Indonesia

About the Country

The Republic of Indonesia (Indonesia) is a unitary sovereign state and transcontinental country located mainly in Southeast Asia with some territories in Oceania and situated between the Indian and Pacific oceans. It is the world’s largest island and archipelagic country. The below content will explain you in detail about the requirements for the company formation in Indonesia, know more about the process of trademark registration in Indonesia and understand Indonesia Legal and Compliance requirements.

Indonesia

Doing Business Introduction

The Country is member of the G20 major economies and World Trade Organization. The manufacturing and processing sector are the major sector. The government OF Indonesia, by its Capital Investment Coordinating Board (BKPM), is actively promoting foreign investment in Indonesia.

As per Doing business report of The World Bank –Indonesia ranks 91 for 2017 survey. Your Global PRO is able to assist its client with any type of company formation, trademark registration and other recurring services for your business in Indonesia.

Incorporation - Types of Business Entities

There are different types of entities that can be incorporated in Indonesia are as mentioned below:

  • Representative Office of a foreign entity [not allowed to engage in business or transactions]
  • Branch of a foreign entity [for highly specific cases and the parent company incurs all the obligations
  • Limited Liability Company [same as a LLC and have two members’ minimum, who can be 100% foreigners
  • Joint venture [requires Indonesian partner]

Time Frame for Incorporation of Company in Indonesia varies from depending on the type of entity selected. Each business type has its own advantages and disadvantages. YourGlobalPro estimates the time required for the process of Company formation in Indonesia to be completed is 21-30 working days.

Benefits of Registration of a Company

Indonesia is already the largest economy in Southeast Asia. Below are the advantages of company formation in Indonesia:

  • Growing economy and competitive Market
  • Increased infrastructure spending and improving the investment climate
  • Important economy in South East Asia
  • Intra-regional agreement to reduce customs tariffs
  • Robust financial system and Rich in natural resources
  • Mining, Manufacturing, Automotive and fast-moving Consumer Goods are some of the emerging industries.
  • The government is improving the regulatory framework, simplifying the licensing process and improving the business infrastructures to attract foreign investment

Tax Registration and Filing

In Indonesia, tax year is basically the calendar year and all the companies incorporated or domiciled are subject to income tax on worldwide income.

Corporate Income Tax Rate 25 %
Capital Gains Tax Rate 0%
Dividends Tax Resident Companies10 % Tax Resident Individuals 15 % Non-Residents 20 %
Interest Tax Resident Companies15% Non-Residents 20 %
Royalties Tax Resident Companies 15% Non-Residents 20 %
Technical Services Fees 2%
Branch Remittance Tax 20%
Annual Corporate Income-Tax Return To be filed by the end of the fourth month following the end of the fiscal year
Corporate Income Tax Payment To be paid every month

Double Tax Treaty

Double Tax Agreements regulates the tax treatment of income or capital gains in situations where the same taxpayer is taxed twice in two countries for the same subject. Indonesia has double taxation treaties with countries as mentioned below: Algeria, Jordan, Seychelles, Australia, Korea (North), Singapore, Austria Korea (South), Slovak Republic, Bangladesh, Kuwait, South Africa, Belgium, Luxembourg, Spain, Brunei, Malaysia, Sri Lanka, Darussalam, Mexico, Sudan, Bulgaria, Mongolia, Suriname, Canada, Morocco, Sweden, China, Netherlands, Switzerland, Croatia, New Zealand, Syria, Czech Republic, Norway, Taiwan, Denmark, Pakistan, Thailand, Egypt, Papua, New Tunisia, Finland, Guinea, Turkey, France, Philippines, Ukraine, Germany, Poland, United Arab Emirates, Hungary, Portugal, Hong Kong SAR, Qatar, United Kingdom, India, Romania, United States, Iran, Russian, Uzbekistan, Italy, Federation, Venezuela, Japan, Saudi Arabia, Vietnam

Trademark registration

For Trademark registration in Indonesia application needs to be made to Directorate General Of Intellectual Property Rights (DGIPR). It takes approximately 36-40 months’ timeframe to complete the trademark registration process.  In Indonesia, a Trademark Registration is valid for 10 years from the application date and can be renewed indefinitely provided renewal fees are paid every three 10 years.

YourGlobalPro are fully equipped to assist you with the process of trademark registration for your business in Indonesia. For assistance or advise in the matter of the trademark registration in Indonesia or intellectual property – please feel free to write or contact us.

