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FAQ (Frequently Asked Questions)

Get to know more about business processes and requirements when it comes to running a company in Indonesia. If you cannot find an answer here, we will be happy to answer your questions directly.

1. Company registration

Can I set up a company in Indonesia as a foreigner?

Yes, as a foreigner you can set up a foreign-owned company (PT PMA) in Indonesia if your business field is entirely open to foreigners. Find more about Indonesia’s Positive Investment List.

Are there options to expand my business without incorporating a company in Indonesia?

Yes, particularly for export and import business, you can use a service called undername import.

What are the common company types in Indonesia?

Depending on your business requirements, preferences, and the nature of your business. there are 3 company types you can choose

  • Local Company (PT): 100% local ownership.
  • Foreign Company (PT PMA): can be entirely owned by foreigners, however, restrictions in business sectors apply
  • Representative Office: a branch of parent company overseas whose purpose is to conduct marketing-related activities without generating income or profits

What kind of company is the best for me: a foreign-owned company, local company, or representative office?

It all depends on the nature of your business and the purpose of your business incorporation. Consult with us if you are not sure.

When do I have to deposit money in the bank?

As soon as the company completes its establishment process, the minimum paid-up capital should be deposited. Another option to look into: after the company receives the Article of Association and Deed of Establishment.

Will the government check if I have fulfilled the investment plan of IDR 10,000,000,000?

Yes, the government will check IDR 10,000,000,000, which is the minimum paid-up capital. Fulfilling this requirement is a must.

Is a foreigner able to become a director or commissioner?

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

2. VISA

Can I use a business visa to work in Indonesia?

No, you cannot. Business visa can only used for business purposes such as attending business meetings, seminars, exhibitions, or training.

To work in Indonesia, you are required to apply for a work permit as well as a limited (KITAS) or permanent (KITAP) stay permit.

How easy is it to obtain a business visa or work visa?

Difficulty level depends on your country of origin. Indonesia has a list of restricted countries, including Afghanistan, Guinea, Israel, North Korea, Cameroon, Liberia, Niger, Nigeria, and Somalia. Citizens from those countries will find the process complicated and difficult and with a high possibility that their application will be rejected.

Who can be my visa sponsor?

For business visa and work visa, the sponsor has to be a company legally registered in Indonesia.

Regarding social-cultural and retirement visa as well as KITAS & KITAP, the sponsor must be either an Indonesian legal entity or citizen. Cekindo provides visa sponsorship should you require this service.

How long is the visa application process and for how long will my visa be valid?

The duration depends on the visa type.

  • Work and stay permit take approximately 2 months. If the applicant is a director of a company, the visa is valid for 1 year. For other positions, the visa is valid for 6 months.
  • Multiple-entry business visa takes approximately 1 week and will be valid for 1 year.
  • Single-entry business visa and social-cultural visa take approximately 1 week and will be valid for 2 months with the possibility to extend the visa 4 times, each time for an additional 30 days.
  • Retirement visa takes approximately 2 months and will be valid for 1 year.

3. Finance

Should I submit tax reports if my company has been established but currently does not have any business activities?

Yes, it is mandatory to submit monthly and annual tax reports even if your company does not have any business activities, thus zero taxes.

Will having a tax ID but never submitting tax reports cause a problem to my company?

Yes, you will receive an administrative penalty for delaying or not correctly and promptly filing the tax report. To avoid this, it is best to hire a local third party to handle your taxation matters in Indonesia such as Cekindo.

What are the obligations related to payroll?

Health Insurance and Social Security Insurance (BPJS) are mandatory. Certain percentage will be borne by the company and the employee respectively. Other obligation is tax withholding. The percentage and type of taxes vary from case to case. Contact us to get the information on your specific field.

What are the deadlines for annual tax return?

The deadline for an individual tax return is 31 March. A corporate tax return must be lodged within four months after the end of the calendar year or taxable year. More information to be found here: 21 Must-Know Facts about Annual Tax Return in Indonesia.

