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The act of forming a new business in Jakarta, Indonesia, follows a set of comprehensive laws and regulations that aim to maintain a fair, competitive, and transparent business environment. The process usually involves obtaining specific licenses, registration with the Ministry of Law and Human Rights, and the Indonesia Investment Coordinating Board (BKPM). Furthermore, businesses must comply with tax regulations managed by the Indonesia Tax Office. Although it might seem complex, the Indonesian government offers an integrated online system called the Online Single Submission (OSS) to streamline the process.
Setting up a business involves comprehending a plethora of legal requirements and nuances that may be difficult for laypeople to understand. A lawyer can help navigate these complexities, ensuring compliance with all applicable laws and regulations. They can assist with drafting the articles of association, obtaining necessary licenses, and ensuring tax compliance. Furthermore, if your business is international or involves complex transactions, a lawyer can provide essential guidance to avoid potential legal pitfalls.
The Indonesian commercial law, which includes Jakarta, is based on the principle of freedom of contract. That said, businesses are required to be registered with the Indonesian Commercial Register maintained by the Ministry of Law and Human Rights. Indonesia also imposes restrictions on foreign investment in certain sectors specified by "Negative Investment List". Labor laws, environmental regulations, and zoning regulations among other things, must also be complied with, making legal assistance beneficial in these areas.
While a foreign national can own a business in Jakarta, they are subjected to restrictions dictated by the Negative Investment List. Some sectors are totally closed to foreign investment while others limit the percentage of foreign ownership.
The most common type of business entity in Indonesia is a Limited Liability Company, known locally as PT (Perseroan Terbatas).
With the introduction of the Online Single Submission (OSS) system, the process has been streamlined and can be completed in as little as 3-14 business days.
Indonesian businesses must register for tax identification, pay corporate income tax, along with value-added tax, and withholding taxes. Detailed requirements can vary depending upon the nature of the business.
While foreign individuals cannot buy land, a foreign-owned company (PMA) can obtain rights to build or rights to use land for business purposes.
Governmental bodies such as the Ministry of Law and Human Rights, Indonesia Investment Coordinating Board (BKPM), and Indonesia Tax Office can provide assistance and resources. Additionally, organizations like the Indonesian Chamber of Commerce and Industry (KADIN) can prove useful for networking and guidance purposes.
If you need legal assistance in new business formation, it's advisable to hire a lawyer or legal expert specializing in Indonesian business law. They will walk you through the entire process of setting up a business entity, ensure all legal requirements are met, and help minimize potential legal risks associated with doing business in Jakarta, Indonesia.
