Foreigners are allowed to do business in Indonesia by opening an LLC, here called PT. It is possible to purchase land and vehicles for a company, which cannot be done directly for an individual if you are not a citizen of the country. The company also provides an opportunity to obtain a residence permit KITAS, and this is a simple opening of bank accounts, discounts in medical institutions and tourist facilities, multiple entry to Indonesia. Let’s talk more about companies for foreigners PT PMA.
What is the difference between PT and PT PMA?
Both PT and PMA are abbreviations in Indonesian.
PMA (Penanaman Modal Asing) only emphasizes that there is at least one foreigner among the founders, while Indonesian co-founders may also be present.
The fact that you have an LLC (Limited Liability Company) is indicated by the prefix PT (Perseroan Terbatas).
In speech, PT PMA is often shortened to PMA. Documents only use PT without PMA.
How to open a company in Bali?
It is necessary to gather all the founders to sign notarial documents. It is also possible to set up a company by power of attorney without a presence in Indonesia.
The first step is to fill out a brief for the establishment of a company, which will be reviewed by our notary. Founders and representatives by power of attorney will be invited to our office.
A few days and the company will be ready.
You can immediately obtain a residence permit in Indonesia by issuing Investor KITAS.
However, let first tell you more about the management of PT PMA.
What types of activities are allowed for companies with foreign investments PT PMA?
This list is updated quite often, so there is no point in translating it. More often than not, activities that many Indonesians can easily do are not available. These are, for example, hairdressing salons, beauty salons.
The types of economic activities of KBLI are published on the portal of the OSS department controlled by the Ministry of Investments. Not all types of activities from different categories can be included included in the statutory documents of the company. We advise you to choose the main and additional activities, limit yourself to 2-3 activities.
The list of activities is available at the link.
Type of activity is not the same as a license!
Initially, you declare as many activities as you potentially need. You can change this list in the future, but it costs about 10 million rupiah. The same applies to changing the list of founders. It is better to think everything over in advance.
Each activity requires a license. Many licenses are issued free of charge. However, activities with increased risk (according to the legislation) require spending time and money, often fulfilling a number of conditions for the office where the company will be located.
Even if your license is inactive, you can already start working. The process of obtaining a license sometimes takes up to several months. Sometimes instant.
What is the easiest company to open in Bali?
Consultations on any issue, including tourism. You can start an IT project that is not related to finance. Recently, the rental of bikes and cars has been allowed. It is not difficult to open a real estate agency that deals with sales and service.
But, for example, it will be more difficult to obtain a license for a construction company.
If you want to open a cryptocurrency trading exchange, you will need about 100 million USD in authorized capital and obtaining a license from the financial regulator OJK.
What is the minimum capital for a PT PMA company?
The Indonesian government has allowed foreigners to open only medium-sized companies with a capital from 10 billion rupiah. Micro companies with a capital of 50 million rupiah are the lot of the Indonesians.
When registering a company, no one asks to present the authorized capital. Subsequently, after the opening of the company, you will submit quarterly investment reports on the OSS website on the use of these funds. Yes, at first, it is allowed to submit zero reports, if the activity has not yet begun, you are in the process of obtaining a license.
The law assumes that the investment will be applied within a year, but nowhere is it said that there are any penalties for PT PMA if this is not done!
The OSS department periodically conducts inspections, visits the operating business. You should not be afraid of this, they give advice, ask to eliminate shortcomings.
More often than not, OSS doesn’t show up with a check in the company’s early years. The last resort, if investment reports are not submitted, is the revocation of the license.
Can foreigners work for an Indonesian company?
Yes, but the owner himself cannot do it. He is only allowed to train staff. True, it is possible to extend the functions of the founder to workers. We are ready to help in this.
Initially, it is best to rely on Indonesian staff. You can hire an indispensable foreign specialist if your company employs several Indonesians. Contact us and we will walk this path with you.
Without a work permit, a foreigner is deported from the country.
How long does the KITAS release process take?
The company itself is registered in a few days, sometimes in a few weeks.
The Onshore process of issuing KITAS (within the country) can take approximately 2 to 4 weeks.
The Offshore process is faster, as the visa for KITAS is obtained electronically, the online procedure takes about 7-12 business days. Then 90 days are given to fly into the country.
You can start the Offshore process while in Indonesia, then you will need to leave the country and fly back to activate KITAS. It is convenient to make such a visarun to Kuala Lumpur, because it is not far away, you can return within one day. The next step, within 30 days after arrival, all documents are submitted, including the Domicile Letter (letter of residence) to the local immigration office. Than you will get an Investor’s KITAS for 2 years.
The offshore process is faster and cheaper and involves flying into the country from abroad.
The Onshore process can only be started with a valid visa B211A.
PT PMA activity taxes: accounting
For the first three years of the founding of the company, you are entitled to a reduced tax rate of 0.5% on the Gross Profit of the organization. You can immediately switch to regular taxation, which is 11% of Net Profit.
The reduced rate may be terminated earlier if your Gross Income since the beginning of the year exceeds 4.8 billion rupiah.
Calculating taxes is pretty easy. The amount payable must be paid once a month on the tax website, a receipt is generated, which you instantly pay in the online bank. Also, once a year, you will have to fill out a declaration for several sheets in electronic form, which is downloaded from the same personal account of the tax service.
How not to get confused in financial terms when paying taxes in Indonesia?
