Shareholder Agreements in Indonesia: A Guide for Foreign Investors
A shareholder agreement in Indonesia is a contract governing shareholders' rights and obligations, including decision-making authority, ownership arrangements, share transfers, and dispute resolution.
For foreign investors establishing a PT PMA or entering a joint venture, a shareholder agreement can provide contractual protections beyond the company's Articles of Association, particularly concerning...
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Business Setup
Shareholder Agreements in Indonesia: A Guide for Foreign Investors
A shareholder agreement in Indonesia is a contract governing shareholders' rights and obligations, including decision-making authority, ownership arrangements, share transfers, and dispute resolution.
For foreign investors establishing a PT PMA or entering a joint venture, a shareholder agreement can provide...
Can Minority Shareholders Force a General Meeting in Indonesia?
Minority shareholders in Indonesia can request a General Meeting of Shareholders (GMS) if they hold at least 10% of the company's voting shares, unless its articles of association allow a lower threshold.
If the board...
How Can Foreign Investors Protect Decision-Making Control in an Indonesian Joint Venture?
Foreign investors can protect decision-making control in an Indonesian joint venture by structuring voting rights, reserved matters, board representation, director authority, information rights, and shareholder protections. In an Indonesian PT PMA, the percentage of...
Should China+1 Investors Establish One Indonesian Entity or Multiple Companies
Most China+1 investors can run manufacturing, distribution, and related activities in Indonesia through a single PT PMA, provided each activity is registered under the correct KBLI code and is open to the company's foreign...
Should You Fund an Indonesian Company with Shareholder Debt or Equity?
Foreign investors can fund an Indonesian company through equity, shareholder debt, or a combination of both. Equity is generally more suitable for capital intended to remain in the Indonesian business. At the same time,...
Tax & Accounting
VAT Treatment of Digital Services in Indonesia
Digital services supplied to Indonesian customers are generally subject to value-added tax (VAT), including services purchased from overseas providers. These include software subscriptions, cloud computing, online advertising, and streaming platforms.
VAT collection depends on the supplier's registration status and the...
Can You Correct a Tax Assessment in Indonesia Without Filing an Objection?
An incorrect Indonesian tax assessment does not always require a formal objection. Certain errors can be corrected through a separate procedure with the Directorate General of Taxes (DGT), while an objection is generally used...
Indonesia’s 0.5% Marketplace Income Tax: What Foreign-Owned Businesses Need to Know
Indonesia began collecting income tax (PPh Article 22) from domestic sellers through designated online marketplaces on October 1, 2026. Appointed marketplace operators collect income tax at 0.5 percent of qualifying sellers’ gross turnover. The...
Indonesian Tax Consequences of Selling Shares in a PT PMA
Foreign investors selling shares in an Indonesian foreign-owned company (PT PMA) may be subject to Indonesian income tax, even if the transaction takes place overseas. Unlike taxes calculated on capital gains, Indonesia's domestic withholding...
How Can Audit Issues Affect M&A and Corporate Transactions in Indonesia?
Audit issues can affect the valuation, negotiation, and completion of mergers and acquisitions (M&A) and other corporate transactions in Indonesia. Unresolved financial reporting problems, undisclosed liabilities, and outstanding tax obligations can lead foreign investors...
HR & Payroll
Can Foreign Employers Pay Employees Below the Minimum Wage in Indonesia?
Foreign employers in Indonesia generally cannot pay employees below the applicable minimum wage. Foreign-owned companies (PT PMAs) are subject to the same wage requirements as Indonesian-owned businesses.
Which Minimum Wage Applies to Foreign Employers in Indonesia?
Indonesia applies provincial minimum wages...
Calculating Employee Salary During Unpaid Leave in Indonesia
Employers in Indonesia can deduct wages during agreed unpaid leave, provided the arrangement complies with Indonesian employment law. The same general principles apply to Indonesian and foreign employees, although contractual benefits and payroll obligations...
Payroll and Tax Treatment of Employee Transfers Between Group Companies in Indonesia
Moving an employee between two Indonesian companies in the same group is not an internal reassignment. Each PT PMA is a separate employer, employee income tax (PPh 21) withholding agent, and BPJS registrant, so...
Tax Treatment of Employee Allowances and Benefits in Kind in Indonesia
Employee allowances and non-cash benefits are generally taxable in Indonesia, but their treatment depends on how the employer provides them. Cash allowances normally form part of an employee's taxable income, while some non-cash benefits...
In-House vs Outsourced Payroll for Companies in Indonesia
Foreign-owned companies in Indonesia can run payroll internally or use an external payroll provider. The main question is whether the Indonesian operation has enough scale and local capability to justify managing payroll in-house.
What Does...
Industries
Which Mining and Downstream Activities Are Open to Foreign Investment in Indonesia?
Foreign investors can participate across much of Indonesia's mining and downstream value chain, from extraction through to industrial production. The rules that apply change according to where the investment sits in that chain and whether the company holds the...
Warehouse Leasing vs Build-to-Suit vs Cold Storage in Indonesia
Foreign investors choosing warehouse space in Indonesia need to decide both how the facility will be secured and whether temperature-controlled infrastructure is required. Leasing generally suits companies that can operate from an existing warehouse...
Waste, Emissions, and Hazardous Material Management (B3) Compliance in Indonesia
Foreign-owned companies operating facilities in Indonesia can face different environmental requirements depending on their activities, waste streams, emissions, wastewater, and use of hazardous materials. These can determine the environmental approval required, the infrastructure that...
Indonesia Local Content (TKDN): When It Is Mandatory and How It Affects Imports
Indonesia does not require every industrial product sold in the country to meet a minimum local content level. Local content requirements become mandatory when government procurement rules or sector-specific regulations require domestic products, meaning...
Setting Up a Foreign-Owned Hospital in Indonesia – Licensing and Ownership Rules
Foreign investors can establish a private hospital in Indonesia through a PT PMA, including with 100% foreign ownership in principle. Private hospitals fall under KBLI 86103 – Private Hospital Activities (Aktivitas Rumah Sakit Swasta)...
