Indonesia company registration
Healy Consultants Group PLC
17 March, 2014
Indonesia is the fourth most populous country in the world and its GDP is growing at a rate of 6% per annum. Indonesians per capita income and purchasing power is increasing. Thus, local residents are hungry for international products and services and willing to spend on quality. After China and India, Indonesia boasts the largest domestic market in the Asian continent. This potential makes Indonesia business setup attractive for foreign entrepreneurs.
Historically, foreign investment in Indonesia was in the manufacturing and mining sector. Healy Consultants encourages international investors to focus on Indonesias vast services sector. The services sector in Indonesia is going through a massive transformation and there is massive demand for quality, innovative service providers. It is expected demand for services will outweigh supply in the near future, making Indonesia company formation ideal for your companys expansion goals.
Thanks to the abundance of labour and raw materials, Indonesias reputation as a manufacturing hub is growing considerably. The country is rich in several minerals and is one of the leaders in agricultural products, which is advantageous for entrepreneurs interested in Indonesia company formation. Plus, compared to countries of the western world, the cost of living in Indonesia is very cheap including food, transport, utilities, rent, and wages.
Investors who want to enter the Indonesian market should be aware of the following accounting and tax considerations:
1. Indonesian companies are taxed at a flat corporate tax rate of 25% for both domestic and international income streams. In contrast, individuals are taxed at the normal marginal rates of tax with the top Indonesia tax rate being 46.5%.
2. Annual audited financial statements and corporate tax return is submitted to the Indonesian Taxation Office following Indonesia business setup. It is usually possible to obtain an audit exemption.
3. Following Indonesia company formation, resident companies and individuals settle their tax liabilities either by monthly payments, third party withholdings, or a combination of both.
4. Resident Indonesian companies are required to withhold tax ta a rate of 20% from the payments to foreign companies. However, Indonesia boasts 47 double tax treaties which minimize withholding tax for service fees, dividends, interest, royalties, and branch profits.
5. An individual is considered tax resident if he is present in Indonesia for at least 183 days per year.
It is important to note that Indonesian Government agencies play an important role in doing business in Indonesia. All businesses deal with Government agencies on a regular basis. This is where foreign companies would also need to exercise restraint and be patient as much as possible since Government authorities would always have the final say in any matter.
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