Foreign shareholders in an Indonesian company should expect annual financial statements prepared under Indonesian accounting requirements and, where the applicable thresholds are met, audited by a public accountant. Foreign parent companies may also require monthly or quarterly financial data for consolidation, intercompany reconciliation, or group reporting.
What Financial Statements Should an Indonesian Company Produce?
Indonesia’s financial reporting framework is based on Standar Akuntansi Keuangan (SAK). A complete set of financial statements under SAK Indonesia generally covers the company’s financial position, profit or loss and other comprehensive income, changes in equity, cash flows, and accompanying notes.
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Indonesia introduced additional financial reporting requirements through Government Regulation No. 43 of 2025 (PP 43/2025), which has been in force since September 19, 2025. The regulation requires financial statements within its scope to be prepared by individuals who meet the applicable accounting competency requirements.
A further change takes effect on January 1, 2027, when PSAK 118 on Presentation and Disclosure in Financial Statements replaces PSAK 201. This changes financial statement presentation and disclosure, including the structure of information presented in the statement of profit or loss.
When Is an Indonesian Company Required to Have Its Financial Statements Audited?
Foreign ownership alone does not trigger a statutory financial statement audit in Indonesia.
Under Indonesia’s Company Law, an audit is required for companies that collect or manage public funds, issue debt instruments to the public, are publicly listed, constitute state-owned enterprises, or are required to undergo an audit under other legislation.
The requirement also applies where a company has assets and/or annual turnover of at least IDR 50 billion (USD 3.1 million). If a company subject to the requirement does not have its financial statements audited by a public accountant, the financial statements cannot be approved by the General Meeting of Shareholders (GMS).
What Must Be Reported to Shareholders and the Government?
The directors must submit the company’s annual report to the GMS no later than six months after the end of the financial year. The annual report includes financial statements, a report on the company’s activities, material issues affecting its business, the board of commissioners’ supervisory report, details of directors and commissioners, and remuneration information.
Indonesia’s annual corporate reporting requirements have also changed following the introduction of Minister of Law Regulation No. 49 of 2025. Following GMS approval, the approval of the annual report must be recorded in a notarial deed and submitted electronically through Indonesia’s Legal Entity Administration System (SABH) within the applicable filing period.
Why Can Indonesian Financial Results Differ from Group Reporting?
Adjustments can arise between an Indonesian subsidiary’s financial statements and its foreign parent’s group reporting because of differences in accounting policies, account classifications, reporting periods, depreciation, provisions, and other accounting treatments. Figures recorded in Indonesian rupiah may also need to be translated into the group’s reporting currency.
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Intercompany balances must be reconciled for consolidation. A receivable recorded by an Indonesian subsidiary against an overseas group company, for example, should correspond with a payable recorded by the other entity. Differences can arise when transactions are recorded in different periods, an invoice has not been recorded by both entities, or foreign exchange movements affect the balances.
How Do Related Party Transactions, Funding, and Dividends Appear in the Accounts?
Related-party transactions can account for significant balances in foreign-owned Indonesian companies. Management fees, royalties, intercompany services, loans, and reimbursements involving overseas group companies must be reflected in the Indonesian accounts and can also create Indonesian tax and transfer pricing implications.
An equity injection increases shareholder equity, while a shareholder loan is recorded as a liability and can generate interest expenses and Indonesian withholding tax obligations.
Reported profit does not automatically equal the amount available for distribution to shareholders. Under Indonesia’s Company Law, dividends can generally be distributed where the company has a positive retained earnings balance, subject to statutory reserve requirements and the required corporate approvals.
What Financial Information Can a Foreign Shareholder Receive?
An Indonesian company’s annual report must be available at the company’s office from the date of the GMS invitation so that shareholders can inspect it. A shareholder can also submit a written request to inspect the annual report and obtain a copy.
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A controlling foreign parent can require monthly or quarterly management accounts, cash-flow reports, intercompany reconciliations, and schedules for group consolidation.
A minority foreign shareholder can establish additional reporting rights through the articles of association and shareholder or joint venture agreements, subject to Indonesian law. These can specify the frequency and scope of financial information provided beyond statutory shareholder rights.
Financial Reporting Support from MAP Resources Indonesia
MAP Resources Indonesia supports foreign-owned companies with financial statement preparation, group and shareholder reporting, and audit coordination. Contact us today at info@mapresourcesindonesia.com.
