Establish a Branch in Indonesia

Updated on Tuesday 22nd May 2018

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Unlike other countries which allow foreign companies to create subsidiaries, branch offices and representative offices, Indonesia is slightly different. Foreign companies are allowed to establish subsidiary companies and representative offices in this country. In order to compensate for the lack of an Indonesian branch structure, the government has created another type of company – the foreign-owned limited liability company (PT PMA). This business form can be employed by foreign companies seeking to have a subsidiary or a branch office in Indonesia.

Our company formation agents in Indonesia can offer information on all the structures available for foreign companies interested in doing business in this country.

Laws governing the establishment of fully-owned foreign companies in Indonesia

There are two main laws which provide for the establishment of a structure fully owned by a foreign company, which could cover the creation of a branch office in Indonesia. These laws are:
  • the Capital Investment Law;
  • the Company Act.

While the first law provides for foreign investments made in the country, the share capital required to set up a business in Indonesia and the requirements applied to foreign investors, the second one covers the company registration procedure in this country.

Our company registration consultants in Indonesia can assist with the incorporation of any business form chosen by a foreign company.

How to register a foreign-owned company in Indonesia

If it were acknowledged, the Indonesian branch office would be registered just like a subsidiary company. This would imply the parent company to file its certificate of incorporation and other relevant information about it with the Business Register, as well as an investment plan with the Capital Investment Coordinating Board.

From a taxation point of view, a foreign-owned company can benefit from various incentives granted by the government. Also, Indonesia has several special economic zones in which foreign-owned companies equivalent with branch offices can operate under very advantageous conditions.
The documents required to open a PT PMA in Indonesia are:
  • copies of the incorporation documents of the foreign company setting up the local entity;
  • power of attorney to the person carrying out the company registration process in Indonesia;
  • information about the representative appointed for the Indonesian company;
  • information about the activities which will be undertaken by the Indonesian company.

We invite you to watch our video on the creation of a branch in Indonesia:

Comparison between the branch office and the subsidiary in Indonesia

If it were recognized, the Indonesian branch office would be registered by using the same structure of the subsidiary company. However, there are significant differences between these two types of legal entities, as shown below:
 Branch Office  Subsidiary
 Is dependent on the parent company  Independent business entity
 Its activities is limited to the activities of the parent company       Can carry out other activities than the parent company  
 Is taxed on the income generated in Indonesia  
 Is taxed on the global income

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. You can also contact us if you want to open a company in Indonesia.