Business License Indonesia

[2020 Updated] How to Get a Business License in Indonesia

  • InCorp Editorial Team
  • 2 April 2014
  • 3 minutes reading time

Licensing issues were established by Presidential Instruction No. 5 Year 1984 date of 11 April 1984 on Guidelines for Implementation and Control Permissions on the line of business. The rules ensure that any business in Indonesia can apply for a license smoothly, legally and in a structured manner.

A business license in Indonesia is required for any business activity by small and medium enterprises as well as  large-scale businesses, includingforeign investment companies.  Having a business license identifies your business and its operation as  legitimate and permitted by the appropriate authorities.

Business Licenses are issued by the Investment Coordinating Board (BKPM) or Regional Investment Coordinating Board (BKPMD) to a company that was established within the framework of a foreign investment company (PMA). A business License is issued as an operating permit to conduct commercial business activities in the trade of good and services.

Classification of business license for PMA

  • A company engaged in general trading, goods or other services should have a business license.
  • A company engaged in the manufacturing industry outside of the oil, gas and geothermal sectors should have an  industrial business license.

Business license requirements

A permanent business license will be given to aPMA if it meets the following requirements:

  • Has been in productio
  • Meets the time limit given (3 years)

Application Procedures

  • A PMA can apply for a permanent license to the Head of BKPM or BKPMD (BKPM region/province). It depends upon the foreign investment license, whether it will issued by the BKPM or the BKPMD. It also depends upon the domicile of the company.
  • The applicant completes and signs the application form for a business license at BKPM office or the BKPMD and attaches the required documents.
  • BKPM or BKPMD officers will check all the files and the eligibility and completeness of the application, and issue a permanent license certificate.

Requirements

  • Copy of permit approval for investments
  • Copy of Deed of Establishment and its amendments.
  • Copy of company domicile, NPWP and TDP.
  • Copy of contract/rental of business premises and certificate from the owner of the building.
  • Copy of ID card and passport or KITASfor foreigners.
  • Nuisance Act Permit and Location Permit (SITU)
  • List of office equipment and Industrial Equipment
  • Company organizational structure

Based on new regulation form the beginning of 2015 all new foreign companies and foreign companies which till now still don´t have business license needs to have financial audit before they can apply for a permanent business license and also other connected licenses (import license, etc.) which are critical for a lot of companies.

This new regulation wants to ensure that all foreign investors realized their an investment plan and not only submitted an investment plan to Investment Coordinating Board (BKPM) just only on paper, which often happened in the past.

Time processing and validity

  • The process for a permanent business license takes 14 working days.
  • A permanent business license for a PMA is valid for 30 years.

2020 Business License Application with OSS

To facilitate and streamline the business licensing process in Indonesia, the government has implemented what is called the Online Single Submission (OSS) system.

With OSS, all business entities will have to register online. After completion of registration at the OSS, each business will automatically get a Business Identity Number NIB (Nomor Induk Berusaha) one day after the registration, provided that the submitted documents are complete and meet the requirements.

A Business License will also be granted alongside the NIB if your business does not require other licenses, which depends on the business sector your company is engaged in.


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Verified by

Hotdo Nauli

Senior Legal & Delivery Manager at InCorp Indonesia

Hotdo heads the Legal and Delivery team at InCorp Indonesia, managing Product Registration, Legal Advisory, and Business Licensing. With over 8 years of experience, she focuses on compliance and integrity, ensuring all client operations align with Indonesian laws and regulatory standards, including contract reviews and sector-specific licenses. She is also a licensed advocate and a member of the Indonesian Advocates Association (PERADI). 

Frequently Asked Questions

    Shareholders of a PMA Company in Indonesia have various rights, including voting rights in general meetings, entitlement to dividends and liquidation proceeds, and access to information.
    They must approve significant matters through general meetings of shareholders with specified quorums, such as:

    • Amending articles of association
    • Changing share capital
    • Appointing or dismissing directors and commissioners
    • Approving major transactions, dividends, and financial statements
    • Company reorganization

    A newly established PMA company in Indonesia is typically provided with import facilities, tax holidays, tax allowances, or investment allowances.

    • Import facilities
      Investors in Indonesia, particularly in manufacturing, may benefit from import tax exemptions for capital goods and raw materials through the Master List Facility. The imported goods must meet specific criteria, such as not being produced locally or not meeting industry demand despite local production.
    • Tax holiday
      The government offers CIT reductions of 50% or 100% for 5–20 years for listed pioneer industries, based on investment value. After this period, a CIT reduction of 25% or 50% applies for two fiscal years. Non-listed sectors can also apply by meeting criteria demonstrating pioneer industry status.
    • Pioneer industries are industries that have a wide range of connections, provide additional value and high externalities, introduce new technologies, and have strategic value for the national economy.

    • Tax allowance
      For companies in certain designated areas or regions, the government may provide the following tax concessions:
      Net income reduction up to 30% of the amount invested, prorated at 5% annually for six years, on condition that the assets invested are retained for the same duration.
      Accelerated depreciation and/or amortisation deductions
      An extension of tax losses carried forward for a maximum of ten years
      A 10% (or lower if treaty relief is available) withholding tax rate on dividends paid to non-residents
      The applicant eligible has to meet high-level-criteria for the above tax facilities:
      High investment value or for export purposes
      High manpower absorption
      High level of local content
    • Investment allowance
      The government offers a reduction in net income of up to 60% of the investment, distributed at 5% annually over six years of commercial production, contingent upon the retention of invested assets for the same duration. To qualify, applicants must meet business line eligibility criteria and employ a minimum of 300 Indonesian workers in the project.
    • Super deduction
      This facility could be granted to certain businesses, such as:
      60% reduction in net income of the amount of tangible fixed assets invested for labor-intensive industries, distributed throughout a certain time frame.
      Up to 200% reduction in the gross income of the amount spent for human resources development in certain competency activities.
      Up to 300% reduction in gross income of the amount spent for certain R&D activities in Indonesia.

    Yes, in a foreign-owned (PT PMA) company, a foreigner can be a director or a commissioner

    According to Presidential Regulation No. 10/2021 and the amended version, all businesses are open for domestic and foreign investment with these limitations and classifications:

    • Eight businesses are closed to foreign investment and may be operated by the central government.
    • Designated business sectors or joint ventures with cooperatives (koperasi) and micro, small, and medium enterprises
    • Open businesses are subject to specific conditions, such as those that are exclusively available to 100% local investors, those with restricted foreign shareholding, and investments requiring special licenses

    Certain sectors are closed to foreign investment, including narcotics cultivation, gambling, and environmental conservation activities.

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The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind. We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials. We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website.