Understanding Different Types of Business Licenses in Indonesia

Understanding Different Types of Business Licenses in Indonesia

  • InCorp Editorial Team
  • 9 April 2025
  • 6 minutes reading time

The laws in Indonesia require a wide range of businesses to acquire a business license before they can be legally established and operated. Some businesses may also obtain a more specific license, such as a commercial license to sell alcohol.

Follow InCorp’s guide to understand the different types of business licenses in Indonesia.

What is a Business License?

A business license is an official document authorizing you to operate a business legally. The specific requirements for obtaining a permit depend on the nature of your company’s business activities or intellectual property.

In Indonesia, acquiring the necessary business licenses is compulsory for all business entities, from small and medium enterprises to large corporations. Operating without a license puts your business at risk of being shut down by government authorities.

When Do You Need a Business License?

You must obtain a business license if your business operates within a regulated industry or involves significant liability. The government mandates licensing for businesses that require oversight due to the nature of their activities, ensuring compliance with industry standards and legal obligations.

Business License Indonesia Validity

The validity of a business license in Indonesia varies depending on the type of license issued. Some licenses, such as the General Business License (NIB), remain valid indefinitely as long as the business complies with regulatory requirements.

However, other specialized licenses may require renewal, typically 1 to 5 years after a certain period. Businesses must monitor expiration dates and ensure timely renewals to avoid penalties or operational disruptions.

Types of Business Licenses in Indonesia

There are primary and non-primary business licenses in Indonesia. Primary licenses are the most widely used business licenses. A sample of common business licenses in Indonesia includes:

Primary Business License

Companies in Indonesia often use one of the three primary licenses, which include a general business license, an industrial business license, or a construction business license.

General Business License (NIB)

The General Business License, NIB (Nomor Induk Berusaha), is a flexible license covering a broad spectrum of general business activities. The NIB is the essential license whether your business involves trading, consulting, or providing services. It serves as a foundation for many companies, streamlining the licensing process.

Industrial Business License (IUI)

The Industrial Business License (IUI) is crucial for manufacturing businesses. If your company produces goods or processes materials, this license ensures that your operations meet safety and quality standards.

Construction Business License (SBU)

Companies in the construction industry must obtain a Construction Business License (SBU). This license is required for businesses involved in building, infrastructure development, and related activities, ensuring that projects comply with regulations and safety guidelines.

Non-Primary Business License

Non-primary licenses include commercial and operational licenses and permits. Based on their business activities, these licenses are required before businesses start operating.

Restaurant License

A Restaurant License is essential if your business sells food and beverages. This license ensures that your establishment meets hygiene standards and complies with other regulations, safeguarding the health and safety of your customers.

Hotel License

A hotel license is crucial for those entering the hospitality industry. This license applies to businesses offering accommodation services and covers key aspects such as safety, hygiene, and guest comfort.

Transportation License

A transportation business involving taxis, buses, or trucks requires a Transportation License. This license ensures the safety of passengers, proper vehicle maintenance, and compliance with transportation laws.

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Licenses That Can Be Applied via OSS

The Indonesian government introduced three types of licenses that can be applied through OSS to replace and consolidate the previous licenses. This implementation integrates and simplifies the license-issuing procedures.

  • Business identification number (NIB)
  • Business licenses
  • Operational and commercial licenses

How to Get Business Licenses in Indonesia via OSS

The OSS licensing procedure system is relatively straightforward. Business owners must complete their registration with the OSS and acquire the Business Identification Number (NIB).

Once the business license Indonesia requirements are met and the NIB is obtained, the business license will be processed, and the applicant will receive it shortly after.

Access the OSS System

You can start the OSS registration by preparing the following for application submission:

  • Applicant’s name
  • Identity card number or passport number
  • Registration number of the deed of establishment for private companies
  • Establishment’s legal basis for public companies

Apply and Obtain an NIB

Then, the applicant (as an individual or non-individual) shall proceed to provide the following information to get the NIB:

Individuals

  • Applicant’s name
  • Identity card number or passport number
  • Business line or category
  • Business address
  • Investment location
  • Planned investment value
  • Business contact number
  • Plan of workforce utilization
  • Taxpayer identification number
  • Plan of fiscal and customs application

Non-individuals

  • Investment type
  • Business registration number or name of the deed of establishment
  • Business line
  • Investment location
  • Planned investment value
  • Plan of workforce utilization
  • Entity’s contact number
  • Plan of fiscal and customs application
  • Taxpayer identification number
  • ID number of the business or person in charge

Once all required documents have been submitted, proven valid, and complete, the business license is processed in approximately 14 business days.

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Licenses That Cannot Be Secured via OSS

BKPM is still in charge of licensing processes of several sectors in Indonesia that cannot be done through OSS. The sectors with licenses that cannot be secured through OSS include the following:

  • Electricity sector
  • Mineral and coal sector
  • Oil and gas sector
  • Public housing and public work sector
  • Custom and taxation
  • Capital investment

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Obtain a Business License in Indonesia with InCorp

Indonesia offers excellent business opportunities and has emerged as one of the fastest-growing economies in the world.

If you plan to expand your business in Indonesia, you must be familiar with acquiring a business license. At InCorp Indonesia, we offer comprehensive services and tailored solutions to meet your needs.  

Why Choose InCorp Indonesia for Your Business?

  • Tailored Solutions
  • Expert Guidance
  • Efficient Processes
  • Proven Track Record

Ready to take the next step? Fill out the form below to schedule a consultation and discover how InCorp can elevate your business in Indonesia.

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

    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.

    For tax purposes in Indonesia, companies must maintain their books in Rupiah, using the Indonesian language, and store them within the country. Exceptions for using USD and English in bookkeeping require prior notification to the authorities and any use of languages other than Indonesian needs approval from the Ministry of Finance.

    The procedures for (voluntarily) liquidation typically involve the following steps:

    • Conduct a general shareholder meeting to approve the liquidation and the liquidator’s nomination
    • Notify the Ministry of Law and Human Rights as well as the creditors of the liquidation and the distribution plan for the assets by newspaper notice
    • All business licenses and tax numbers should be canceled or revoked; the tax office will conduct a tax audit to revoke the tax number
    • Make sure creditors are paid and that any liquidation funds are distributed to shareholders (if any)
    • Conduct a general meeting of shareholders to approve the liquidator’s discharge and acquittal
    • Notify the Ministry of Law and Human Rights of the liquidation’s outcome. After receiving the notification, the Ministry of Law and Human Rights will deregister the company’s status as a legal entity and remove its name from the Company Registry
    • Release the liquidation’s outcome in a newspaper

    Completing the liquidation process can take around two years.

    In Indonesia, employment arrangements are categorized into temporary employment agreements (PKWT) and permanent employment agreements (PKWTT). Temporary contracts are for short-term, seasonal, or experimental work, while permanent contracts are for continuous employment.

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Disclaimer

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.

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