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Indonesia Company Incorporation

The need for Indonesia company incorporation services to incorporate Indonesia companies continues to rapidly grow. Many companies are now choosing to incorporate their businesses in Indonesia due to the lack of stringent taxes on foreign direct investment. Like many countries around the world, Indonesia also has a lot of untapped opportunity within its vast and diverse geography. As an Indonesia company you will find that there are currently many opportunities for companies to choose from including establishing a manufacturing facility, retail outlet or even a distribution center on the East Timor and West Timor regions, or establishing an offshore operation in Indonesia’s Borneo region – an area that has been historically ignored by many companies outside Indonesia.

Indonesia company incorporation

With regards to the cost of incorporating in Indonesia, it is currently between six and eight percent and the statutory rate varies from one year to the next, but generally six percent is the general range. Indonesia company incorporation typically takes around three months from the submission of your Articles of Association (OA) to the Registration and Examination Department (REID) and up to three months from the submission of all completed application forms to the Companies Development Department (CDD). From the receipt of your application, the REID will determine if the business needs further evaluation and approval or if it can proceed with standard business needs assessment, review and possible approval at any stage. Because the cost of setting up a business in Indonesia can be very high, the Indonesian government has implemented a number of tools and incentives to help speed up the process of registration.

Like most foreign owned company registration in Indonesia, it is required that companies register with the PTDC (Sultanate Development Corporation) or the PPA (Unitary Development Agency). The most common type of registration is a limited liability partnership (LLP), also known as a non-domestic company. Limited liability partnerships (also referred to as ‘passive businesses’) have significant advantages over corporations, allowing companies to limit their liability, avoid double taxation, enjoy advantageous tax treatment in many foreign countries and have the option to trade publicly.

Companies must also ensure that they comply with several other requirements such as obtaining a business license from the SARI (Sultanate Business Development Office) and ensuring that they have an active bank account in Indonesia with a balance exceeding the lowest amount of capital required by the law. These requirements are designed to prevent indirect and dishonest conduct which would otherwise be exempt from company registration and regulation in Indonesia. Additionally, companies must ensure that they obtain a business licence from the respective government authority responsible for licensing and regulating foreign owned businesses in Indonesia – in general, the tax department.

One of the most common ways of incorporating a business in Indonesia is through limited liability companies. However, another way of incorporating a business in Indonesia – commonly referred to as a ‘Malaysian company’ is by setting up a company in accordance with the Memorandum and Articles of Association of Malaysia. The latter provides that all necessary legal procedures relating to company formation, registration, maintenance of books and accounts, payment of payroll, payment of shares, payment of dividends and transfer of share holders will be managed by the attorney general of the country in which the company is incorporated. Furthermore, the document includes measures whereby a company may resolve disputes between itself and its stockholders and between itself and other third parties. To complete a shareholders’ agreement, approval by shareholders is required and it must include a provision enabling the directors of a company to petition the court for the resolution of any conflicts or disputes that arise between the company and its directors.

The documents required for Indonesian company incorporation comprise the Memorandum and Articles of Association of the company, its Articles of Association along with relevant foreign currency quotations, and its annual report. Foreign investors must understand that the failure to comply with these conditions will lead to the cancellation of their registration as well as the confiscation of their assets. Furthermore, before starting any new business activities in Indonesia, it is crucial to file the necessary documents to ensure that they meet the stipulated legal requirements. Moreover, all legal fees will be borne by the entrepreneur from the proceeds of the sale of shares.