Set Up Business in Indonesia
Indonesia Expansion Guide
Global Upside helps companies set up, hire, and operate in Indonesia. Set up a legal entity quickly and easily with our solutions for branch, subsidiary, and rep office. Looking for an alternative to permanent establishment? Hire and pay employees in Indonesia without a legal entity by using our PEO & employer of record services. Once your business is set up, our teams can support with recruitment and staffing, human resources, employee benefits, payroll, accounting, and tax.
Capital City
Jakarta
Currency
Indonesian Rupiah (IDR)
Language
Indonesian
Government
Unitary Presidential Constitutional Republic
Country Overview
Indonesia is a country surrounded by the Indian and the Pacific Ocean with the largest economy in the South-Eastern zone. It is a newly industrialized, developing lower middle-income nation which has made huge growth in destitution reduction by diminishing the poverty rate to 9.4% in 2019 since 1999.
- Indonesia is the world’s largest producer of cloves, cinnamon, and palm oil. The nation is also the 2nd largest producer of nutmeg, mace, vanilla, and coconut oil.
- Indonesia’s main export products are mineral fuels, mineral oils and products of their distillation, mineral waxes, bituminous substances, animal or vegetable fats and oils.
- The major imports of the country are nuclear reactors, boilers, mechanical appliances, machinery, and their parts.
Options for setting up a legal entity in Indonesia include:
Limited Liability Company or Perseroan Terbatas (PT)
Limited Liability Company or Perseroan Terbatas (PT) is an establishment that is similar to an LLC in the US and is run by at least one director and two local investors.
It takes a minimum of 4 to 8 weeks to incorporate a legal establishment in Indonesia.
There are three kinds of workers that are classified on the basis of the nature and type of their job, and the length of their employment:
- Permanent employees
- Fixed-term employees
- Foreign employees
Labor law is regulated by the Law No. 13 of 2003 which comprises of the following:
- Employer’s name, address, and type of business
- Employee’s name, sex, age, and home address
- Occupation and type of work
- Job location
- Remuneration and method of payment
- Rights and obligations of both the parties
- Starting date and contract duration
- Place and date of the work agreement
- Signatures of both parties
Public holidays in Indonesia are as follows:
- Jan. 1: New Year’s Day
- Chinese New Year
- Prophet Muhammad’s Birthday
- Hindu New Year
- Ascension of the Prophet Muhammad
- Good Friday
- Vesak Day
- Ascension
- International Labor Day
- Pancasila Day
- Aug. 17: Independence Day
- Idul Fitri (five days)
- Idul Adha
- Islamic New Year
- Dec. 25: Christmas Day
- Dec. 26
The frequency of salary payment varies from weekly to monthly with the exception of an employment contract that is for a period of less than one week.
The common-setting body that regulates the accounting standards in Indonesia is the Financial Accounting Standards Board, also known as, Dewan Standar Akuntansi Keuangan (DSAK) under the Indonesian Institute of Accountants, also known as, Ikatan Akuntan Indonesia (IAI). The Indonesian law states that both public and private firms must be in compliance with the accounting standards issued by the DSAK-IAI.
Corporate Tax
The corporate tax rate in Indonesia is 25%.
Value Added Tax (VAT)
VAT levied here is 10%.
There is no general law on data protection in Indonesia, however, there are specific rules that concern the usage of electronic data. The principal sources of the administration of electronic data and exchanges are Law No. 11 of 2008 with respect to Electronic Information and Transactions, also known as the EIT Law, as revised by Law No. 19 of 2016 with respect to the Amendment of EIT Law or the EIT Law Amendment, Government Regulation No. 71 of 2019 with respect to Provisions of Electronic Systems and Transactions Reg. 71 and its exercising regulation, Minister of Communications and Informatics Regulation No. 20 of 2016 in regards to the Protection of Personal Data in an Electronic System (the “MOCI Regulation”).
Anti-Bribery & Anti-Corruption Law
The Indonesian Anti – Bribery Law and Anti-Corruption Law regulates the bribery of public officials. However, practically, litigations of bribery have been put into effect by the recent Anti-Corruption Law.
1. Bribery of Public Officials
For Individuals:
i) Imprisonment for up to 5 years.
ii) A fine that ranges from IDR 50 million to IDR 250 million.
For legal entities:
i) A fine for the firm.
ii) Penalty for the firm’s management.
iii) Imprisonment of the officers of the firm.
2. Bribery of private officials
It is not governed under the Indonesian legal system. However, under Article 378 of the Indonesian Criminal Code, any deceitful act is punishable for up to 4 years imprisonment.
