Good to know
Good to Know
- PT PMA is the only structure that lets a foreigner legally own a business, sign contracts, hire staff, and hold land-use rights (HGB/Hak Pakai) in Ubud — informal 'nominee' arrangements using a local's ID to front the business are illegal and carry real risk.
- Most of the incorporation steps (name reservation, notarized deed, Kemenkumham ratification, OSS registration) can be done remotely via Power of Attorney, but opening the corporate bank account and the director's Investor KITAS biometric registration require your physical presence in Indonesia at some point.
- If you're setting up specifically in Bali/Ubud, budget for a physical office lease from day one — virtual offices stopped being accepted for PT PMA registration in Bali as of May 13, 2026.
- The IDR 2.5 billion paid-up capital is real cash that must sit in the company account for about a year — it is not spendable working capital on day one, so factor this liquidity commitment into your planning separately from setup fees.
- Choosing the correct KBLI (business classification) code up front matters a lot — the wrong code can cause problems later with licensing, banking, or property-related activity, and changing it afterward costs money and time.
- There is no legal freelancer/sole-proprietor path for foreigners in Indonesia — despite common talk in nomad circles of operating informally, the only fully compliant way to own and invoice through a business here is a PT PMA (or, in restricted sectors, a joint venture with a local partner).
- A major 2026 rule change (PP No. 20/2026) removed PT PMA companies from the simplified 0.5% small-business tax rate entirely — many small foreign-run businesses in Bali that budgeted around that rate now face the standard 22% framework (with a possible 11% partial relief on lower income tiers), so it's worth re-checking your tax structure with a local accountant if you incorporated before this change.
- So-called 'nominee' arrangements — where an Indonesian citizen holds shares on paper for a foreigner to dodge PT PMA capital requirements — are legally void and offer the foreigner zero enforceable ownership if the relationship or business sours; this is a real and recurring risk pattern in Bali, not just a technicality.
- Corporate tax obligations are monthly, not just annual — filings are due every month even in months with zero revenue, so ongoing local accounting support is close to essential rather than optional.
Filing Obligations
- Monthly
- Ongoing monthly filings are required every month regardless of whether the company has revenue, including employee/foreign-individual withholding returns (SPT Masa PPh 21/26) and VAT returns if PKP-registered, all filed through the Coretax system.
- Investment Activity Report
- Every PT PMA must submit an Investment Activity Report (LKPM) to Indonesia's Investment Coordinating Board (BKPM) every 3 months, separate from tax filings.
Annual
- Deadline
- Due 4 months after fiscal year-end; for companies on a calendar year, that means April 30.
- Return Name
- SPT Tahunan Badan (Annual Corporate Income Tax Return)
- Required Documents
- Financial statements (audited where legally required), fiscal reconciliation, and records of advance tax payments made during the year.
Late Filing Penalties
- Monthly Return Fine
- IDR 100,000
- Late VAT Return Fine
- IDR 500,000
- Late Annual Cit Return Fine
- IDR 1,000,000
Corporate Tax PT Pma
- Listed Company Rate
- Public companies meeting minimum stock-exchange listing/free-float requirements can qualify for a reduced 19% rate, though this is not relevant to most small foreign-owned Ubud businesses.
- Withholding Taxes
- A PT PMA with employees must withhold monthly income tax on salaries (PPh 21) for local and foreign staff; other withholding obligations (PPh 23, 25, 26) apply to payments like local services, tax installments, and payments to foreign parties.
VAT
- Rate Percent
- 11
- Note
- Monthly VAT (PPN) reporting applies once the company is registered as a PKP (Taxable Entrepreneur), which is typically mandatory above a revenue threshold or if the business voluntarily registers.
Standard Rate
- Rate Percent
- 22
- Basis
- Net taxable income (revenue minus allowable deductions), not gross revenue.
- Worldwide Income
- A PT PMA is a resident taxpayer from the day it incorporates, so it is taxed on worldwide income, with foreign tax credit relief available where treaties apply.
Dividend Withholding
- Default Rate Percent
- 20
- Note
- Dividends paid out to a foreign shareholder are subject to PPh 26 withholding at a default 20%, which can be reduced under a bilateral tax treaty if the shareholder files the correct treaty form (Form DGT).
