Offshore Company Incorporation in Indonesia

Indonesia has become one of the top destinations to invest in as a foreign entrepreneur because it is the world’s largest archipelago, and its economy is constantly growing.

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 entity you can setup is an offshore company incorporation in Indonesia. Offshore companies offer different types of benefits, including low tax obligations, low setup and maintenance costs, and reduced administration.

Offshore companies carry out the same type of business as a locally incorporated company. 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.

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 registration 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 beyond your travel visit pass duration.

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

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.

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.

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:

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.

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.

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 account are: