesian branch |
| Corporate tax rate | 22% (an additional 20% branch profits tax is levied in certain cases) |
| Possibility of hiring local staff | Yes |
Table of Contents
What is the branch/ subsidiary in Indonesia?
As per the Indonesian law, foreign entities can open a regular Limited Company with the foreign parent company as a shareholder of the new local entity. This type of structure is called a branch or subsidiary.
What are the main requirements for starting a branch/ subsidiary in Indonesia?
Investors should keep the following in mind:
- The foreign company’s establishment document is required as part of the document list when opening a branch/ subsidiary in Indonesia;
- A local director is required (who also has a tax ID in Indonesia);
- The newly incorporated business form will be subject to full compliance under law (for tax and reporting, accounting, and other obligations).
How long does it take to open a subsidiary/ branch in Indonesia?
In most cases, it can take one week to complete the procedure.
Please keep in mind that the actual process may be lengthier, and it depends on the company’s founder(s) ability to provide all the required documents, as indicated by the local authorities.
We invite you to watch our video on the creation of a branch/ subsidiary in Indonesia:
Do I need a local address for the branch/ subsidiary in Indonesia?
Yes, the Commercial Code requires the subsidiary to have a local address.
For this purpose, our team can help you with virtual office services or co-shared office packages.
Must I travel to Indonesia to open a branch/ subsidiary here?
Not necessarily. The branch/ subsidiary incorporation process, for a locally registered company, can be completed with the help of our agents.
You do not need to be present in Indonesia when setting up a legal entity as per one of our company formation packages.
A power of attorney is, however, required, so that our agents can handle the branch or the subsidiary incorporation process on your company’s behalf.
How much does it cost to open a branch/ subsidiary in Indonesia?
An estimated cost for corporate setup is presented below:
- Initial incorporation costs can have a value of USD2,100. These include: the company registration documents, applying for and obtaining the tax number, setting up the company account, and, if requested, the virtual office;
- The bank account setup costs are calculated separately and can include a fee of USD255 per account. Please keep in mind that it is mandatory to open a bank account for a branch/ subsidiary in Indonesia;
- Additional costs, as offered by our team, can refer to nominee director solutions, annual tax and compliance assistance, and others.
In addition to the costs briefly listed above, investors should also consider:
- The costs for hiring an accountant in Indonesia. More information on this can be provided upon request;
- Costs related to recruitment and talent hiring, as the branch/ subsidiary will have employees;
- Overhead costs, which may refer to renting as opposed to using a virtual office solution, depending on the industry in which the branch/ subsidiary operates.
How is the branch or the subsidiary taxed in Indonesia?
The following rates and requirements apply for corporate taxation in Indonesia:
- 22% corporate income tax rate;
- In some cases, the Indonesian branches of a foreign bank can be subject to different tax requirements;
- The standard value-added tax is 12%, and some types of goods and services are zero-rated;
- Companies in Indonesia pay social contributions.
Foreign companies interested in doing business in this country can obtain more information on the types of structures available from our Indonesian company formation advisors. Contact us for assistance when you open a branch/subsidiary in Indonesia.