Representative Office.
A representative office is an office set up by a company located outside of Indonesia (parent company) to take care of its business in Indonesia. A representative office may act as a supervisor, liaison, coordinator, and also as a representative of the parent company’s interests in Indonesia. However, as representative offices are not allowed to generate any income in Indonesia, all commercial transactions must be handled by the parent company.
Also, note that a representative office is not the same as a branch. Currently, Indonesia does not allow foreign companies to open branch offices in Indonesia.
Also, note that a representative office is not the same as a branch. Currently, Indonesia does not allow foreign companies to open branch offices in Indonesia.
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Representative office
Benefits
Benefits
No capital requirement
Foreign-owned companies are required to have a minimum paid up capital of at least IDR 2.5 billion.
Representative offices, on the other hand, do not have any capital. Therefore, the same capital requirements that bound foreign companies do not apply.
For some investors, this also means that they can establish a market presence in Indonesia at very low costs and still do everything by the law.
Representative offices, on the other hand, do not have any capital. Therefore, the same capital requirements that bound foreign companies do not apply.
For some investors, this also means that they can establish a market presence in Indonesia at very low costs and still do everything by the law.
Allowed to open a bank account
As soon as your representative office is established, you can open a bank account which will enable a better and faster way of transactions within Indonesia and between the parent company.
Can handle sales and delivery
A representative office is allowed to represent sales of its own products and services. The limitation is that you need to charge your clients under the name of your parent company.
In many cases, your Indonesian clients will accept it and you can delay opening a PT PMA until you have a strong client portfolio.
In many cases, your Indonesian clients will accept it and you can delay opening a PT PMA until you have a strong client portfolio.
Allowed to hire employees
Another perk of having a representative office in Indonesia is that in addition to having market presence, you can also hire employees, both local and foreign.
Entitled to a limited stay permit (KITAS)
However, note that in order to be able to legally stay and work in Indonesia, all foreign nationals need a limited stay permit (KITAS).
Just like a PT PMA, a representative office can also apply for a KITAS for its foreign executives.
Just like a PT PMA, a representative office can also apply for a KITAS for its foreign executives.
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Types of representative offices.
Types of representative offices.
start from IDR19.500.000
KPPA – a general representative office
The activities of a general representative office are limited to taking care of the interests of the parent company and companies affiliated with the parent company. A general representative office is a suitable option if you would like to conduct feasibility studies in Indonesia to test the market and later set up a PT PMA.
start from IDR19.500.000
KP3A – representative office for trading
A representative office for trading may become the parent company’s selling, manufacturing, and buying agent in Indonesia. It can also handle the establishment of the parent company’s branch offices in any of the Indonesian cities. A KP3A is a suitable option if the parent company is a manufacturer or a product owner with a plan to establish a network of agents and distributors in Indonesia.
start from IDR97.500.000
BUJKA – representative office for foreign construction companies
A BUJKA is a representative office for foreign construction service companies. Through a BUJKA, you can: -contact people, companies, and government institutions and also collect information regarding available construction projects all over Indonesia -participate in tenders -hire foreign experts and Indonesian staff to support your operation -open a bank account in Indonesia
Suitable for foreign construction companies who are planning to expand their activities to Indonesia
Suitable for foreign construction companies who are planning to expand their activities to Indonesia
start from IDR20.800.000
KPPA Migas – representative office for foreign oil and gas companies
Foreign oil and gas companies are also allowed to establish a representative office and use it for having a permanent establishment in Indonesia under the subsector of oil and gas.
FAQs
What does the PMA stand for and are there any limitations to my business name?
PT PMA is basically the Indonesian equivalent to Limited, Pte or Ltd. In Indonesia you must register your PMA company name in Indonesian or English using a minimum of 3 words. For example: Klub Rumah Baru or New home club. But, don’t worry this is just your company establishment name, you may brand your business with a name you prefer.
When setting up a business do you need an actual office or can you use a residential location?
Before processing of incorporation, you need to choose the location of your business and have a registered address in an office building Indonesia. You cannot use your home address as it is not possible to register a company with a residential address. Alternatively, you can also use a virtual office for Local PT or Coworking Space for PT PMA.