Visual tables have been made especially for you:
|Gross Income < 4.8 billion|
|–||Cost of good sold (COGS)|
Cost of Sales
|=||Gross Profit (tax 0.5%)|
Purchases – cost, returns, discounts.
|Gross Profit||–||Operating Expenses||=||Net Operating Income||–||Taxes||=||Net Profit (tax 11%)|
Operating expenses – salary, social benefits to medical and working funds, rent, electricity, cleaning, internet, hosting, domain.
We recommend at first to be served by local accounting firms, which, for 5-7 million rupiah per year, will enter data on profitability for you and submit an annual declaration STP.
Family dependent KITAS
After you receive an Investor KITAS, you can “distribute” Dependent KITAS to your spouse and minor children. The maximum term is 1 year. It is faster and cheaper to arrange an Offshore option.
Employee salaries and dividends, insurance contributions BPJS
Under an employment contract, you must pay salaries to employees, feel free to do this from the company’s account. You can arrange your income in the form of dividends and withdraw to your personal account. It is better not to make own expenses that are not related to the activities of the company from a corporate account.
You can buy cryptocurrency from a company account, which is quite simple. It is not forbidden to pay at the expense of the company hospitality expenses, transport rental, buy furniture, stationery and office equipment.
In proportion to the size of the salary, you must make social payments to the BPJS funds, withholding them from the income of employees. There are two such funds BPJS Ketenagakerjaan (labor) and BPJS Kesehatan (for health).
What if you decide to close the company?
This is a paid process. KITAS issued on the basis of the company will also cease to be valid. It will be necessary to do the exit procedure from KITAS through EPO. If this regulation is violated, other visas may be denied in the future.
What is KITAS and KITAP? How to get Indonesian citizenship?
KITAS is a temporary residence permit in Indonesia. PT PMA founders can apply for an Investor KITAS (may continue to live on a different visa). It is convenient that this type of KITAS for Investors is a long-term visa with multiple entries for 1-2 years. Your family members will be able to get Dependent KITAS for up to 1 year. Dependent KITAS is renewed for 1 year, Investor KITAS can be extended for both 1 and 2 years, renewals go up to 5 years (including the initial period of KITAS), after that you can get KITAP for 5 years, and then unlimited KITAP. KITAP is a permanent residence permit. Subsequently, you can apply for Indonesian citizenship.
It is important to determine the structure of investors in the company
Founders can be assigned 3 roles: Main Director, Director, Commissioner. Only the director has the right to sign, commissioners only as observers. There can be several people for the role of commissioners.
Information required to register a PT PMA company
For ease of company registration, we have prepared a form. When filling out the form, the following information will be required:
- company name (minimum 3 words),
- foreign passports of the founders (can be scanned),
- shares of founders in Indonesian rupiah,
- company address (often the address of your villa is accepted if you have an Internet project, but sometimes you may need at least a virtual office: it costs from 6.5 million per year; sometimes only a real office is suitable),
- list of activities (you declare what you plan to do),
- resident addresses of the founders,
- Indonesian phone number of the company (for government).
Where are the founders of the future company located? Remote business opening
If the founders are in Bali, then everything is simple. We will invite them to our office for the signing of the deed of incorporation of the company, after completing and verifying the above form. Company registration takes place in the presence of our notary.
But, if one of the founders is not in Bali, then he signs a power of attorney for the one who will represent his interests, then sends the original by mail or by plane to speed up the process. A sample power of attorney is compiled by our notary: it will be a file printed on plain paper. The signatory must take a selfie with a passport and a signed power of attorney. The power of attorney contains data that will also be in the act of registration of the company.
Company registration PT PMA
The notary registers the act of incorporation of the company, receives a tax number.
Onshore and offshore issue of Investor and Working KITAS: steps, prices, terms
1. PT PMA founders with a capital of 1 billion IDR or more are eligible to receive an Investor KITAS for a period of 1 or 2 years at your choice.
Getting KITAS is possible Offshore (when you are out of the country) and Onshore.
For those who are in Indonesia it is necessary to request a letter of recommendation from the Ministry of Investment BKPM. Term 1-3 weeks, price 4.5 million IDR. It is in the original attached to the documents for the opening of KITAS. At the moment, for those who are in the country, we simply pay 5 million IDR to the immigration office and the issue of a letter of recommendation is closed.
It is also possible to issue KITAS with an offshore process when you are in Bali. It will take 7-12 working days. Then, to activate KITAS, it is enough to make a visarun for one day, for example, to Kuala Lumpur and return to Indonesia. Perhaps this is the best way in the current realities.
2. Submission of documents for the Onshore process is carried out by us at the immigration office in Bali. The Offshore process starts online at the website of the main immigration office in Jakarta, however, after entering the country, it still ends at the local immigration office.
Terms of Offshore obtaining KITAS about 1-2 weeks, Onshore process takes 4-6 weeks. At the request of the immigration office, when receiving Onshore, you must have a B211A visa for at least 1-2 months or a reserve of extensions, visa on arrival VoA is not suitable. Offshore process can be started even with visa on arrival.
3. In addition to the Investor KITAS for company executives, there is also a Working KITAS for foreign employees. Before the obtaining of the Working KITAS at the immigration department, it is first necessary to obtain a work permit through the Ministry of Human Resources of Indonesia.
The duration of the requested permit affects the fee payable. You can choose between 6 or 12 months for a work permit. Accordingly, the fee will be – 600 and 1200 dollars.
The important point is that for every hired foreigner there should be 5-10 working Indonesians. They must have BPJS insurance numbers, or if the salary is less than the minimum wage, it is enough to provide employment contracts.
The term for obtaining a work permit in our agency is ~1-3 weeks, the price of the service is 4.5 million IDR.