In Indonesia, limited liability companies can be established by foreigners through a joint venture with Indonesian citizens. According to the Company Law, an LLC can be set up for a minimum share capital of 50 million rupiahs, approximately 3,700 US dollars and must be approved by the Ministry of Justice in the country.
If you want to open an LLC or another type of company in Indonesia, one should consider the Indonesian law, a matter where our team of company formation in Indonesia can offer complete assistance and information.
The general company formation steps for the LLC remain unchanged in 2023, however, foreign investors need to be mindful of the special requirements that are in place for selected industries or business fields. Reaching out to our local team of experts before incorporation is advisable.
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Types of limited liability companies in Indonesia
The Company Law in Indonesia provides for two types of limited liability companies in Indonesia. The first type is dedicated to local investors and it is simply known as the PT. Its main features are:
- it must only have local shareholders and no foreign participation is allowed; not an option for those who are interested in immigration to Indonesia;
- the minimum share capital depends on the size of the company and starts at 50 million RP;
- only PTs deemed as medium-sized entities can apply for work permits for foreign employees;
- the time for the incorporation of a local limited liability company is around 8 weeks.
The other type of limited liability company is the one with foreign direct investment which is known as the PT PMA and has the following characteristics:
- it requires an investment plan and a minimum share capital of USD 7000.000 for any type of business activity;
- the PT PMA can be fully or partially owned by foreign investors; those who wish to know more about immigration to Indonesia upon opening this company can reach out to us;
- at least 25% of the share capital must be deposited upon the registration of the PT PMA;
- there are no restrictions related to the number of business and work visas released for this type of company;
- the company registration process for this type of company takes around 10 weeks to complete.
Our local agents can assist foreign enterprisers with the registration of a PT PMA in Indonesia. You can also count on us for accounting services in Indonesia.
Steps in opening an LLC in Indonesia in 2023
If an LLC is established through a joint venture in Indonesia, the foreign shareholder must settle an agreement with an Indonesian partner. One should know that all the incorporation documents must be translated into the Indonesian language. These are going to be issued by the Ministry of Law and Human Rights. Please consider that the following requirements must be fulfilled when registering an LLC:
• prepare the Articles of Association by drafting and notarizing them;
• provide information about the owners of the company (name, address, and nationality);
• appoint the board of director, where at least one should be from Indonesia;
• name a commissioner for the company, regardless of the nationality;
• notarize the owners’ signatures and submit them with the Companies Registrar;
• pay the registration fee and obtain the receipt which will be appended to the incorporation documents;
• register for VAT and other tax purposes and obtain the business registration number;
• provide all the notarized documents with the Ministry of Law and Human Rights.
Once the above-mentioned requirements are fulfilled, an LLC in Indonesia must register for employment purposes with the Ministry of Manpower and then apply for special licenses and permits, in order to legally start the activities.
We remind that our specialists in company incorporation in Indonesia can help foreigners understand the conditions of setting an LLC in Indonesia.
You can also watch our video on how to open a limited liability company in Indonesia:
The responsibilities of an LLC commissioner
The appointed commissioner of an LLC in Indonesia can be non-resident, must supervise the company, needs to analyze the annual report of activities in the firm and approve the budget plan issued by the board of managers. We mention that naming a commissioner for your LLC in Indonesia is a mandatory request.
The experts at our law firm in Indonesia can give you more details on the legal responsibilities.
FAQ on establishing a foreign-owned LLC in Indonesia
1. How long does it take to open a PT PMA in Indonesia?
It can take a few weeks to establish a foreign-owned LLC in Indonesia. The maximum period is around 10 weeks.
2. Does a PT PMA need a local director?
Yes, just like in the case of the local LLC, the foreign-owned company also needs at least one resident director. This does not mean that the founder cannot immigrate to Indonesia if he wishes to do so.
If this is a suitable option, our immigration lawyers in Indonesia can give you details about the process.
3. Are nominee director and shareholder services available in Indonesia?
Yes, these services are available for foreign investors interested in opening any type of company in Indonesia.
Our team can give you more information about this type of service and its advantages in your case.
4. What is the corporate tax in Indonesia?
Companies in Indonesia are imposed with corporate tax at a 22% rate.
Other taxes for companies should also be taken into account when opening this business form. The value-added tax has a standard value of 11% in Indonesia, and a reduced rate of 0% applies in some cases. Moreover, the company (in its role as an employer) will need to pay social security contributions that can have varying percentages.
5. How much does it cost to open an LLC in Indonesia?
The costs of an Indonesian LLC are influenced on the necessary business license fees and on the services included in the company formation package. This is why we offer personalized services.
If you want more details about how to register a limited liability company as a foreigner in Indonesia in 2023, please contact our Indonesian team of local company formation consultants.
You can also reach out to our immigration lawyers in Indonesia if you wish to know more about the temporary residence permit.