Doing business in Indonesia
- How quickly can I set up a business?
- What is the minimum investment needed?
- How can I raise finance?
- What are the legal requirements for setting up my business?
- What structure should I consider?
- What advice can you give me in regards to payroll and taxation requirements?
- Is there anything else that I should know?
How quickly can I set up a business?
What is the minimum investment needed?
Minimum commitment of total investment should be at least IDR 10billion (≈ USD 700,000).
How can I raise finance?
Shareholders must inject at least IDR 2.5billoin (≈ USD 175,000).
What are the legal requirements for setting up my business?
The new ‘Omnibus Law’ has opened up most business classifications to 100% foreign ownership.
There are 45 business classes that maintain partial ownership, depending on the business line in question, while a total of 58 business classes remain closed to foreigners.
What structure should I consider?
Establishment of Representative Office:
• No capital requirement.
• To conduct market research or promotion of overseas company’s product.
• Not allowed to sign contract, issue invoice, receive payment, or applying business license.
Limited Liability Company:
• Minimum 2 Shareholders
• One residing Director and One Commissioner
• Company’s Law No 40 of 2007
• Must follow the minimum investment requirement
What advice can you give me in regards to payroll and taxation requirements?
• There are dedicated industrial parks scattered across Indonesia
• Indonesia currently has 19 Special Economic/Free Trade Zone which has easy accessibility to the global market and are given certain facilities and incentives.
• Indonesia offers various tax incentives based on industries and certain investment valued.
• Corporate income tax is 22% and will be reduce to 20% in 2022. Medium-sized companies with annual revenue of less than IDR 50 billion may apply for 50% reduction in income tax rate, and small companies with annual revenue of less than IDR 4.8billion eligible for corporate income tax of 0.5% from revenue.
• Value Added Tax is 10%.
• Personal income tax rates begin at 5% and gradually increase to 15%, 25%, and a top rate of 30%. Apart from taxes, companies must also contribute to Employees’ social and health program and pension plan.
Is there anything else that I should know?
Indonesia is the largest economy in Southeast Asia, with GDP over USD 1 trillion, and it continues to play dominant role in global affairs as it becomes ASEAN’s only member of G-20.
Indonesia is strategically located along major sea lanes connecting East Asia, South Asia and Oceania.
Indonesia is endowed with rich natural resources from being a major producer of liquified natural gas and expansion of mining industry. Petroleum and mineral make up the majority exports.
Indonesia is the World’s fourth most populous country, with 53% of 270million people live in urban areas with increased purchasing power and the productive age group will dominate the population in 2025-2035.
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