Doing business in Indonesia

Indonesia is a civil law jurisdiction with a unitary government, although provinces and regencies set minimum wages and handle some local permits. Key authorities for an incoming business are the Ministry of Investment and Downstreaming (BKPM), which runs the OSS licensing system, the Ministry of Law (company registration), the Directorate General of Taxes, the Directorate General of Customs and Excise, Bank Indonesia, the Financial Services Authority (OJK), the Ministry of Manpower, the Business Competition Supervisory Commission (KPPU) and the Directorate General of Intellectual Property.

Key facts

Corporate income tax

Standard rate 22% (as at mid-2026)

VAT

12% statutory; effective 11% for most supplies

Main entity form

PT PMA (foreign-owned limited liability company)

Foreign ownership

Most sectors open; limits set by the investment business fields regulation (Presidential Regulation 10 of 2021, as amended)

Currency

Rupiah required for domestic transactions; no general repatriation controls

Data protection

Personal Data Protection Law 27 of 2022; implementing Government Regulation 33 of 2026 (transition to January 2027)

New York Convention

Party since 1981; exequatur from Central Jakarta District Court

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Most business lines are open to full foreign ownership, but some are reserved, capped or subject to conditions, and PT PMA companies face minimum investment and capital requirements.

Key facts

• Check the investment business fields regulation for each intended business classification (KBLI) before choosing the structure, because foreign ownership limits are set by activity, not by company.

• Plan for a PT PMA with at least two shareholders, directors and commissioners, and paid-up capital of at least IDR 2.5 billion; confirm the investment-value requirement per business classification with an adviser.

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• Licensing is applied for and tracked through OSS under the 2025 risk-based licensing regulation; medium-high and high risk activities need a permit or must fulfil commitments after the NIB is issued.

• Prepare beneficial ownership information at incorporation, as it must be reported to the Ministry of Law.

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Who handles this in IndonesiaSetting up and running a companyLicences, permits and regulatorsContracts and commercial law

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Key facts

• Budget for 22 percent corporate income tax, with 20 percent withholding on dividends, interest, royalties and other payments to non-residents unless a treaty applies and a certificate of domicile is provided.

• Price goods and services on the basis of an effective 11 percent VAT for most supplies; luxury goods bear the full 12 percent.

• A branch structure creates an extra 20 percent branch profits tax on after-tax profits unless reduced or reinvested.

• Large groups should assess Indonesian top-up tax exposure under the global minimum tax rules, including the undertaxed profits rule from 2026.

Who handles this in IndonesiaTax and structuringAccounting and annual filings

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4 statements on rates, thresholds or deadlines are held back until they are checked against an official source.

Key facts

• Foreign staff need an approved RPTKA before a KITAS can be issued; some roles are closed to foreigners.

Who handles this in IndonesiaEmployment, payroll and immigration

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2 statements on rates, thresholds or deadlines are held back until they are checked against an official source.

Foreign companies cannot hold freehold land but can use building and business use rights. Incentives include tax holidays, tax allowances and special economic zones, and halal certification is being phased in for many consumer products.

Key facts

• Use HGB or other derivative land rights for factories and offices, as foreign-owned companies cannot hold freehold land.

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• Check whether the project qualifies for a tax holiday, tax allowance or special economic zone facilities before committing to a location.

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Who handles this in IndonesiaLicences, permits and regulatorsTax and structuring

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Indonesia has no general exchange controls on profit repatriation, but the rupiah must be used for transactions within the country and Bank Indonesia monitors foreign exchange flows.

Key facts

• Invoice and settle domestic transactions in rupiah, as foreign currency pricing within Indonesia is generally prohibited.

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• Dividends and capital can be repatriated without approval, but flows are reported through banks.

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• Natural resource exporters must keep all export proceeds in a special onshore account for 12 months, so plan cash flow accordingly.

• Offshore borrowing by the Indonesian company carries Bank Indonesia reporting and hedging duties.

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• Allow time for bank onboarding checks, which require company and beneficial owner documents.

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Who handles this in IndonesiaPayments and currencyBanking and capitalTreasury and funding

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Customs is administered by the Directorate General of Customs and Excise. Indonesia is a WTO member and trades under ASEAN agreements, RCEP and several bilateral agreements. Importers need registration through OSS, many products require Indonesian National Standard (SNI) certification, and export restrictions apply to some raw minerals.

Key facts

• Use ASEAN, RCEP or bilateral agreement origin rules to reduce import duty where the goods qualify.

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• Register import activity through OSS and check whether the goods need an import approval or technical verification.

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• Allow lead time for SNI certification before launching regulated products.

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• Mining investors should expect domestic processing requirements rather than raw ore exports.

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Who handles this in IndonesiaCustoms, trade and export controls

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Key facts

• Map personal data processing against the Personal Data Protection Law, which reaches processing outside Indonesia too, and its 2026 implementing regulation, whose transition ends in January 2027.

• Document a legal basis for transfers abroad: an adequate destination, approved safeguards such as standard clauses or binding corporate rules, or, narrowly, consent.

• Prepare a breach response process that can notify the authority and affected individuals within 3x24 hours.

Who handles this in IndonesiaData protection and cyberAccounting and annual filings

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Trademarks, patents and designs are registered with the Directorate General of Intellectual Property. Indonesia is a member of the Paris Convention, the PCT and the Madrid Protocol, so international filings can designate Indonesia. Trademark rights are based on first to file, which makes early filing important.

Key facts

• File trademarks in Indonesia before launch, as rights go to the first filer.

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• Use the Madrid Protocol and PCT routes to extend existing filings to Indonesia.

• Record key copyright works with DGIP to simplify enforcement.

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Who handles this in IndonesiaTrade marks, patents and brands

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Acquisitions of listed companies follow OJK takeover rules, and insolvency is handled by the Commercial Courts through bankruptcy or suspension of payment proceedings.

Key facts

• Check KPPU thresholds (assets above IDR 2.5 trillion or sales above IDR 5 trillion) for every deal, because notification is mandatory within 30 working days after closing and late filing is fined daily.

• Listed targets bring OJK takeover rules and a likely mandatory tender offer.

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• Creditors and debtors commonly use PKPU proceedings in the Commercial Courts for restructuring.

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Who handles this in IndonesiaBuying, selling and investingContracts and commercial law

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Bribery of public officials is a criminal offence, enforced by the Corruption Eradication Commission (KPK) as well as police and prosecutors, and companies can be held criminally liable. Indonesia's new Criminal Code took effect in January 2026. The anti-money laundering framework is overseen by PPATK, and Indonesia is a full FATF member.

Key facts

• Build anti-bribery controls around dealings with officials, as companies themselves can be prosecuted.

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• Review compliance policies against the new Criminal Code now in force.

• Expect AML checks from banks and other reporting parties; Indonesia has been a FATF member since 2023.

Who handles this in IndonesiaAnti-bribery, sanctions and complianceContracts and commercial law

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Commercial disputes go to the district courts, with specialised Commercial Courts for bankruptcy and IP, and appeals to the High Courts and Supreme Court. Arbitration is governed by Law 30 of 1999, BANI is the main domestic institution, and foreign awards are enforceable under the New York Convention after registration in Central Jakarta. Foreign court judgments are generally not enforceable.

Key facts

• Choose arbitration for cross-border contracts, as foreign awards can be enforced and foreign judgments generally cannot.

• Prepare bilingual contracts with an Indonesian version when an Indonesian party is involved.

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• Expect a mandatory court mediation stage in litigation.

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Who handles this in IndonesiaDisputes and arbitration