What is paid up capital and how does that effect the business set up?
Paid up capital is the amount of money the shareholder invests into the business.
The investor should invest above USD 1 million / 10 Billion IDR as their investment plan, with a paid-up capital above USD 250.000.000 / 2.5 Billion IDR. The Investment plan can either be cash or fixed assets, such as machinery.
There are 2 ways to prove the paid up capital; one being to send a copy of your company bank statement which shows the investment amount, the second option is to sign a statement letter acknowledging that you will invest the capital in the future.
The investor should invest above USD 1 million / 10 Billion IDR as their investment plan, with a paid-up capital above USD 250.000.000 / 2.5 Billion IDR. The Investment plan can either be cash or fixed assets, such as machinery.
There are 2 ways to prove the paid up capital; one being to send a copy of your company bank statement which shows the investment amount, the second option is to sign a statement letter acknowledging that you will invest the capital in the future.
Do you need to provide proof of transfer of your paid up capital?
Whilst processing our company establishment, you do not need to provide proof of transfer for your paid up capital. You may pay the paid up capital once the company is established.
Paid up capital is generally set at 25 percent of the minimum capital requirement (hence IDR 2.5 billion). In certain (capital intensive) industries paid up capital requirements are higher. In practice, however, it frequently occurs that a PT PMA is established without the foreign investor needing to transfer the paid up capital to an Indonesian bank account. The shareholders of the PT PMA can sign a Capital Statement Letter pledging that the paid up capital can be transferred (without ever transferring it). However, in specific sectors, such as the financial services sector, this is not possible.
Paid up capital is generally set at 25 percent of the minimum capital requirement (hence IDR 2.5 billion). In certain (capital intensive) industries paid up capital requirements are higher. In practice, however, it frequently occurs that a PT PMA is established without the foreign investor needing to transfer the paid up capital to an Indonesian bank account. The shareholders of the PT PMA can sign a Capital Statement Letter pledging that the paid up capital can be transferred (without ever transferring it). However, in specific sectors, such as the financial services sector, this is not possible.
Are there any standard compliances you need to know before establishing your company in Indonesia?
Apart from taxes, companies must also register for social and health security programme (BPJS) by the government. For PT PMA companies it is mandatory to report investment four times per year which is commonly known as the “LKPM Report”.
How does the taxation process work in Indonesia?
All companies in Indonesia must pay and report taxes on a monthly and annual basis. The main corporate taxes imposed on companies in Indonesia are: corporate income tax (CIT), value-added tax (VAT), and land and building tax. The general corporate income tax rate imposed in Indonesia is 25%. Medium-sized companies with annual revenue of less than IDR 50 billion can apply for a reduced income tax rate of 12.5%, and small companies with annual revenue of less than IDR 4.8 billion are eligible for corporate income tax of 0.5%.
Can the Director or Commissioner be a foreigner in a PT or a PMA?
Directors and Commissioners of a PT PMA can be foreigners or Indonesians and they are not required to be residents in Indonesia. Please note that non resident Directors will not have the authority to sign documents on behalf of the company.
In regard to a Local PT you may have a foreign Director, but you should still have a minimum of 1 local Director as well as a local commissioner.
In regard to a Local PT you may have a foreign Director, but you should still have a minimum of 1 local Director as well as a local commissioner.
How many foreigners can you hire once the company has been established?
A PT PMA may hire as many foreigners as required, as long as you have a minimum of 10 Indonesian Employees per 1 foreigner.
For a Local PT you can hire 1 foreigner as long as you have a minimum paid up capital of 1.1 billion IDR.
For a Local PT you can hire 1 foreigner as long as you have a minimum paid up capital of 1.1 billion IDR.
What are the responsibilities of the Director and the Commissioner?
The Directors responsibilities are to manage the company pursuant to its Articles of Association and the Indonesian Company Law.
The Commissioners responsibilities will be to supervise the company’s activities.
The Commissioners responsibilities will be to supervise the company’s activities.
