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Setting up a company in Indonesia
For foreign investors establishing a company in Indonesia: the PT PMA structure, 2026 capital and tax rules, formation cost, timeline and a step-by-step process with expert advice.
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For foreign investors establishing a company in Indonesia: the PT PMA structure, 2026 capital and tax rules, formation cost, timeline and a step-by-step process with expert advice.
Company Formation in Indonesia: 2026 PT PMA Guide (Requirements, Cost and Tax)
Setting up a company in Indonesia gives investors direct access to Southeast Asia's largest economy and a consumer market of more than 280 million people. The foreign-owned company type, the PT PMA, is covered below across minimum capital, KBLI business codes, OSS-RBA licensing, corporate income tax, the KITAS work permit and post-registration LKPM reporting.
Contents
- Indonesia's Business Environment and Growth Potential
- What Is a PT PMA? The Foreign-Owned Company Structure
- Can Foreigners Own 100% of a Company in Indonesia?
- PT PMA vs PT PMDN vs Representative Office (KPPA)
- Advantages of Setting Up a Company in Indonesia
- PT PMA Requirements and Minimum Capital in 2026
- How to Register a PT PMA: Step by Step
- OSS-RBA Risk Tiers and Business Licences
- Required Documents
- Indonesia Company Formation Cost in 2026
- How Long Does PT PMA Registration Take?
- Indonesia Tax System and Rates
- Ongoing Compliance: LKPM and Annual Filings
- Investor KITAS and Work Permits
- Can a PT PMA Own Land in Indonesia?
- Priority Investment Sectors and Bali
- Common Mistakes and Nominee Risks
- Setting Up POS and Payment Infrastructure
- The Right Roadmap for Company Formation in Indonesia
- References
Indonesia's Business Environment and Growth Potential
Indonesia is ASEAN's largest economy and ranks among the biggest in the world by purchasing power parity. An archipelago of more than 17,000 islands, a young and rapidly digitalising population and an expanding middle class create strong opportunities in e-commerce, manufacturing, tourism, renewable energy and fintech. Government reform of the investment regime, in particular the OSS-RBA risk-based single-window system, has materially lowered entry barriers for foreign investors.
The country sits inside a single ASEAN market alongside Malaysia, Singapore, Vietnam and the Philippines, which makes regional trade, production and logistics networks accessible from an Indonesian base. Indonesia is also party to an extensive double taxation treaty network, including agreements with Germany, Turkey and most major investor countries, reducing withholding tax on cross-border profit repatriation.
What Is a PT PMA? The Foreign-Owned Company Structure
A PT PMA (Perseroan Terbatas Penanaman Modal Asing) is the foreign-investment limited liability company under Indonesian law. It allows foreign shareholders to hold up to 100% of the shares in sectors that are open to foreign investment, and shareholder liability is limited to the capital subscribed. It is the standard legal vehicle foreign investors use to trade, invoice and employ staff in Indonesia.
Core Structural Requirements
Shareholders, Directors and Commissioners
Under the Indonesian Company Law (Law No. 40/2007), a limited company is established by at least two shareholders, individual or corporate, through a notarial deed. The structure requires at least one director and at least one commissioner. Public companies and entities that collect public funds must appoint at least two of each. Having a resident director simplifies bank account opening and tax administration in practice.
KBLI Business Code and the KBLI 2025 Transition
Every company selects a KBLI code (Indonesian Standard Industrial Classification) that defines its business activity. Foreign ownership caps, investment thresholds and licence requirements all follow from that code, which makes the choice decisive. The KBLI 2025 classification, introduced by BPS Regulation No. 7/2025, went live in the OSS system on 15 June 2026. Existing permits remain valid; new applications convert KBLI 2020 codes automatically, and where one old code maps to several new ones the selection is made manually.
Positive Investment List and Foreign Ownership Caps
Sectors open, partially open and closed to foreign investment are set out in the Positive Investment List under Presidential Regulation 10/2021 as amended by Presidential Regulation 49/2021. Most sectors permit full foreign ownership, while a limited set of strategic activities cap foreign participation or require a local partner. Confirming the status of the intended activity before incorporation prevents licence refusals later.
Can Foreigners Own 100% of a Company in Indonesia?
