Foreign Investment Limited Liability Company (PT PMA)
Perseroan Terbatas Penanaman Modal Asing (PT PMA)
Company formation in Indonesia
The PT PMA is best suited for: Foreign companies entering Indonesia's 270 million consumer market, Digital and fintech companies targeting Southeast Asia's largest economy, Manufacturers accessing Indonesian labour and natural resources, Consumer goods companies targeting the fastest-growing middle class in ASEAN. PT PMA companies are taxed at the standard corporate income tax rate of 22% on worldwide income. Public companies that list at least 40% of their shares on the Indonesia Stock Exchange qualify for a reduced rate of 19%. Small and medium enterprises with annual turnover up to IDR 4.8 billion can elect to pay a final income tax of 0.5% on gross turnover for the first three years. VAT is 11% on most goods and services. Withholding tax on dividends paid to non-resident shareholders is 20%, reduced under Indonesia's 71 double tax treaties (typically to 10–15%). Interest and royalty payments to non-residents are also subject to 20% withholding tax, treaty-reduced. Indonesia applies transfer pricing rules aligned with OECD guidelines. Tax holidays of 5–20 years (100% CIT reduction) are available for pioneer industries meeting minimum investment thresholds.
- Foreign companies entering Indonesia's 270 million consumer market
- Digital and fintech companies targeting Southeast Asia's largest economy
- Manufacturers accessing Indonesian labour and natural resources
- Consumer goods companies targeting the fastest-growing middle class in ASEAN
Key Facts
Step-by-Step Formation Process
Obtain investment approval from BKPM (OSS system)
Submit your investment plan through the Online Single Submission (OSS) system managed by BKPM (Investment Coordinating Board, now part of the Ministry of Investment). This replaces the old multi-agency approval process under the 2021 Omnibus Law. You must specify your business activities using KBLI codes (Indonesian Standard Industrial Classification) and confirm that your sectors appear on the Positive Investment List allowing foreign ownership.
Reserve a company name and prepare documents
Reserve the company name through the Ministry of Law and Human Rights (AHU Online). The name must be at least three words, in Indonesian, and not identical to existing companies. Prepare the deed of establishment (akta pendirian), articles of association, and KYC documents for all shareholders and directors.
Execute the deed of establishment before a notary
A licensed Indonesian notary drafts and notarises the deed of establishment (akta pendirian perseroan), which includes the articles of association, share capital structure, and director/commissioner appointments. The deed must be in Indonesian. At least one director and one commissioner must be appointed.
Register with the Ministry of Law and Human Rights
The notary submits the deed of establishment to the Ministry of Law and Human Rights via AHU Online for legal entity approval. Upon approval, the company receives its SK Kemenkumham (ministerial decree) confirming legal entity status.
Obtain NIB, business licences, and tax registration
Through the OSS system, obtain the Nomor Induk Berusaha (NIB — Business Identification Number), which serves as your company registration, import licence, and customs access. Register with the Directorate General of Taxes for NPWP (tax identification number) and PKP (taxable entrepreneur status for VAT). Sector-specific licences may be required depending on your KBLI codes.
Open a corporate bank account
Open a corporate bank account at a major Indonesian bank (BCA, Mandiri, BNI, BRI) or international bank (HSBC, Standard Chartered, Citibank). Directors must appear in person. Deposit the paid-up capital. Indonesian banks require the SK Kemenkumham, NIB, NPWP, and director identification.
Required Documents
- Passport copies and proof of address for all shareholders and directors
- Notarised deed of establishment (akta pendirian) in Indonesian
- Articles of association
- Investment plan submitted via OSS/BKPM
- KBLI code classification for intended business activities
- Domicile letter (surat keterangan domisili) from the registered office landlord
- Appointment letters for directors and commissioners
Cost Overview
Tax Treatment
PT PMA companies are taxed at the standard corporate income tax rate of 22% on worldwide income. Public companies that list at least 40% of their shares on the Indonesia Stock Exchange qualify for a reduced rate of 19%. Small and medium enterprises with annual turnover up to IDR 4.8 billion can elect to pay a final income tax of 0.5% on gross turnover for the first three years. VAT is 11% on most goods and services. Withholding tax on dividends paid to non-resident shareholders is 20%, reduced under Indonesia's 71 double tax treaties (typically to 10–15%). Interest and royalty payments to non-residents are also subject to 20% withholding tax, treaty-reduced. Indonesia applies transfer pricing rules aligned with OECD guidelines. Tax holidays of 5–20 years (100% CIT reduction) are available for pioneer industries meeting minimum investment thresholds.
Pros & Cons
- Access to Southeast Asia's largest economy — 270 million consumers and the world's fourth most populous country
- 100% foreign ownership now permitted in most sectors under the 2021 Omnibus Law and Positive Investment List
- 22% corporate tax rate is competitive for the region and significantly lower than Japan (30%) or the Philippines (25%)
- World-class fintech opportunity — Indonesia has the most active fintech investment market outside China and the US
- G20 member with a rapidly growing digital economy projected to reach $146 billion by 2025
- Young, growing population with median age of 30 — massive long-term consumer growth trajectory
- Abundant natural resources (palm oil, nickel, tin, coal) for manufacturing and commodity businesses
- High minimum capital requirement — IDR 10 billion (~$625,000) total investment plan for PT PMA, though paid-up capital may be lower
- Bureaucratic complexity — despite OSS simplification, government processes still involve multiple agencies and frequent regulatory changes
- Language barrier — all legal documents, tax filings, and many government interactions are in Bahasa Indonesia
- Regional variation — Indonesia spans 17,000 islands with significant bureaucratic and cultural differences between regions
- Requires both a director and a commissioner (board of commissioners) — adds governance overhead compared to simpler structures in Singapore or Hong Kong
- Labour laws are protective of employees — termination costs and processes can be expensive and time-consuming
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Get StartedThis content is educational and does not constitute legal or tax advice. Always consult a qualified professional for your specific situation. Data last verified March 2026.