Once the company is established, do you need to renew any licenses every year?
There are no validity restrictions or renewals that are mandatory every year, as long as the company is still running and there are no amendments required from either the business structure or new governmental regulations.
If we would like to change the office address later is this possible?
If you would like to change your office location, the first thing you need to know is whether your new address is still in the same district as the previous one. If this is the case, then all you will be required to do is report your new company address to the tax office so they can change your taxation number.
Unfortunately, if your new address is in a different district you will need to amend numerous documents and permits such as: the location permit which will need to be signed by the district and subdistrict heads, as well as revise your Article of Association, Domicile Letter, Business License, Company Certificate Number and finally – advise the tax office so they that change your taxation account."
Unfortunately, if your new address is in a different district you will need to amend numerous documents and permits such as: the location permit which will need to be signed by the district and subdistrict heads, as well as revise your Article of Association, Domicile Letter, Business License, Company Certificate Number and finally – advise the tax office so they that change your taxation account."
FAQs
What does the PMA stand for and are there any limitations to my business name?
PT PMA is basically the Indonesian equivalent to Limited, Pte or Ltd. In Indonesia you must register your PMA company name in Indonesian or English using a minimum of 3 words. For example: Klub Rumah Baru or New home club. But, don’t worry this is just your company establishment name, you may brand your business with a name you prefer.
When setting up a business do you need an actual office or can you use a residential location?
Before processing of incorporation, you need to choose the location of your business and have a registered address in an office building Indonesia. You cannot use your home address as it is not possible to register a company with a residential address. Alternatively, you can also use a virtual office for Local PT or Coworking Space for PT PMA.
What is paid up capital and how does that effect the business set up?
Paid up capital is the amount of money the shareholder invests into the business.
The investor should invest above USD 1 million / 10 Billion IDR as their investment plan, with a paid-up capital above USD 250.000.000 / 2.5 Billion IDR. The Investment plan can either be cash or fixed assets, such as machinery.
There are 2 ways to prove the paid up capital; one being to send a copy of your company bank statement which shows the investment amount, the second option is to sign a statement letter acknowledging that you will invest the capital in the future.
The investor should invest above USD 1 million / 10 Billion IDR as their investment plan, with a paid-up capital above USD 250.000.000 / 2.5 Billion IDR. The Investment plan can either be cash or fixed assets, such as machinery.
There are 2 ways to prove the paid up capital; one being to send a copy of your company bank statement which shows the investment amount, the second option is to sign a statement letter acknowledging that you will invest the capital in the future.
Do you need to provide proof of transfer of your paid up capital?
Whilst processing our company establishment, you do not need to provide proof of transfer for your paid up capital. You may pay the paid up capital once the company is established.
Paid up capital is generally set at 25 percent of the minimum capital requirement (hence IDR 2.5 billion). In certain (capital intensive) industries paid up capital requirements are higher. In practice, however, it frequently occurs that a PT PMA is established without the foreign investor needing to transfer the paid up capital to an Indonesian bank account. The shareholders of the PT PMA can sign a Capital Statement Letter pledging that the paid up capital can be transferred (without ever transferring it). However, in specific sectors, such as the financial services sector, this is not possible.
Paid up capital is generally set at 25 percent of the minimum capital requirement (hence IDR 2.5 billion). In certain (capital intensive) industries paid up capital requirements are higher. In practice, however, it frequently occurs that a PT PMA is established without the foreign investor needing to transfer the paid up capital to an Indonesian bank account. The shareholders of the PT PMA can sign a Capital Statement Letter pledging that the paid up capital can be transferred (without ever transferring it). However, in specific sectors, such as the financial services sector, this is not possible.
Are there any standard compliances you need to know before establishing your company in Indonesia?
Apart from taxes, companies must also register for social and health security programme (BPJS) by the government. For PT PMA companies it is mandatory to report investment four times per year which is commonly known as the “LKPM Report”.
How does the taxation process work in Indonesia?
