What Is Company Formation In Indonesia?

Indonesia company incorporation

There is a high chance that you may want to incorporate your Indonesian company in the country. This is because Indonesia is one of the fastest developing countries in South-East Asia and has become a lot more lucrative for international businesses. As such, establishing an Indonesia company is also very reasonable for anyone who is willing to invest. However, establishing an Indonesia company involves quite a long process of paperwork, registration of the new company, the establishment of a registered agent for the business, hire of a legal adviser and financial consultant to carry out the transactions.

One important requirement for doing Indonesia company incorporation in Indonesia is that the minimum share capital requirement is Bostian. The minimum requirement for an individual is Bostian of at least USD 200. An agreement between the companies must be drafted which shall clearly state that the shares of each entity will be transferred to the principal stock holders on death or disposal of that person. Also, each entity must be duly authorized by the Indonesian Government or by a power of attorney. In addition, the agreement must state that each of the entities involved has consented to the document and that it is intended that it be recorded as an execution of a contract.

Another requirement for Indonesia company incorporation is that it must comply with all local rules and regulation regarding foreign ownership of property in Indonesia. As such potential investors must conduct a research of the real estate sector of Indonesia prior to deciding on investing. The research should include information regarding the minimum ownership requirements, type of ownership taxation, legal requirements including registration of foreign ownership and payment of taxes on such ownership. Also, potential investors must conduct a research about the business and reputation of the companies involved. For instance, a research done by an accredited financial reporting agency is recommended. Additionally, companies must be able to provide documents relating to the foreign ownership in Indonesia.

Indonesia allows for foreign ownership but the rate of tax on such ownership is different from that of the country’s other companies. There is a minimum rate of 5% on capital gains arising from the transfer of shares and dividends to non-tax resident businessmen and institutions. This rate varies according to the law. However, most companies pay the appropriate rate of tax and avoid offshore incorporation.

On the issue of share capital, the law provides for limited liability. An entrepreneur or a company must have a minimum capitalization limit of five shareholders. The company may not have any share capital. An important aspect of incorporating is that foreign investors must follow the same registration process as domestic investors. Foreign companies are required to register in Indonesia, pay the prescribed registration fees and file the necessary tax returns.

Another important requirement is that foreign ownership shareholders must adhere to the code of conduct. The code of conduct includes anti-money laundering and know-your-client procedures. Indonesia company incorporation also requires that all payments made are at least reported to the Indonesian Government.