Small Business Facility 2026 Change
- Old Rule
- Businesses with annual turnover under IDR 4.8 billion could historically use a simplified 0.5% final tax on turnover (the UMKM regime).
- New Rule 2026
- Under Government Regulation (PP) No. 20 of 2026, PT PMA and other PT structures are no longer eligible for the 0.5% final UMKM scheme at all, regardless of how small the initial revenue is — they must use the standard corporate tax framework from day one. Companies already approved for the 0.5% scheme before the change may continue only until their approved period ends.
- Loss Making Years
- If the business has a net loss (common for new startups with high setup costs), no corporate tax is owed; losses can generally be carried forward up to 5 years.
- Partial Relief Article 31e
- Companies with annual revenue below IDR 50 billion can still access an Article 31E facility: a 50% reduction (effectively 11%) on the portion of taxable income attributable to the first IDR 4.8 billion of gross revenue; income above that is taxed at the full 22%.
Structure Options For Foreigners
PT Pma Full Company
- Ownership
- Can be 100% foreign-owned in most sectors, or require a local partner in sectors restricted under the Positive/Negative Investment List.
- Legal Status
- Fully legal and regulated
- Processing Time
- Roughly 4–10 weeks from name reservation through deed ratification and OSS-RBA registration, depending on the agency and business classification (KBLI).
- Shareholder Structure
- Minimum 2 shareholders, 1 resident director, 1 commissioner; the director must be Indonesia-resident and needs a KITAS and NPWP (tax ID) if foreign.
- Description
- PT PMA (Perseroan Terbatas Penanaman Modal Asing) is the only Indonesian legal entity through which a foreigner can legally own a business, invoice clients, hire staff, sponsor their own work/stay permit (KITAS), and open a corporate bank account.
Capital Requirements
- Minimum Paid Up Capital
- IDR 2,500,000,000
- Minimum Total Investment Plan
- IDR 10,000,000,000
- Note
- The paid-up capital and total investment-plan figures are two distinct requirements under BKPM Regulation No. 5/2025, not conflicting numbers — the paid-up capital must actually sit in the company bank account, while the larger investment plan is a declared business-scale threshold.
Typical Incorporation Cost Bali
- Currency Local
- IDR
- Amount USD Range
- 1,381–1,934
- Amount Local Range
- 25,000,000–35,000,000
- Note
- This covers notary, licensing agent, and OSS registration fees when using a local agency in Bali; it excludes the paid-up capital itself, virtual/physical office setup, and any sector-specific licenses.
Freelance Sole Proprietor
- Details
- Foreigners cannot legally register a sole proprietorship (UD) in Indonesia; that structure is reserved for Indonesian citizens. Foreign individuals invoicing clients, running a café, doing consulting, or selling online in Bali without a proper corporate vehicle are technically operating outside the law, regardless of revenue size.
- Legal Status
- illegal
- Nominee Warning
- Some foreigners historically paid an Indonesian citizen to hold shares in a cheaper local PT ('nominee' structure) to avoid PT PMA capital requirements. This is explicitly illegal under Indonesian investment law — nominee agreements are legally void, the foreigner has no enforceable ownership claim if a dispute arises, and government systems now cross-check tax and investment data, increasing audit risk.
- Spouse Exception
- An informal exception exists only if a foreigner is married to an Indonesian citizen, who can register a UD in their own name, but the foreigner has no legal ownership, the business is tied to the marriage, and it cannot sponsor the foreigner's own KITAS.
Scope Note
Indonesian corporate tax law and company-structure rules are set nationally (not by Bali or Ubud specifically), so these figures apply uniformly to a foreign-owned business based in Ubud.
Incorporation Process And Requirements
- Entity Type
- PT PMA (Perseroan Terbatas Penanaman Modal Asing) — the foreign investment limited liability company, and the only legal vehicle through which a foreigner can own and operate a commercial business in Indonesia, including in Ubud/Bali. A representative office (KPPA) is an alternative but cannot invoice or earn local revenue.
- Typical Timeline
- Roughly 4–8 weeks for a standard PT PMA with no special sector licensing, from name reservation through NIB issuance, functioning bank account, and capital deposit. Businesses in regulated sectors (health, fintech, financial services, or those needing additional permits) can take 8–12 weeks or longer. Property-holding PT PMAs aimed at acquiring land typically take 2–4 months end-to-end.
