FAQs About Registering a Company in Indonesia

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With the passing years, Indonesia is growing its reputation as one of the best countries in Southeast Asia to start a business. The country is going through rapid development and reforms, and many sectors are still unexplored. Furthermore, in recent times, the government has been introducing various rules and regulations to help the investors and the economy alike.

If you are looking for a company incorporation Indonesia specialist, you may have a lot of questions. We try to answer some of the most asked questions while incorporating a company in Indonesia.

What are the Types of Companies in Indonesia?

Indonesia’s company types can be a little complicated to understand for some. Apart from the sole proprietorship and partnership, the limited liability company comes in these two forms:

Local Company

A local company has strictly local contributions and investments. However, the company can have a foreign director, as long as all the shareholders are locals. A local company in Indonesia does not need a physically registered address if they have a virtual address for mailing.

Depending on the investment amount, there are three types of local companies:

  • Small Local Company
  • Medium Local Company
  • Large Local Company

Foreign Company

A company which has at least one foreign shareholder is called a foreign company in Indonesia. Foreign companies have more investment requirements than locals and have lesser flexibility when it comes to the sectors they can work in. Unlike local companies, they need a physical registered address.

The minimum investment required for a foreign company is similar to a large local company. Furthermore, 100% foreign shareholding is available in Indonesia.

How Easy is it to Run a Business in Indonesia as a Foreigner?

Indonesia welcomes foreigners, even if some international investors report that the government favours the local economy more than the FDI. The rules sometimes tend the locals more than international investors, and even if the bureaucracy is significantly lower in recent days, it still exists.

On the other hand, there are a lot of perks of being a foreign investor in Indonesia. If you have the necessary papers and file for taxes, you are actually able to buy land and property in the country for living or even investing. This shows how convenient it can actually be to be a foreign investor in Indonesia.

What are the Tax Rates in Indonesia?

The tax rates in Indonesia was 25% to the net taxable income in the fiscal year 2019. The rate decreased to 22% in 2020 and 2021, and from 2020, businesses will only need to pay 20% of their income. Moreover, various schemes and discounts decrease the final tax you need to file.

How Much Does it Cost to Start a Company in Indonesia?

If you have already figured out, registering a company in Indonesia can be a long affair. You have to take care of many procedures and go through offices, which make it almost impossible for foreigners to establish a company themselves. Thus, you must work with a company registration provider, and the costs depend on the type of business you need to open.

To know more about it, see how much to register a company in Indonesia.

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