Secretarial Compliance

Below are some of the important points in relation to Company Secretarial Compliance in Indonesia:

  • Permanent Business License to be obtained from Badan Koordinasi Penanaman Modal (BKPM)
  • BKPM approval before carrying out certain actions such as share transfers, capital increases and business expansions.
  • Requirement for submission of an investment activities report to the BKPM – quarterly for companies that have not obtained a Business License and each semester for companies that have obtained a Business License
  • All companies are required to register their employees to the BPJS Kesehatan
  • Accounting records to be maintained for at least ten years after the end of the company’s reporting period

Accounting Services

In Indonesia, all the corporate entities to prepare financial statements in accordance with accounting standards issued by the Dewan Standar Akuntansi Keuangan/Indonesian Financial Accounting Standard Board (DSAK) of the Ikatan Akuntan Indonesia/Institute of Indonesia Chartered Accountants (IAI). Most of the entities use the 1 January to 31 December calendar year as their accounting year and all accounting books, records and financial statements should be prepared using the Indonesian language.

YourGlobalPro professionals can assist you with the entire bookkeeping and accounting services for your Indonesia Business Set up as per your business needs including implementation of financial accounting software, accounting records preparation and time to time preparation of budgets, forecasts.

Auditing service

In Indonesia, all the listed companies have an Audit Committee within their organization. There is no statutory requirement for a tax audit of your accounts by a public accountant. Statutory audit by a qualified auditor is mandatory for Publicly-listed companies, insurance companies, state-owned enterprises, Bank debtors, Companies with assets more than 25 billion Rupiah, which are required to submit their annual financial statements to the Ministry of Trade:

Based on the size of the business – the companies are required to prepare and file financial statements with the Authority. YourGlobalPro professionals provide auditing services as required by your business.

Banking

The documentation requirement differs from Bank to Bank and need to be complied for the Bank account opening.  The major banks in Indonesia are Bank Indonesia, BNI, Bank BRI, Bank BTN, Citibank, Permata Bank. All banks are stable, reliable and offer the same level of services.

YourGlobalPro professionals can facilitate all the paper work in relation to banking need and can assist you in opening bank account for your business plan in Indonesia.

Legal and Compliance

In Indonesia, the responsibility of legal compliance is not a one-time affair, but a continuous process. Below is the various Indonesia legal and compliance requirement to be followed by incorporated entities:

  • Monthly withholding tax report to be submitted by all types of companies and entities
  • Limited Liability Company with Foreign Direct Investment to do Quarterly/semi-annual investment reporting
  • Annual tax reporting by all the Local Limited Liability Company
  • Annual Activity report to be sent to BKPM by Representative office and Representative office for trading
  • The annual employee income tax return must be filed by March 31 of the following year
  • All the companies are required to comply with the Articles of Association (AOA) or bylaws of such companies and other applicable laws and regulations of Indonesia
  • As per investment law the companies need to carry out corporate social responsibility programs

YourGlobalPro professionals can assist you with Indonesia Legal and compliance requirements

HR and Employment Law and Immigration / VISA

Below are some of the important points in relation to HR & employment law in Indonesia:

  • The Employment Visa is intended for a foreign resident who intends to work in Indonesia must obtain work permit an addition to a KITA [Elektronik Kartu Izin Tinggal Terbatas, or E-KITAS] visa
  • The Indonesian government prefers that expatriates be employed in Indonesia only in positions that cannot currently be filled by Indonesian nationals.
  • visas and work permits in Indonesia is a protracted and complex process
  • Work permits are usually issued for a maximum period of 12 months and may be extended
  • the employer must train at least one Indonesian counterpart for every expatriate employed
  • The work permit application is then submitted to the General Director of Manpower Development and Placement (Direktur Jenderal Pembinaan dan Penempatan Tenaga Kerja) at the Ministry of Manpower office
  • Fixed-term and Permanent are the two type of employment contract
  • Normal working hours are 7 hours per day or 40 hours per week for 6 working days and the Normal break time will be a minimum of 30 minutes per 4 hours of work and 2 days per week.
  • Workers are entitled to compensation for overtime
  • Annual leave for a minimum of 12 days per year
  • Termination of employment must be mutually agreed
  • The Company need to comply with the rate of minimum wage for salary determined by the Regional Government

Country Statistics

Capital Jakarta
Largest City Jakarta
Total Area 1,904,569 Sq. Km.
Population 263.51 million
Density 124.66 / Sq. Km.
Currency Indonesian Rupiah (Rp) (IDR)
Government Unitary Presidential Constitutional Republic
Official Language Indonesian
Spoken Languages Indonesian, Javanese, Malay, Slang, English, and 700 others
Religion Islam: 87.2% Christianity: 9.9% Hinduism: 1.7% Buddhism: 0.7% Confucianism and others: 0.2%

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