10 important PT PMA rules and requirements in Indonesia you should know about

The PT PMA rules in Indonesia are complex and hard to understand, which doesn’t make starting a PT PMA any easier. Foreign nationals considering establishing a PT PMA in Indonesia must understand the basic PT PMA rules and regulations, such as the minimum capital requirement, paid-up capital requirement, and the possibility of buying freehold real estate.

Before diving into the most important PT PMA rules and requirements, ensure you know what a PT PMA is and where it’s used.

1. PT PMAs can be 100% foreign-owned

Understanding the rules around foreign ownership in PT PMA is crucial. Although foreign ownership up to 100% is allowed in many industries in Indonesia, restrictions are listed in the Negative Investment List (DNI) for specific sectors. These restrictions specify which sectors have limited or no foreign investment opportunities and explain the associated limitations.

2. There is a PT PMA minimum capital requirement

There is a minimum capital requirement for PT PMAs. Indonesian foreign-owned companies are required to show that they have an intention to invest a minimum of IDR 10 billion ($630,000). Officially, there is a paid-up capital for PT PMAs, covering a minimum of €2.5 billion ($2.73 billion), which should be deposited at the start of the PT PMA. In reality, depositing the PT PMA paid-up capital isn’t necessary.

3. The PT PMA should have a minimum of two shareholders

The PT PMA rules state that there should be at least two shareholders in a PT PMA. These shareholders can be foreign individuals (WNA), corporations, or a combination of the two types. It’s important to remember that the shareholder can be from any country.

4. Each PT PMA needs a director and commissioner

The PT PMA requirements state that each PT PMA must have at least one director and commissioner. Anyone of any nationality can fill the director role at the PT PMA. The director oversees the business’s daily operations. The commissioner, who does not participate in day-to-day operations but oversees the director’s work, is another position a foreigner can fill. This means a PT PMA can be 100% foreign-owned, which is one of the main reasons foreigners choose to establish a PT PMA when investing in real estate.

5. You can’t perform every commercial activity with a PT PMA

The commercial activities of the PT PMA must correspond to the business classifications outlined in the Indonesia Standard Business Classification (KBLI), according to the rules for PT PMA. In addition to this, the activities should not violate any of the requirements or restrictions outlined in the Negative Investment List.

6. The PT PMA might require additional licenses and permits

Depending on the type of business, obtaining several different licenses and permits may be necessary to start a business in Indonesia. This may include environmental licenses, business licenses, building permits, and other licenses. Always seek advice from a legal agent on the licenses and permits you need before starting a PT PMA in Indonesia.

7. PT PMAs must meet certain tax obligations

All companies that operate in Indonesia have to pay taxes. PT PMAs must also comply with Indonesian tax obligations, including tax registration, monthly tax filing, and annual tax returns. You read more about tax obligation rules for PT PMA in our article about PT PMA taxes.

8. The company must comply with Indonesian employment laws

To operate legally in Indonesia, PT PMAs must adhere to the country’s labor laws, which mandate compliance with minimum wage requirements, social security programs, and other employee benefits. The exact PT PMA rules and regulations vary per sector, so ensure you know the laws that apply to your business before starting your PT PMA.

9. Annual and monthly reports and audits must be performed

PT PMA companies must submit annual activity reports and financial statements to the Indonesian Investment Coordinating Board, locally called Badan Koordinasi Penanaman Modal (BKPM). For more prominent companies, audited financial reports might be required.

10. There must be an office address in Indonesia

The company must have a physical office space in Indonesia to serve as its operational base. It’s impossible to start a PT PMA without an office address. However, it’s possible to rent a PT PMA virtual office in Indonesia that can be used to establish the PT PMA.

Overview of the most essential PT PMA rules and requirements

These are the ten most important PT PMA rules and requirements to be aware off:

1. PT PMAs can be 100% foreign-owned
2. There is a PT PMA minimum capital requirement
3. The PT PMA should have a minimum of two shareholders
4. Each PT PMA needs a director and commissioner
5. You can’t perform every commercial activity with a PT PMA
6. The PT PMA might require additional licenses and permits
7. PT PMAs must meet certain tax obligations
8. The company must comply with Indonesian employment laws
9. Annual and monthly reports and audits must be performed
10. There must be an office address in Indonesia

Start your PT PMA with Own Property Abroad

Are you looking to establish a PT PMA in Indonesia? Own Property Abroad can assist you seamlessly and hassle-free, thanks to our extensive knowledge and experience in the Indonesian market and regulations.

With our expert team, you won’t have to navigate the complexities alone. For further information on how we can assist you, kindly drop your details below or email us at [email protected]. Let’s start working on your success story today!

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