All companies in Indonesia must pay and report taxes on a monthly and annual basis. The main corporate taxes imposed on companies in Indonesia are: corporate income tax (CIT), value-added tax (VAT), and land and building tax. The general corporate income tax rate imposed in Indonesia is 25%. Medium-sized companies with annual revenue of less than IDR 50 billion can apply for a reduced income tax rate of 12.5%, and small companies with annual revenue of less than IDR 4.8 billion are eligible for corporate income tax of 0.5%.
Can the Director or Commissioner be a foreigner in a PT or a PMA?
Directors and Commissioners of a PT PMA can be foreigners or Indonesians and they are not required to be residents in Indonesia. Please note that non resident Directors will not have the authority to sign documents on behalf of the company.
In regard to a Local PT you may have a foreign Director, but you should still have a minimum of 1 local Director as well as a local commissioner.
In regard to a Local PT you may have a foreign Director, but you should still have a minimum of 1 local Director as well as a local commissioner.
How many foreigners can you hire once the company has been established?
A PT PMA may hire as many foreigners as required, as long as you have a minimum of 10 Indonesian Employees per 1 foreigner.
For a Local PT you can hire 1 foreigner as long as you have a minimum paid up capital of 1.1 billion IDR.
For a Local PT you can hire 1 foreigner as long as you have a minimum paid up capital of 1.1 billion IDR.
What are the responsibilities of the Director and the Commissioner?
The Directors responsibilities are to manage the company pursuant to its Articles of Association and the Indonesian Company Law.
The Commissioners responsibilities will be to supervise the company’s activities.
The Commissioners responsibilities will be to supervise the company’s activities.
Once the company is established, do you need to renew any licenses every year?
There are no validity restrictions or renewals that are mandatory every year, as long as the company is still running and there are no amendments required from either the business structure or new governmental regulations.
If we would like to change the office address later is this possible?
If you would like to change your office location, the first thing you need to know is whether your new address is still in the same district as the previous one. If this is the case, then all you will be required to do is report your new company address to the tax office so they can change your taxation number.
Unfortunately, if your new address is in a different district you will need to amend numerous documents and permits such as: the location permit which will need to be signed by the district and subdistrict heads, as well as revise your Article of Association, Domicile Letter, Business License, Company Certificate Number and finally – advise the tax office so they that change your taxation account."
Unfortunately, if your new address is in a different district you will need to amend numerous documents and permits such as: the location permit which will need to be signed by the district and subdistrict heads, as well as revise your Article of Association, Domicile Letter, Business License, Company Certificate Number and finally – advise the tax office so they that change your taxation account."
FAQs
What does the PMA stand for and are there any limitations to my business name?
PT PMA is basically the Indonesian equivalent to Limited, Pte or Ltd. In Indonesia you must register your PMA company name in Indonesian or English using a minimum of 3 words. For example: Klub Rumah Baru or New home club. But, don’t worry this is just your company establishment name, you may brand your business with a name you prefer.
When setting up a business do you need an actual office or can you use a residential location?
Before processing of incorporation, you need to choose the location of your business and have a registered address in an office building Indonesia. You cannot use your home address as it is not possible to register a company with a residential address. Alternatively, you can also use a virtual office for Local PT or Coworking Space for PT PMA.
What is paid up capital and how does that effect the business set up?
Paid up capital is the amount of money the shareholder invests into the business.
The investor should invest above USD 1 million / 10 Billion IDR as their investment plan, with a paid-up capital above USD 250.000.000 / 2.5 Billion IDR. The Investment plan can either be cash or fixed assets, such as machinery.
There are 2 ways to prove the paid up capital; one being to send a copy of your company bank statement which shows the investment amount, the second option is to sign a statement letter acknowledging that you will invest the capital in the future.
The investor should invest above USD 1 million / 10 Billion IDR as their investment plan, with a paid-up capital above USD 250.000.000 / 2.5 Billion IDR. The Investment plan can either be cash or fixed assets, such as machinery.
There are 2 ways to prove the paid up capital; one being to send a copy of your company bank statement which shows the investment amount, the second option is to sign a statement letter acknowledging that you will invest the capital in the future.
