Indonesia has one hard rule worth understanding before anything else: nominee arrangements, where a local stands in as the paper owner of a foreign-run business, are explicitly illegal under Article 33 of Law 25/2007, and courts have routinely invalidated them. If it's discovered, the actual economic owner loses the shares outright. The compliant path is a PT PMA. Here's what it takes to start a business in Indonesia in 2026.
1. Which business structure fits you?
Before you register anything, it helps to know what you're actually choosing between.
- Local PT (Perseroan Terbatas). Indonesian shareholders only, no minimum capital threshold imposed by BKPM, faster approvals unless the sector is regulated. Not an option if you have any foreign capital participation.
- PT PMA (Penanaman Modal Asing). Indonesia's foreign-owned limited liability company, and the only compliant structure for any level of foreign ownership, even a minority stake triggers PMA classification.
100% foreign ownership is now the default in most sectors thanks to the Omnibus Law (11/2020) and Presidential Regulation 10/2021, which liberalized the investment list: e-commerce, most manufacturing, SaaS, IT services, consulting, and hospitality are generally open. A shorter list, broadcasting, certain agriculture, shipping, and select financial services, still carries restrictions.
2. Register your business
A PT PMA needs at least two shareholders, one resident director, and one commissioner (a distinctly Indonesian governance requirement beyond just a board), a notarized Deed of Establishment, approval from the Ministry of Law and Human Rights, a tax number (NPWP), and a Business Identification Number (NIB) issued through the OSS-RBA (Online Single Submission) system. Minimum authorized capital is IDR 10 billion (roughly $645,000), with at least IDR 2.5 billion (roughly $161,000) paid up, a genuinely higher bar than most countries in this series. Plan for 4 to 8 weeks from start to finish. Every PT PMA needs a registered business address in Indonesia matching its activity and zoning; as of 13 May 2026, virtual offices are no longer permitted for PT PMA companies in Bali specifically, worth knowing if that's where you're headed.
3. Sort out your own work authorization
Owning shares in a PT PMA doesn't automatically grant you the right to work in it. A director who'll actually manage operations locally needs an Investor KITAS; non-shareholder foreign employees need an RPTKA (Manpower Utilization Plan), an IMTA (Work Permit), and their own separate KITAS.
4. Check licenses and permits
Indonesia doesn't issue a single national business license; your KBLI business activity code determines what additional licensing applies through the OSS system.
5. Understand Indonesian taxes
Corporate income tax (PPh Badan) is a flat 22% on net profit for standard PT PMA, or 19% for companies listed on the Indonesia Stock Exchange with at least 40% public float. A 50% reduction (an effective 11%) applies to the portion of taxable income tied to gross revenue up to IDR 4.8 billion for companies with total annual revenue up to IDR 50 billion. Worth flagging: under Government Regulation No. 20 of 2026, PT PMA companies are no longer eligible for the simplified 0.5% final tax regime that some small local businesses can still use, so plan your tax position around the standard rates described here.
VAT (PPN) sits at 11% for most transactions in practice, even though the 2025 tax reform set a headline rate of 12%, an adjustment mechanism keeps most goods and services at the lower effective figure. Confirm the current treatment for your specific transactions with a local accountant, since this is an area that's shifted more than once.
6. Stay compliant
Every PT PMA files a quarterly LKPM (Investment Activity Report) through OSS or directly with BKPM, monthly PPh 21 (employee withholding), PPh 23/26 (service, interest, and royalty withholding), PPh 25 (corporate tax installments), and PPN (VAT) returns, plus an annual SPT Tahunan (annual tax return). Companies above certain thresholds also need audited annual financial statements.
Indonesia business costs at a glance
| Item | Cost |
|---|---|
| PT PMA minimum authorized capital | IDR 10 billion (~$645,000) |
| PT PMA minimum paid-up capital | IDR 2.5 billion (~$161,000) |
| Corporate tax, standard | 22% |
| Corporate tax, listed companies (40%+ public float) | 19% |
| Corporate tax, small-revenue portion (Article 31E) | 11% effective |
| VAT, effective rate (most transactions) | 11% |
Frequently asked questions
Are nominee shareholder arrangements legal in Indonesia?
No. They're explicitly illegal under Article 33 of Law 25/2007, and courts have routinely invalidated them, with the actual economic owner losing the shares if discovered.
How much capital does a PT PMA need in Indonesia?
Minimum authorized capital of IDR 10 billion (about $645,000), with at least IDR 2.5 billion (about $161,000) paid up.
What's the corporate tax rate in Indonesia?
A flat 22% on net profit for a standard PT PMA, or 19% for companies listed on the Indonesia Stock Exchange with at least 40% public float.
Does owning a PT PMA let me work in Indonesia?
No. A director who'll actually manage operations locally needs a separate Investor KITAS.
Can PT PMA companies use Indonesia's simplified 0.5% final tax regime?
No. Under Government Regulation No. 20 of 2026, PT PMA companies are no longer eligible for that simplified regime.
Fees and rates above come from BKPM/OSS and Indonesia's Directorate General of Taxes as of 2026, and they do change over time, so double check before you file. None of this is legal or tax advice. Talk to an Indonesia-qualified accountant or lawyer about your specific situation.