Yes. In sectors classified as open on the Positive Investment List, a foreign investor may hold the entire share capital of a PT PMA. Because the company form itself requires a minimum of two shareholders, the shares are split between two foreign individuals or corporate entities. Restrictions attach to the KBLI code rather than to the industry in general, and where a company carries several codes the most restrictive cap governs the whole structure.
PT PMA vs PT PMDN vs Representative Office (KPPA)
Foreign investors choose between three vehicles: the foreign-owned PT PMA, the wholly domestic PT PMDN, and the non-trading liaison structure KPPA (representative office).
| Criterion | PT PMA | PT PMDN | Representative Office (KPPA) |
|---|---|---|---|
| Source of capital | Foreign, wholly or partly | Entirely domestic | Overseas parent company |
| Can generate revenue | Yes | Yes | No — promotion, market research and coordination only |
| Minimum paid-up capital | IDR 2.5 billion | Lower, based on enterprise size class | None |
| Investment plan threshold | Above IDR 10 billion | None | None |
| Best suited to | Invoicing and selling inside Indonesia | Local partnership or restricted sectors | Market entry research and representation |
Any investor who needs to issue invoices, collect payments and employ local staff in Indonesia requires a PT PMA. A KPPA is limited to representation and market research and cannot earn commercial income.
Advantages of Setting Up a Company in Indonesia
| Advantage | Detail |
|---|---|
| Large domestic market | More than 280 million consumers and a fast-growing middle class. |
| 100% foreign ownership | Full ownership in sectors open under the Positive Investment List. |
| Reduced capital threshold | The 2025 reform cut paid-up capital from IDR 10 billion to IDR 2.5 billion. |
| Digital licensing | OSS-RBA handles applications electronically through a single window. |
| Strategic location | Direct access to ASEAN markets and the Strait of Malacca trade route. |
| Tax treaty network | Extensive double taxation agreements, including Germany and Turkey. |
PT PMA Requirements and Minimum Capital in 2026
Under Minister of Investment and Downstreaming/BKPM Regulation No. 5/2025, promulgated on 2 October 2025, the minimum paid-up capital for a PT PMA was reduced from IDR 10 billion to IDR 2.5 billion. Article 26(10) states that the amount applies per limited liability company, not per KBLI code — the widely repeated "IDR 2.5 billion per KBLI code" reading is incorrect. The investment plan requirement is unchanged: above IDR 10 billion per five-digit KBLI code per project location, excluding land and buildings.
| Item | Position as of August 2026 |
|---|---|
| Minimum paid-up capital | IDR 2.5 billion per company (approx. USD 141,000) |
| Minimum investment plan | Above IDR 10 billion per KBLI code per location (excluding land and buildings) |
| Minimum shareholders | 2 (individual or corporate) |
| Directors and commissioners | At least one director and one commissioner |
| Registered address | Mandatory; a virtual office may qualify where zoning rules permit |
USD equivalents vary with the exchange rate and are indicative only. Special economic zones (KEK) may apply different thresholds.
How to Register a PT PMA: Step by Step
| 1 | KBLI code and capital plan Fix the business code, the permitted foreign ownership ratio and the investment plan. |
| 2 | Company name approval Reserve a unique name through the Ministry of Law AHU system. |
| 3 | Deed of establishment (Akta Pendirian) Executed before a notary; ministerial approval confers legal personality. |
| 4 | NIB and OSS-RBA registration The business identification number is issued and licences follow the risk tier. |
| 5 | Tax registration (NPWP and PKP) Corporate tax number, plus VAT registration where turnover requires it. |
| 6 | Corporate bank account Capital injection is evidenced through this account; usually the longest step. |
| 7 | Sector licences and KITAS Activity-specific permits plus residence and work permits for foreign staff. |
Sequence and duration vary with the business code, risk tier and location. Planning the bank account alongside incorporation avoids delays in evidencing the capital injection; our corporate bank account opening service covers this stage.
