Lombok Tengah and especially Kuta Lombok have seen the number of listings multiplied by 3 on AirBnb since 2022. This trend indicates a growing offer on the market while an average occupancy rate stabilizes or is slightly below 2023 during the year. The number of people making investment in Lombok is growing alongside the increasing number of visitors. However, with more properties under construction, planning the investment wisely and choosing the best location, such as between Selong Belanak and Kuta Lombok becomes crucial.
Setting up a PT PMA is a prerequisite for any person looking to invest as a foreigner following the agrarian law, as individuals are not allowed to own land in Indonesia. This guide is for foreign investors and developers looking to set up their investments and properly optimise their taxes.
Why a PT PMA is Essential for Foreign Investors
There are several reasons why a foreigner should invest in a property through a PT PMA. The two main reasons are legality and tax.
On the legal side a foreigner non-resident cannot own a land title in Indonesia and by agrarian law a foreigner cannot even lease a property despite some notary accepting it.
Land Purchase and Building permit
The PT PMA is the simplest way to secure land or property for your investment in Lombok and other Indonesian regions. It enables the acquisition of freehold titles through a sales and purchase agreement (AKTA JUAL BELI; AJB) and grants a right to build, known as HGB (Hak Guna Bangunan).
This land title is necessary to obtain a building permit known as PBG under the company name and not be dependent on the land owner or using a nominee in Indonesia.
Renting out the property
The PT PMA allows the foreigner to obtain the licence to rent out properties under certain conditions and obtain a licence such as Hotel or Apartment Hotel. The licence is called NIB and the PMA can obtain a Sertifikat Standard.
Tax payment and efficiency
While a foreigner cannot directly obtain a tax identification number, the PT PMA simplifies investment in Lombok by enabling access to a local tax number (NPWPD), a tax identification number (NPWP), and an electronic filing identification number (EFIN).
Those tax numbers are necessary to report the tax to the local tax office when the property is rented out or when the company has to withhold the tax on services the PT PMA pays.
Flexibility
The PT PMA allows different investors to enter an investment by making different classes of shares or selling part of the business without having to resell the property or business.
Registering a company in Indonesia has never been easier
Setting up a business abroad can be challenging with so many documents, laws and regulations to consider. Luckily, the process will be a breeze, and we’ll give you expert advice on which business structure and setup will fit your needs.
Reach out to the ILA team today to set up a free consultation or read more about the company registration process.
Key Requirements to Establish a PT PMA
Authorized Capital
The authorized capital of a PT PMA is equal to 10 billion IDR. A PT PMA needs to have at least 2 shareholders, individuals or companies, and 1 commissioner with at least 1 director.
Shareholders and Directors
Shareholders can get an investor KITAS if their total shares are worth at least 10 billion IDR. While shareholders may also serve as directors or commissioners, this isn’t mandatory. Consult us or your tax advisor to determine the ideal share percentage and investment approach, as personal or corporate investment in a PT PMA affects dividend withdrawals and tax rates.
Business classification
A company in Indonesia needs to select one or several business classifications. The business code will vary depending on whether the company operates as developer or focuses on renting out properties for commercial purposes. We advise you to consult us to know more on the set up.
However it is important to note that a PT PMA cannot be 100% under foreign investment for any consulting in construction or acting as contractor despite what some PT PMA promote themself as service provider.
Step-by-Step Process to Set Up a PT PMA in Lombok
Here are the steps to set up a PT PMA in Lombok:
- Identifying the business code and KBLI related to your activity
- Define a name of at least 3 words with 3 letters
- Select a commercial address in Lombok to register (ILA can assist)
- Deed preparation (AKTA) known as Article of Association
- Obtention of the Ministry of Law and Human Rights (SK or Ministry Approval)
- Tax card registration (NPWP)
- Business licence (NIB) and Sertifiktat Standard
- Bank account opening
Timeline and Costs
Setting up a PT PMA for investment in Lombok can be completed within five working days, ensuring a swift process to establish your business presence. The cost varies from the address selected to the business licence if a certificate standard is necessary to be approved, such as Hotel, or Broker.
Steps to buy a property in Lombok with a PT PMA
Once the PT PMA is set the process to purchase a freehold property is as follows:
- Select the land and make an offer (do not pay without making the offer and do not pay the seller directly)
- Conduct due diligence on the land and property
- Check all authorization and building permit (PBG)
- Sign a lease agreement or a PJB and AJB
- Pay the notary and the related tax
- Process with the changes of the land certificate
Also Read : How To Establish A PT PMA In Bali
FAQs
Can I own land directly through a PT PMA?
Yes it is possible to own land under a PT PMA. They will convert the land title into HGB, lasting 30 + 20 + 30 years. Then, you can convert the land title to SHM anytime to resell it as a freehold.
How long does the setup process take?
The process takes 5 days
What taxes apply to PT PMA property investments?
Buyer tax is 5% on the property value and seller tax is 2.5% on the transaction value. Some retributions exist to convert the land title into HGB and transfer it under the PT PMA.
Local tax for a daily rental is set at 10% and must be paid under an NPWPD.