4. Product registration

What are the regulations on products distribution in Indonesia?

Before you can distribute your products in Indonesia, you will have to register your product with the BPOM (National Agency of Food and Drugs) and MoH (Ministry of Health). Only an Indonesian legal entity can register the product. If you decide to distribute your product via a local distributor, they will register the product under their entity in Indonesia and become the product license holder. Cekindo can act as your local distributor and register the product under its name.

Is it safe to register a product under a local distributor?

Yes and no. It is very important to choose a reliable distributor as they will register the product under their company and become the product license holder as well as the import license holder. It is difficult to change the local distributor in case you are not satisfied with the cooperation.

What if my product has been registered under a local distributor and I decide to transfer the license to my company or another distributor?

You can transfer the license as long as your current local distributor agrees to change the product license holder.

What requirements are needed if my Indonesian company will register the product?

You need to register the product with BPOM (National Agency of Food and Drugs) and MoH (Ministry of Health). The type of testing and document requirements depend on the type of product you want to register. Also, the time frame for registration could vary between 3 to 15 months.

If my company is Halal certified for Europe or Malaysia, does it mean it is also halal certified for Indonesia?

The Indonesian Halal bodies recognise some of the international halal certifications. Nevertheless, since there might be differences in the standards used by each of the certification bodies, it is still needed to process Halal Certification in Indonesia.

Do all the products sold in Indonesia need to be halal registered?

Yes, if they are halal. Law no. 33 of 2014 states that all halal products distributed in Indonesia that are not halal certified will be considered as non-halal since October 2019. Further information can be found in Halal Certificate Registration with Cekindo.

5. HR Outsourcing

What are the standard regulations regarding employment in Indonesia?

  • Minimum salary of IDR 3.9 mil for Jakarta region
  • 12-day annual leave (minimum)
  • BPJS coverage
  • Holiday allowance

How does HR outsourcing mechanism work?

As your HR outsourcing provider, Cekindo signs a standard employment agreement with an outsourced employee. After this, we take care of the employee’s payroll in coordination with your company. Cekindo is also responsible for paying the salary to the employee.

What taxes are involved?

  • Employee income tax article 21
  • VAT on both service invoice and salary invoice
  • 2% recovery tax on salary invoice

How does Cekindo’s recruitment outsourcing mechanism work?

As a professional executive search agent, Cekindo helps promote job vacancies, screen and shortlist applicants, conduct pre-interviews and arrange final interview with applicants. This can also be topped up with an employee background check.

What needs to be included in an employment background check?

These are a few things you need to examine while performing an employee background check:

  • Criminal record
  • Educational background, qualifications, and professional certifications
  • Work and employment history
  • Sexual offense record
  • Alcohol and drug tests
  • Credit and financial background

How many types of employment and hiring options are there in Indonesia?

According to the Indonesia’s Manpower Law employers can hire the Indonesian talents either under a temporary or a permanent contract.

What are the non-wage compensations that employers in Indonesia usually provide to their employees?

In addition to the agreed-upon salary, employers also typically offer some other compensations such as the overtime pay, paid annual leave, festive holiday leave, and insurances.

What other things should be considered when it comes to hiring local and foreign employees in Indonesia?

  • Prohibit any form of discrimination and provide equal opportunity for Indonesians and expatriates
  • Increase the competence of the workers by giving or encouraging job training
  • Follow the procedures of termination (Terminating an employee in Indonesia can be a long, tedious, and expensive process.
  • Observe the working hours, holidays, and overtime regulations
  • Give the mandatory employee benefits including social security and health insurance
  • Withhold only the right amount of income tax on behalf of the employees
  • Follow the wages and other benefits outlined by the law
  • Process the work permits for foreign employees

Looking for more answers? Get in touch with us by filling in the form below. Or, visit our offices in Jakarta, Bali and Semarang. 

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