OSS-RBA Risk Tiers and Business Licences
OSS-RBA classifies activities by risk level and issues a different permit set for each tier. Government Regulation No. 28/2025 replaced Regulation No. 5/2021, introducing binding service-level deadlines per permit type and automatic issuance by the system where the responsible agency misses the deadline.
| Risk tier | Permit required |
|---|---|
| Low (rendah) | NIB only |
| Medium-low (menengah rendah) | NIB plus a self-declared Standard Certificate |
| Medium-high (menengah tinggi) | NIB plus a Standard Certificate verified by the sector ministry or local government |
| High (tinggi) | NIB plus a licence (izin) and environmental approval |
Required Documents
- Passport copies of shareholders and directors
- Deed of establishment (Akta Pendirian) and articles of association
- Proof of registered business address and zoning conformity
- KBLI business code and investment plan
- Details for the tax number (NPWP) application
- Incorporation documents and board resolution for corporate shareholders
- Passport, RPTKA approval and KITAS details for foreign managers
Indonesia Company Formation Cost in 2026
Official components follow published tariffs; professional fees vary with scope and location. Government Regulation No. 30/2026, effective 1 August 2026, reset the incorporation fee according to authorised capital brackets.
| Item | Amount (IDR) | Type |
|---|---|---|
| Incorporation fee — authorised capital 1–5 billion | 1,500,000 | Official tariff |
| Incorporation fee — authorised capital above 5 billion | 5,000,000 | Official tariff |
| Notary and deed of establishment | 5,000,000 – 15,000,000 | Market range |
| Registered address / virtual office (annual) | 2,000,000 – 15,000,000 | Market range |
| Environmental declaration (SPPL) and sector permits | 2,000,000 – 5,000,000 | Activity dependent |
| ITAS/KITAS state fee (one year) | 3,000,000 | Indicative tariff |
| Foreign worker levy (DKPTKA) | USD 100 per position per month | Official tariff |
Non-tariff items are market ranges; the final figure depends on scope, location and the chosen KBLI code. Paid-up capital is not a cost — it is equity injected into the company.
How Long Does PT PMA Registration Take?
For a low-risk KBLI code, legal entity formation, NPWP and NIB typically complete within two to four weeks, with the NIB itself issued in one to two days once the company has legal personality. Activities that need sector or operational licences add a further two to eight weeks. In practice the corporate bank account and KITAS stages generate most of the delay. Having documents apostilled and translated in advance shortens the timetable noticeably.
Indonesia Tax System and Rates
| Tax | Rate (2026) |
|---|---|
| Corporate income tax (PPh Badan) | 22% on net profit |
| Listed company reduction | 19% for qualifying public companies |
| Small-business relief (Art. 31E) | 50% reduction on the portion of income attributable to the first IDR 4.8 billion of turnover, where annual turnover does not exceed IDR 50 billion |
| VAT (PPN) | 12% statutory; 11% effective on non-luxury goods and services |
| Branch profit tax | 20%, reducible by treaty |
The statutory VAT rate is 12%, but under Minister of Finance Regulation No. 131/2024 the tax base for non-luxury goods and services is set at 11/12 of the sales value, keeping the effective rate at 11%. The true 12% applies to goods subject to luxury goods sales tax (PPnBM).
Withholding Tax and Double Taxation Treaties
Payments of dividends, interest and royalties to non-residents carry a domestic withholding rate of 20%. Treaty relief lowers this, provided the recipient is the beneficial owner and files a certificate of domicile (DGT form) certified by its home tax authority.
| Payment type | Domestic rate | Germany | Turkey |
|---|---|---|---|
| Dividends (portfolio) | 20% | 15% | 15% |
| Dividends (substantial holding) | 20% | 10% | 10% |
| Interest | 20% | 10% | 10% |
| Royalties | 20% | 10% – 15% | 10% |
Ongoing Compliance: LKPM and Annual Filings
Incorporation is the beginning of the obligation cycle, not the end of it. Every PT PMA must file the LKPM (Investment Activity Report) through OSS on a periodic basis, reporting realised investment and employment figures. Failing to file leads to administrative sanctions that escalate to suspension of the business licence.
- LKPM: periodic investment realisation report submitted via OSS.
- Monthly withholding and VAT returns: PPh 21/23/26 and PPN filings.
- Annual corporate tax return (SPT Tahunan): due by the end of the fourth month after the financial year end.
- Annual financial statements and shareholder resolutions under company law.
- Employee social security registration: BPJS Ketenagakerjaan and BPJS Kesehatan.
Investor KITAS and Work Permits
Foreign directors and employees working in Indonesia need a KITAS, the limited-stay permit. The investor KITAS is available to foreign nationals holding a qualifying shareholding in a PT PMA and can cover the right to work. Employment-based KITAS requires prior approval of an RPTKA (foreign manpower utilisation plan).