- Registered Office Requirement
- A PT PMA must have a registered commercial business address matching its licensed activity and zoning. Notably, as of May 13, 2026, virtual offices are no longer accepted for PT PMA registration in Bali — a physical office is now required for companies registering there (this affects Ubud-based incorporations), a stricter rule than in some other Indonesian cities where virtual offices remain acceptable for service/consulting businesses.
- Shareholder Director Requirements
- Minimum 2 shareholders (individuals or entities, both can be 100% foreign — one can hold up to 99% of shares while the other holds at least 1%, since a single shareholder cannot hold 100%). Minimum 1 director (operational head) and 1 commissioner (oversight); both can be foreign nationals, though a director managing day-to-day operations from Indonesia needs a stay/work permit (KITAS/Investor KITAS) and an Indonesian tax number (NPWP).
- Local Partner Or Sponsor Requirements
- No mandatory local Indonesian partner for most sectors — in fields listed as fully open on Indonesia's Positive Investment List, a foreigner can own 100% of a PT PMA. Some sectors carry foreign-ownership caps (e.g. 49% or 67%) or are closed to foreign investment entirely, in which case a local shareholder is required. Using an Indonesian citizen as a nominee shareholder to disguise real foreign ownership is explicitly illegal under Indonesian law.
Typical Cost
- Separate Capital Deposit
- IDR 2,500,000,000
This is not a fee but the mandatory paid-up capital that must sit in the company bank account — the single largest cash requirement of the whole process.
- Government Fees
- IDR 5,000,000
Approximate ceiling for standard-sector government/PNBP processing fees; excludes paid-up capital.
- Professional Agent Package
- IDR 50,000,000
Typical high end of a local agent/notary 'company establishment package' fee (ranges roughly IDR 25–50 million, or USD ~3,000–8,000 depending on provider and sector); most foreign investors use such a service because navigating BKPM/OSS solo is difficult without local language and experience.
Capital Requirements
- Paid Up Capital
- IDR 2,500,000,000
- Total Investment Commitment
- IDR 10,000,000,000
- Paid Up Capital Note
- Reduced from IDR 10 billion under BKPM Regulation No. 5 of 2025. This amount must be deposited into a corporate Indonesian bank account and generally held for around 12 months; banks and BKPM can verify/audit this.
- Total Investment Commitment Note
- Separate from paid-up capital: the company must commit to a total investment plan exceeding IDR 10 billion per registered business activity (KBLI code), excluding land and buildings, typically to be realized over roughly 3–5 years and reported quarterly.
Core Incorporation Steps
- 1. Select the business activity classification (KBLI 2025 code) and confirm the maximum permitted foreign-ownership percentage for that sector via the Positive Investment List.
- 2. Reserve the company name and have an Indonesian notary draft and notarize the Deed of Establishment (Akta Pendirian) — this can be executed remotely via Power of Attorney, no physical presence required at this stage.
- 3. Submit the Deed to the Ministry of Law and Human Rights (Kemenkumham) for ratification; a Decree (SK Kemenkumham) is issued confirming legal-entity status, typically within 24–48 hours once submitted digitally.
- 4. Register with the local Tax Office (KPP) to obtain the company's NPWP (Tax ID) and SKT.
- 5. Register through the OSS-RBA (Online Single Submission — Risk-Based Approach) portal to obtain the NIB (Business Identification Number), which also triggers BPJS social security registration.
- 6. Depending on the risk classification of the business activity, obtain any additional Standard Certificate or full Business Permit (medium/high-risk activities require inspection before commercial operations can start).
- 7. Open a corporate bank account (requires the NIB, Deed of Establishment, and generally a valid KITAS for the signing director) and deposit the paid-up capital.
- 8. Ongoing: file quarterly Investment Activity Reports (LKPM) with BKPM; missed filings can trigger warnings and eventually NIB suspension.
Official Government Resources
- OSS (Online Single Submission) system — oss.go.id — the mandatory portal for NIB and business licensing.
- Ministry of Investment / BKPM — bkpm.go.id — oversees foreign investment policy and the Positive Investment List.
- Ministry of Law and Human Rights (Kemenkumham/AHU) — ahu.go.id — ratifies the company's legal-entity status.
AI-generated estimateData refreshed July 2026
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Data last updated July 2026 · Verify anything important.