Set Up a Subsidiary in Indonesia

Updated on Tuesday 15th May 2018

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Foreign investors interested in starting a business in Indonesia have several options in terms of company structure. The same is available for foreign companies interested in setting up their presence on the local market. Among the preferred options for foreign companies is the subsidiary.

The main type of company used to create a subsidiary in Indonesia is the limited liability company (PT). However, there are several types of Indonesian limited liability companies and the most suitable one for foreign companies is the foreign-owned limited liability company, also referred to as the PT PMA.

Our Indonesian company formation consultants can explain the main differences when setting up a subsidiary as a PT and PT PMA.
 

Requisites for starting a subsidiary in Indonesia

The registration of a subsidiary company in Indonesia falls under the commercial legislation which encompassed several laws. The law covering the registration of a fully foreign-owned subsidiary company is the Foreign Capital Investment Law which provides for the following:
  •          the foreign company must present an investment plan worth 1,2 million USD;
  •          the minimum share capital of the subsidiary is 300,000 USD which represents 25% of the amount assigned for the investment;
  •          the subsidiary must have at least one director who has a Indonesian residence permit;
  •          certain licensing requirements apply for subsidiaries with activities in specific domains, such as the financial one.
Our company registration agents in Indonesia can explain all the requirements related to setting up a subsidiary in this country.

You can also watch our video on how to open a subsidiary in Indonesia:

 

Registering a subsidiary in Indonesia

The Indonesian company registration process of a subsidiary taking the form of a PT PMA must begin with the Capital Investment Coordinating Board once the investment plan is submitted for approval. Once the plan is accepted, the incorporation process of the Indonesian subsidiary will continue with the Companies Registrar. The procedure is completed following the usual business formation process of any other type of company.
Setting up a subsidiary in Indonesia implies registration with the local tax authorities, as the company will be considered a resident taxpayer. However, the government offers many tax incentives and fiscal facilities.
 

Common questions related to opening a subsidiary in Indonesia
 

  1. Is it hard for a foreign company to register a subsidiary in Indonesia?
No, the company registration process is not complicated in Indonesia.
 
  1. What taxes will the Indonesian subsidiary pay?
As a tax resident company, the subsidiary will be subject to the corporate tax of 25%.
 
  1. Do I need a local address for the company in Indonesia?
Yes, the Commercial Code requires the subsidiary to have a local address. For this purpose, we can help you with virtual office services.
 
  1. When do I open the bank account for the subsidiary?
The bank account opening should be completed after the company is registered with the Indonesian authorities.
 
  1. How much does it cost to register a subsidiary in Indonesia?
The company registration process is not costly, however foreign investors must take into consideration the registration fees required by the Trade Register, the notary fees and the share capital requirements. 
 

For information on the advantages of the Indonesian subsidiary company, please contact us. You can also rely on us for assistance with the registration of the chosen business form.
 

 

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