Do you need to provide proof of transfer of your paid up capital?
Whilst processing our company establishment, you do not need to provide proof of transfer for your paid up capital. You may pay the paid up capital once the company is established.
Paid up capital is generally set at 25 percent of the minimum capital requirement (hence IDR 2.5 billion). In certain (capital intensive) industries paid up capital requirements are higher. In practice, however, it frequently occurs that a PT PMA is established without the foreign investor needing to transfer the paid up capital to an Indonesian bank account. The shareholders of the PT PMA can sign a Capital Statement Letter pledging that the paid up capital can be transferred (without ever transferring it). However, in specific sectors, such as the financial services sector, this is not possible.
Paid up capital is generally set at 25 percent of the minimum capital requirement (hence IDR 2.5 billion). In certain (capital intensive) industries paid up capital requirements are higher. In practice, however, it frequently occurs that a PT PMA is established without the foreign investor needing to transfer the paid up capital to an Indonesian bank account. The shareholders of the PT PMA can sign a Capital Statement Letter pledging that the paid up capital can be transferred (without ever transferring it). However, in specific sectors, such as the financial services sector, this is not possible.
Are there any standard compliances you need to know before establishing your company in Indonesia?
Apart from taxes, companies must also register for social and health security programme (BPJS) by the government. For PT PMA companies it is mandatory to report investment four times per year which is commonly known as the “LKPM Report”.
How does the taxation process work in Indonesia?
All companies in Indonesia must pay and report taxes on a monthly and annual basis. The main corporate taxes imposed on companies in Indonesia are: corporate income tax (CIT), value-added tax (VAT), and land and building tax. The general corporate income tax rate imposed in Indonesia is 25%. Medium-sized companies with annual revenue of less than IDR 50 billion can apply for a reduced income tax rate of 12.5%, and small companies with annual revenue of less than IDR 4.8 billion are eligible for corporate income tax of 0.5%.
Can the Director or Commissioner be a foreigner in a PT or a PMA?
Directors and Commissioners of a PT PMA can be foreigners or Indonesians and they are not required to be residents in Indonesia. Please note that non resident Directors will not have the authority to sign documents on behalf of the company.
In regard to a Local PT you may have a foreign Director, but you should still have a minimum of 1 local Director as well as a local commissioner.
In regard to a Local PT you may have a foreign Director, but you should still have a minimum of 1 local Director as well as a local commissioner.
How many foreigners can you hire once the company has been established?
A PT PMA may hire as many foreigners as required, as long as you have a minimum of 10 Indonesian Employees per 1 foreigner.
For a Local PT you can hire 1 foreigner as long as you have a minimum paid up capital of 1.1 billion IDR.
For a Local PT you can hire 1 foreigner as long as you have a minimum paid up capital of 1.1 billion IDR.
What are the responsibilities of the Director and the Commissioner?
The Directors responsibilities are to manage the company pursuant to its Articles of Association and the Indonesian Company Law.
The Commissioners responsibilities will be to supervise the company’s activities.
The Commissioners responsibilities will be to supervise the company’s activities.
Once the company is established, do you need to renew any licenses every year?
There are no validity restrictions or renewals that are mandatory every year, as long as the company is still running and there are no amendments required from either the business structure or new governmental regulations.
If we would like to change the office address later is this possible?
If you would like to change your office location, the first thing you need to know is whether your new address is still in the same district as the previous one. If this is the case, then all you will be required to do is report your new company address to the tax office so they can change your taxation number.
Unfortunately, if your new address is in a different district you will need to amend numerous documents and permits such as: the location permit which will need to be signed by the district and subdistrict heads, as well as revise your Article of Association, Domicile Letter, Business License, Company Certificate Number and finally – advise the tax office so they that change your taxation account."
Unfortunately, if your new address is in a different district you will need to amend numerous documents and permits such as: the location permit which will need to be signed by the district and subdistrict heads, as well as revise your Article of Association, Domicile Letter, Business License, Company Certificate Number and finally – advise the tax office so they that change your taxation account."
