Registration and filing requirementsAlthough the government does not promote licensing agreements in any particular sector, many companies use licensing agreements in conjunction with direct investment. Parties to a licensing and processes as long as they do not affect Indonesia’s economic and technological contract do not need government approval. Patentees have the right to license their… Read More

The Company Law No. 40 of 2007 regulates limited liability (Perseroan Terbatas, or PT) companies. This is the most common form of business organization and the one to which foreign investors are restricted under the Investment Law. Branches of foreign corporations are normally not permitted outside of the banking and oil and gas sectors. Formalities… Read More

Business environmentThe Republic of Indonesia is a constitutional democracy with an executive presidency. Indonesia has a well-balanced economy, in which all major sectors play an important role. Agriculture historically has been the dominant sector in terms of both employment and output. The country has a vast range of mineral resources, which have been exploited over… Read More

Permanent ResidenceIndonesia wants to attract people whose business, entrepreneurial, trade or professional skills will contribute to its economic growth. Labour Management RelationsLabor contacts are common, and typically cover employees who enter a firm within a certain time period. Contracts can be renewed for one to three years. Collective bargaining is typically conducted at the company… Read More

Property RightsForeign entities have no freehold rights to land ownership in Indonesia. Foreign investors’ land holdings are usually obtained through long-term lease agreements (normally for 30 years) with the government or private parties. Government regulations allow mortgages to be registered against real property and seagoing vessels in their appropriate registries. And also Indonesia is a… Read More

General IntroductionBy special concession, Indonesian nationals are allowed the full use of non-taxable income allowances and the full benefit of the lower bands of tax rates. The following paragraphs list some of the significant grant and incentives opportunities. Government Incentives Employee’s Remuneration Indonesia has ratified the law 13/2003 governs the bargaining power of workers, specifies… Read More

Value added tax (VAT)Indonesia operates a VAT system, which taxes the supply goods and the provision of services at a standard rate of 10%. Certain goods and services are exempt. Insurance and banking are not subject to VAT. VAT on exports is charged at a zero rate, so the payment of VAT on inputs is… Read More

Residents A resident tax subject is defined as any individual present in Indonesia for more than 183 days in any twelve month period, or any individual present in Indonesia and intending to reside in Indonesia. Resident individuals are taxed at the normal rates on taxable income,being world-wide gross income less allowable deductions and non-taxable income.Individual… Read More

Taxation of profitTaxable income for corporation is taxed at the rate of 28%. Some expenses not related to normal business expenses are not allowed for tax purposes and such expenses must be taken out in order to arrive at the amount of taxable income. Rates of depreciation are regulated, although taxpayers may elect either the… Read More