Your business is now officially open, and you’re ready to operate. But what are your obligations as a business owner? What are the obligations of a PT PMA in Indonesia? While opening a business is often simple, maintaining compliance can be complex.
In this article, we’ll explain the crucial post-setup obligations you have, from day one, regardless of whether your company has generated income. We’ll detail the necessary administrative steps, such as obtaining a personal tax number and registering with the BPJS system, as well as the critical quarterly and annual reports.
We also identify and address the most common mistakes foreign entrepreneurs make when setting up a PT PMA in Bali or Lombok. You will learn how to properly manage your company’s capital, avoid the traps of holding a lease under your personal name, and navigate complex tax obligations.
By understanding these pitfalls, we can help you avoid unnecessary delays, higher costs, and legal disputes, ensuring your business is not just open but also secure and compliant for the long term.
This is where ILA Global Consulting excels. For years, we’ve helped hundreds of international clients, including those investing in property in Bali and Lombok, precisely navigate Indonesia’s legal, taxation, and investment complexities.
Our team’s blend of deep local knowledge and international best practices ensures compliant, strategic solutions, making us a trusted advisor for anyone building a sustainable presence in Indonesia.
What Are the Obligations after Setting up a PT PMA in Bali and Lombok?
The most common mistake we see with PT PMAs is thinking a company has no obligation until it generates income. However, from day one, business owners have obligations unrelated to whether the company has income.
It is common to meet property investors who are setting up a company and, unfortunately, believe they have no obligations until their villa is operational.
1. NPWP for the director
Once you set up the company, the director has several ongoing compliance obligations. One of the first steps is obtaining a personal Tax Identification Number (NPWP), which the director needs to manage the company’s tax reporting obligations.
The director must register through the Coretax system, Indonesia’s integrated tax administration platform. Under PMK No. 81 of 2024, Coretax became the mandatory system for tax administration, including registration, filing, and tax payments for all VAT-registered entities (PKP), effective January 2025.
The director must obtain a KITAS before registering for a personal NPWP. The NPWP now consists of a 16-digit identification number. For Indonesian citizens, the National Identity Number (NIK) also serves as the NPWP, while foreign directors continue to obtain an NPWP through the Coretax registration process.
2. BPJS Registration
The company must enroll at least two employees in the social security system, BPJS Ketenagakerjaan. The Director and the Commissioner can be enrolled in the system. The payment is done monthly and calculated based on the declared salary.
3. LKPM Report
Each quarter, a PT PMA must submit an LKPM Report through the OSS system, which then transmits it to the Ministry of Investment/BKPM. The report enables the government to monitor the progress of companies’ investments in Indonesia.
Although the LKPM Report does not trigger any tax liability, failure to submit it may result in administrative sanctions, including the suspension or revocation of business licenses. Since LKPM reporting forms part of Indonesia’s OSS-based compliance framework, non-compliance may also affect future licensing processes and other administrative transactions conducted through the OSS system.
The report is declarative and covers information such as land and building investments, machinery, employee count, environmental reporting, and other obligations related to the company’s business activities.
You need to submit the report in January, April, July, and October, between the 1st and 10th of each month.
4. Annual Tax
As in many countries, companies must submit their financial reports at the end of the fiscal year. The PT PMA has to report its Profit and Loss and its balance sheet. The company needs to report its profits and pay its taxes.
The annual tax calculation is complex and depends on the type of business, and it requires a professional, such as a tax consultant like ILA Global Consulting, to calculate and report the tax. The report has to be submitted between January and the end of April following the fiscal year.
5. Withholding Tax Payment
Having only expenses doesn’t mean the company has no tax to report. A PT PMA must withhold the correct amount of tax on purchases of services, sales, etc. For example, a company purchasing a lease will have to withhold 10% and pay the 10% to the tax office the following month.
For example, for an invoice of 100, the company has to pay 90 to the seller and 10 to the tax office. This complex system can be challenging to understand, but the company becomes responsible for the seller’s tax and ensures the taxes are matched at the end of the year.
6. Income Tax and Local Tax
Indonesia requires income tax to be reported every month. A common mistake is to think those taxes are reported annually.
- Lease tax
- Employee tax
- Local tax for restaurants, etc.
- Monthly prepayments (PPh 25) based on the previous year’s liability.
We recommend maintaining proper reporting of withholding taxes on salaries, vendors, and cross-border transactions. Staying consistent with income tax obligations prevents back taxes, penalties, and reputational issues with the tax authorities.
Contact your tax consultant, such as ILA Global Consulting, to know more about the income subject to the monthly tax reporting.
7. VAT Registration
If your PT PMA’s revenue exceeds IDR 4.8 billion per year, VAT registration (PKP) is mandatory. This allows your company to:
- Issue valid tax invoices (faktur pajak) to clients.
- Credit input VAT against output VAT to reduce costs.
- Maintain credibility with partners who expect VAT compliance.
Although PMK No. 131 of 2024 introduced a statutory VAT rate of 12%, most non-luxury goods and services remain effectively taxed at 11% due to an adjusted tax base. The full 12% VAT rate generally applies only to certain luxury goods, including luxury residential properties valued at IDR 30 billion or more. This distinction is particularly relevant for PT PMAs investing in high-value real estate.
Being proactive about VAT registration helps ensure smoother operations and ongoing compliance with Indonesian tax regulations.
