Knowing Your Approvals – Business Licenses and Permits Requirements in Indonesia
The latest updates on business licenses and permits requirements in Indonesia compiled by 3E Accounting.
With its robust emerging economy and vibrant digital landscape, Indonesia is on track to become the seventh-largest global economy. Indonesia has a great investment climate, backed by strong fiscal policies and political reforms. The recently implemented online licensing system is also geared towards more business-friendly strategies. Here’s all you need to know about business licenses and permits requirements in Indonesia.
Streamlining the Approvals Process
Registering your business with the Trade Register or Company Registry is the first step that needs to be done. Indonesia has two types of entities that are employed for company formation. Legal entities need government approvals to operate and are of the following structures:
- Local Limited Liability Company (Perseroan Terbatas or PT) which is locally owned.
- Limited Liability Company (Perseroan Terbatas Penanaman Modal Asing or PT PMA) which is foreign-owned and needs a Permanent Business License from the Capital Investment Coordinating Board (BKPM).
The other type is a business entity. These only need to be registered with the relevant government departments. Their structures include:
- Civil Partnerships
- Limited Partnerships (Comanditer Venootshcap or CVs)
Once the Registry has issued a Deed of Establishment, the next step is to register on the Online Single Submission (OSS). OSS is an online platform that facilitates the licensing of companies. It will issue a Business Identification Number or Nomor Induk Berusaha (NIB). The NIB is essential for all applications of licenses and permits.
After attending to all necessary tax registrations, its time to move on to other approvals. As of April this year, BKPM has issued Regulation 1 BKPM 2020 which lays down the new licencing classification and guidelines employing the OSS system. The categories are for Business, Commercial or Operating Licenses and are classified according to commitments:
- Type 1: issued where the business has no commitments to fulfil and is immediately effective (such as a consulting or business solutions company).
- Type 2: issued where there are technical requirements.
- Type 3: issued where there are fee requirements.
- Type 4: issued where there are both a fee and technical requirements.
For licenses issued under Type 2, 3 and 4, they only come into effect when the business meets the commitment requirements. Examples of these types of companies include FinTech firms, construction companies, hotels or spas, etc.
If your company is a PT PMA, you will need either a business license or an industrial business license, depending on the nature of your business. An industrial business license is required for manufacturing activities that do not include oil, gas and geothermal industries. A general business license applies to activities such as trading and services. Specific business activities require specific licenses, such as a construction business license for a construction company.
3E Accounting can assist in getting the appropriate business licenses and permits requirements in Indonesia. By conducting in-depth research, meticulous document preparation and faultless online filing, 3E Accounting offers a seamless experience in compliance.
Contact 3E Accounting today for a business-ready experience provided by industry professionals.