Under Government Regulation No. 34/2021, the employer pays the DKPTKA foreign worker levy of USD 100 per position, per person, per month, settled in advance for the RPTKA validity period. For ordinary roles an RPTKA is granted for up to two years and may be extended; temporary work is capped at six months. Government bodies, diplomatic missions and certain social and religious organisations are exempt.
Can a PT PMA Own Land in Indonesia?
Freehold title, Hak Milik, is reserved for Indonesian citizens. A PT PMA can hold property through Hak Guna Bangunan (HGB — right to build and use), Hak Guna Usaha for commercial land, and in defined cases Hak Pakai (right of use). These titles run for fixed terms and are extendable. Villa and hospitality investments in Bali are typically structured on an HGB title registered to a PT PMA, which makes title and zoning due diligence essential before purchase.
Priority Investment Sectors and Bali
Foreign investment concentrates in the digital economy and e-commerce, manufacturing and supply chain, tourism and hospitality, renewable energy, agri-food processing and financial technology. Each sector carries its own KBLI code, foreign ownership ceiling and licensing requirements.
Bali forms a distinct investment cluster around tourism, villa management, food and beverage and lifestyle brands. Zoning rules there are strict, and tourism activities are licensed only on correctly zoned parcels. Jakarta is the hub for finance, technology and wholesale trade, while Sumatra and Kalimantan attract natural resources, palm oil and agricultural investment.
Investors comparing regional options can also review our guides on company formation in Singapore, company formation in Malaysia and Labuan offshore companies.
Common Mistakes and Nominee Risks
- Choosing the wrong KBLI code: a mismatch with actual operations leads to licence refusal or an additional capital requirement. Where several codes apply, the most restrictive governs.
- Overlooking foreign ownership caps: some sectors limit foreign participation or require a local partner.
- Confusing paid-up capital with the investment plan: IDR 2.5 billion paid-up does not remove the IDR 10 billion investment plan threshold.
- Nominee shareholding arrangements: registering a local individual as a paper shareholder conflicts with the Investment Law; side agreements can be held void and the investor may lose the economic interest entirely.
- Skipping LKPM filings: missed reports trigger administrative sanctions and licence suspension risk.
- Deferring tax and KITAS steps: running them in parallel with incorporation shortens the overall timetable.
Setting Up POS and Payment Infrastructure
A PT PMA can obtain virtual or physical point-of-sale facilities in Indonesia. Once incorporation is complete, applications proceed with local banks, payment processors and licensed fintech providers, which assess the company's legal standing, the business activity registered under its NIB and its financial history. The QRIS national QR standard is widely adopted and simplifies collection for retail and food service operators. Businesses planning cross-border collection can review our global virtual POS and payment systems solutions.
The Right Roadmap for Company Formation in Indonesia
Three decisions determine whether an Indonesian entry runs smoothly: a KBLI code that accurately describes the activity, a financial plan that satisfies paid-up capital and the investment plan as separate tests, and bank account, tax registration and KITAS steps run in parallel with incorporation. The 2025 capital reform lowered the entry threshold, and the 2026 OSS and fee regulations have made the process more predictable.
At the same time, the KBLI 2025 transition, higher incorporation fees and the removal of limited companies from the final small-business tax regime have made a portion of pre-2025 guidance obsolete. Planning against current regulation shortens the application cycle and removes the cost of restructuring later. World Company Setup manages the process end to end, from KBLI analysis through NIB, NPWP, banking and KITAS.
References
- Ministry of Investment and Downstreaming/BKPM — Regulation No. 5/2025 on minimum paid-up capital and investment plan: jdih.bkpm.go.id
- OSS — Sistem Perizinan Berusaha, the official business licensing portal: oss.go.id
- Directorate General of Taxes (DJP) — corporate income tax, VAT and Regulation No. 20/2026: pajak.go.id
- Ministry of Manpower TKA-Online — DKPTKA levy and RPTKA procedure: tka-online.kemnaker.go.id
- Bank Indonesia — JISDOR reference exchange rate: bi.go.id
- PwC Worldwide Tax Summaries — Indonesia corporate tax and withholding rates: taxsummaries.pwc.com