Indonesia

Company Formation in Indonesia

Indonesia

Formation Time

4–8 weeks

Min. Capital

IDR 10B (PT PMA — investment plan)

Corporate Tax

22%

Foreign Ownership

100%

Overview

Indonesia is ASEAN's largest economy and the world's fourth most populous nation with 275 million people and a rapidly growing middle class. The PT PMA is the primary vehicle for foreign investment, allowing up to 100% foreign ownership in most sectors under the Positive Investment List. Registration is processed through the OSS system managed by the Ministry of Investment. The minimum investment plan is IDR 10 billion (approximately USD 650,000), excluding land and buildings. The corporate tax rate is 22%, with tax holidays of 5–20 years for pioneer industries. Indonesia's 71 double tax treaties, vast natural resources, young demographics, and ambitious infrastructure programme make it one of Asia's most promising investment destinations.

Largest ASEAN economy

275M population

22% tax

Tax holidays up to 20 years

71 treaties

Why Choose Indonesia

ASEAN's largest economy — 275 million consumers

100% foreign ownership in most sectors under Positive Investment List

22% corporate tax with tax holidays for pioneer industries

71 double tax treaties

Young, growing population with rising middle class

Abundant natural resources (nickel, palm oil, coal, gas)

OSS (Online Single Submission) streamlines licensing

Special Economic Zones (KEK) with 10–25 year tax holidays

Business Entity Types

Entity	Ownership	Directors	Capital	Tax	Best For
PT PMA (Foreign Investment Company)	Up to 100% (sector-dependent per Positive Investment List)	1 director	IDR 10B minimum investment plan; IDR 10B paid-up capital per shareholder	22% standard; tax holidays (5–20 years) for pioneer industries investing IDR 100B+	Manufacturing, mining, trading, services, digital economy
PT PMDN (Domestic Company)	0% (fully Indonesian-owned)	1	IDR 50M minimum authorised capital	22%; 50% reduction on first IDR 4.8B turnover	Indonesian nationals or nominees; restricted sectors
Representative Office (KPPA)	100%	1 chief representative	None	No commercial activity — must report to BKPM	Market research, promotion, liaison
PT Perorangan (Individual Micro Company)	Not available (Indonesian individuals only)	1	Maximum IDR 5B	0.5% of gross revenue (for 7 years)	Solo Indonesian micro entrepreneurs only

Step-by-Step Formation Process

Company Name Reservation

1–2 days

Reserve name through the Ministry of Law and Human Rights. Name must include 'PT' and 3 words minimum.

Notarial Deed

3–5 days

Prepare and notarise the Deed of Establishment and Articles of Association before an Indonesian notary.

Ministry Approval

1–2 weeks

Submit deed to Ministry of Law and Human Rights. Receive SK Kemenkumham (ministerial decree).

OSS Licensing

1–2 weeks

Tax Registration (NPWP)

1 week

Obtain company NPWP from the Directorate General of Taxes. Register for VAT if applicable.

Bank Account Opening

1–2 weeks

Open a corporate bank account using company documents and NPWP.

Costs & Fees

Government / License Fee	IDR 5,000,000+
Our Service Fee	USD 4,000+
Annual Renewal	USD 2,500+

Fees are indicative and may vary based on business activity, entity type, and additional approvals required. Contact us for a precise custom quote.

Get Custom Quote

Banking

Indonesia's banking sector is the largest in ASEAN. BCA and Bank Mandiri are the most widely used for corporate accounts. Foreign banks serve multinational clients. Account opening requires NPWP and in-person visit.

Account Opening Time

1–2 weeks

Multi-Currency

Yes — multiple currencies supported

Recommended Banks

Bank Central Asia (BCA)Bank MandiriBank Negara Indonesia (BNI)Bank Rakyat Indonesia (BRI)HSBC IndonesiaStandard Chartered Indonesia

Tax Overview

Corporate Tax

22% standard; SME: 50% discount (effective 11%) for turnover ≤IDR 4.8B; Tax holidays: 100% for 5–20 years for pioneer industries

Personal Income Tax

5% (IDR 0–60M) to 35% (over IDR 5B); non-residents flat 20%

VAT / Sales Tax

11% PPN (increased from 10% in 2022)

Capital Gains Tax

Included in corporate income at 22%; land/building transfers: 2.5% final tax

Withholding Tax

20% on dividends, interest, and royalties to non-residents (reduced by treaties)

Double Tax Treaties

71 countries

Tax holiday: 100% CIT reduction for 5–20 years for pioneer industries investing IDR 100B+. OSS integrates tax registration. Transfer pricing documentation mandatory for related-party transactions exceeding IDR 50B.

Visa & Residency

KITAS (Temporary Stay Permit)

1–2 years, renewable

For foreign workers employed by Indonesian companies. Requires IMTA (work permit).

Investor KITAS

2 years, renewable

For foreign investors/directors of PT PMA.

KITAP (Permanent Stay Permit)

5 years, renewable

Available after holding KITAS for 3 consecutive years.

Second Home Visa

5–10 years

For high-net-worth individuals. Requires IDR 2B+ savings/investments.

Family visa: AvailableProcessing: 4–8 weeks (KITAS); 2–3 months (KITAP)

Frequently Asked Questions

What is the IDR 10 billion minimum investment?

The total investment plan must be at least IDR 10 billion (~USD 650,000), excluding land and buildings. This is the planned investment over the company's life, not immediate deposit. Paid-up capital must also be at least IDR 10B per shareholder.

Can foreigners own 100% of an Indonesian company?

Yes, in many sectors. Indonesia's Positive Investment List allows 100% foreign ownership in most sectors. Some have caps (e.g., plantation 95%, certain logistics 49%). Priority sectors actively encourage 100% foreign ownership.

What is the OSS system?

The OSS (Online Single Submission) risk-based system issues a single NIB replacing multiple legacy licences. Low-risk businesses receive automatic approval; higher-risk activities require verified commitments.

What are the tax holiday incentives?

100% CIT reduction for 5–20 years for 18 pioneer industry categories. IDR 100B–500B: 5 years; IDR 500B–1T: 7 years; IDR 1T+: 10–20 years. 50% reduction applies for 2 additional years after the holiday.

Do I need an Indonesian shareholder?

A PT PMA requires minimum 2 shareholders, but both can be foreign. An Indonesian shareholder is only needed if the sector has a foreign ownership cap.

How does Indonesia compare to Vietnam and Thailand?

Indonesia offers the largest ASEAN domestic market (275M vs 100M Vietnam, 70M Thailand), abundant natural resources, and aggressive tax holidays. Thailand has better infrastructure; Vietnam has lower labour costs. Indonesia's higher investment thresholds are offset by market scale.