• Indonesia Offshore Company

Indonesia is regarded as one of the greatest nations to invest in as a foreign entrepreneur because it is the world’s largest archipelago, and its economy is constantly rising.

However, injecting a large number of money and jumping into a place you are unfamiliar with is not advisable, especially when you are starting a commercial venture in a new market. It is important to understand the company incorporation process and business structures in Indonesia so you can make a sound decision.

One of the types of business structures is an offshore company. Offshore companies offers different types of benefits, including low tax obligations, low setup and maintenance costs, and reduced administration.

What is an Offshore Company in Indonesia?

Offshore companies carry out the same type of business as a locally incorporated company and the liability of its shareholders is generally limited to the amount of capital they have invested into the company, and they both will essentially be a private limited company.  However, this will be known as an international business

NOTE: Basically, an offshore company means that there is no one running the company in Indonesia, yet it still an Indonesia company.

The difference is that an Indonesian offshore company identify themselves with the company’s incorporation by jurisdiction and that a locally incorporated company will go through the usual process of an Indonesia company incorporation while an offshore company will be incorporated by a local nominee director.

For foreign companies who is setting up an offshore company in Indonesia, and do not wish to relocate, can also opt for the offshore company incorporation option.

You can incorporate an offshore company in Indonesia without any work passes or work visa (KITAS). However, you will not be able to reside in Indonesia for extended period of time.

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Benefits of Offshore Company Incorporation in Indonesia

There are plenty of benefits of incorporating an offshore company in Indonesia. These include:

  • Privacy

  • Asset protection

  • Reduced tax liability

  • Protection against lawsuits

  • Flexible business laws

  • Ease of operation

  • Confidentiality

Aside from the above, the cost efficiency of incorporating in Indonesia is another attractive factor for investors and entrepreneurs given the low cost of labour in the country. Most investors also often associate an offshore company with tax efficiency.

Incorporation with Nominee Director

The first way to incorporate an offshore company is through a nominee director.

If you are new to the business world, a nominee director is an individual who is appointed to represent the interests of another group or person or company.

As the name suggests, a nominee director helps foreign individual or investors for an Indonesia Company Incorporation, and they function as the director of a company for meeting the legal requirement to own a local director. Due to the functions, a nominee director acts passively and lacks certain power in the company.

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Indonesia Offshore Company Registration Requirement

If you do decide to incorporate an offshore company in Indonesia, you should know certain things prior to the incorporation.

Indonesia has two business entities open to foreigners

  • Foreign Investment Limited Liability Company (PT PMA)

  • Representative office (KPPA)

PT PMA

A PT PMA company or also known as Perseroan Terbatas Penanaman Modal Asing in Bahasa Indonesia is a deal for companies that wants to engage in commercial activities in Indonesia. While foreign investors who seek to engage in market research, networking, or feasibility studies, opting for a representative office (KPPA) is the ideal business route.

However, do note that foreign investors would also be required to comply with the Positive Investment List laid down by the Indonesian government.

KPPA

A KPPA company or also commonly known as Kantor Perwakilan Perusahaan Asing (KPPA) in Bahasa Indonesia allows foreign investors to create a market presence in Indonesia and similar to PT PMA, a KPPA is usually set up for management reasons. However, its roles are limited to managing, coordinating, supervising, liaising, and representing the main company.

As a KPPA Company, it is important to note that you are not allowed to receive any revenue.

Fun Fact: The major industrial business sector revolves around natural gas, natural mining materials, petroleum accounting for 43% of Indonesia’s GDP!

Opening a Company Bank Account in Indonesia

After deciding on your type of business entity and completed the company registration process, the next step is to open your corporate bank account in Indonesia.

The requirements to open a company bank acccount are:

  • Original or copy of your passport and KITAS will be required

  • Original or copy of the business permit and proof of identity

  • Original or copy of your company tax identification number (NPWP)

  • Original or copy of your Deed of Establishment

  • Original or copy of your Articles of Association (if any)

  • Business license

  • Domicile letter

  • Monthly account administration fee

A KPPA company or also commonly known as Kantor Perwakilan Perusahaan Asing (KPPA) in Bahasa Indonesia allows foreign investors to create a market presence in Indonesia and similar to PT PMA, a KPPA is usually set up for management reasons. However, its roles are limited to managing, coordinating, supervising, liaising, and representing the main company.

As a KPPA Company, it is important to note that you are not allowed to receive any revenue.

NOTE: While these are the requirements that we have listed, it should be noted that every bank may have slight variations in their requirements. It is recommended that you reach out to the bank directly to ask for the specific requirements.

Ready to incorporate your company in Indonesia? Reach out to us for a free consultation for company incorporation, visas, corporate secretarial, and more.

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FAQs

Why should I set up an offshore company?2021-10-28T09:58:11+08:00

A common reason to set up an offshore company is to meet the legal requirements of the country where you want to buy property. 

What are the benefits of an offshore company?2021-10-28T10:12:00+08:00

Some of the benefits of having an offshore company includes: 

  • Privacy 
  • Asset protection 
  • Reduced tax liability 
  • Protection against lawsuits 
  • Flexible business laws 
  • Ease of operation 
  • Confidentiality 
What privileges do PT PMA company receive?2021-10-28T09:55:46+08:00

In Indonesia, a foreign-owned company receives many privileges and advantages, and they are mentioned in the following. 

  • Ease of obtaining licenses and permits – Most checks are done within a short amount of time with reference other business entity types. 
  • Sponsorship of Foreign Employees – Foreign employees can receive sponsorships from company if they meet the criteria set by the government. 
  • Lower Import Duties – The amount of import duties is lessened while compared to other business entities, allowing the business owner to benefit from tax and other financial advantages if they are eligible. 
What is Indonesia Positive Investment List?2021-10-28T09:53:09+08:00

The Negative Investment List was replaced by the Positive Investment List in 2021. The list details the restricted sectors that the government prohibits investors and entrepreneurs to invest in. 

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