Key Terms for PT PMA Obligations
| Term | Definition |
|---|---|
| NPWP | Nomor Pokok Wajib Pajak (Tax Number). A mandatory personal tax identification number that a director must obtain to report company taxes to the Indonesian government. |
| KITAS | A Limited Stay Permit (Kartu Izin Tinggal Terbatas). A director must have this residency permit to obtain a personal NPWP. |
| BPJS | Badan Penyelenggara Jaminan Sosial (Social Security Administering Body). A mandatory social security system for employees, including directors and commissioners, to which a company must make monthly contributions. |
| LKPM Report | Laporan Kegiatan Penanaman Modal (Investment Activity Report). A quarterly report that a PT PMA must submit to the BKPM to track investment activities and compliance. |
| OSS | Online Single Submission. The government platform for submitting the LKPM report and managing business licenses. |
| BKPM | Badan Koordinasi Penanaman Modal (Investment Coordinating Board). The government ministry that supervises and regulates all foreign investment activities in Indonesia. |
| NIB | Nomor Induk Berusaha (Business Identification Number). A mandatory business license that can be suspended if a company fails to submit its LKPM report. |
| VAT | Value Added Tax. Registration for this is mandatory if a PT PMA’s annual revenue exceeds IDR 4.8 billion. It allows the company to issue tax invoices and manage input/output VAT. |
Registering a Company in Indonesia Has Never Been Easier
Setting up a business abroad can be challenging, with numerous documents, laws, and regulations to consider. Luckily, the process will be a breeze, and we’ll provide you with expert advice on which business structure and setup best fit your needs.
Reach out to the ILA Global Consulting team today to set up a free consultation or read more about the company registration process.
What Are the Common Mistakes When Setting Up a PT PMA in Bali and Lombok?
Setting up a PT PMA (foreign-owned company) in Lombok and Bali is one of the most effective ways for international investors to operate legally in Indonesia. These regions are not only beautiful tourist destinations but also growing hubs for hospitality, property, and investment.
However, many foreign entrepreneurs fall into avoidable traps during the setup process. These mistakes can cause unnecessary delays, higher costs, and even legal disputes. Below are the most common mistakes to avoid when establishing a PT PMA in Bali and Lombok, along with guidance on how to overcome them.
Mistake 1: Capital Incorporation and Structuring
One of the biggest misconceptions about setting up a PT PMA in Lombok or Bali is the capital requirement. The Indonesian Investment Coordinating Board (BKPM) requires a minimum total investment plan of more than IDR 10 billion.
However, under BKPM Regulation No. 5 of 2025, the minimum paid-up capital requirement is IDR 2.5 billion. These are separate requirements, and understanding the distinction is essential when planning your company structure.
Many investors also fail to structure their share capital properly among shareholders, which can result in:
- Tax implications.
- Complications during future investment rounds or corporate restructuring.
Mistake 2: Having a Lease Under a Personal Name
A common error among investors in Bali and Lombok is signing a villa, office, or land lease in their personal foreign name rather than the PT PMA’s name. While this might seem convenient, it exposes the business to significant risks:
- The lease cannot be listed as a company asset, making it harder to use in operations or financing.
- It creates personal tax obligations instead of corporate ones.
- It complicates a future business transfer or sale.
Always register property leases under the PT PMA entity. This ensures asset protection and clear separation between personal and business ownership. It also guarantees a better tax structure and the ability to treat expenses as company capital, thereby avoiding license revocation.
Mistake 3: Not Reporting the Withholding Tax
Tax compliance is crucial for a PT PMA in Bali or Lombok. Many foreign-owned companies neglect their obligation to withhold and report taxes, such as:
- PPh 21 (employee income tax).
- PPh 23 (vendor payments).
- PPh 26 (cross-border transactions).
Failure to file withholding tax correctly can result in:
- Fines and penalties from the tax office.
- Risk of audits that disrupt business operations.
- Damage to the company’s professional reputation.
Monthly and annual tax compliance is a non-negotiable part of running a successful PT PMA in Indonesia.
Mistake 4: Assuming Eligibility for the 0.5% Regime
Some investors mistakenly assume that their PT PMA in Bali or Lombok qualifies for the UMKM (small business) 0.5% final tax regime. This is a serious misconception.
The regime applies only to small, locally owned enterprises. The tax office can provide benefits to PMA, but they must be utilized.
Mistake 5: Misunderstanding Dividend Distribution and Reinvestment
Another common oversight for foreign investors setting up a PT PMA in Bali or Lombok is a misunderstanding of how dividends and reinvestment are regulated. In Indonesia, dividends can only be distributed when:
- The company has recorded net profits after tax.
- At least 20% of the company’s net profit is allocated to the mandatory reserve fund, as required by Indonesian Company Law.
- All tax obligations have been reported and settled.
Some investors attempt to withdraw funds prematurely or overlook the reinvestment obligations stated in their BKPM-approved investment plan. This can lead to:
- Non-compliance with BKPM reporting requirements.
- Tax penalties for improperly declared dividend distributions.
- Restrictions on future expansion or licensing may arise if the company appears non-compliant with its original investment commitments.
The smart approach is to plan dividend distribution alongside reinvestment. For many PT PMAs in Bali and Lombok, reinvesting part of the profits into business expansion (such as upgrading facilities, hiring staff, or expanding into new regions) not only strengthens the company but also ensures compliance with Indonesian regulations.
Mistake 6: Using a Virtual Office Address in Bali
Another common mistake is relying on a virtual office address when establishing a PT PMA in Bali.
Since May 2026, virtual offices have no longer been accepted for PT PMAs established in Bali. Companies must use a compliant physical business address when completing the incorporation process and maintaining ongoing corporate compliance.
Choosing the correct registered office address from the outset helps avoid unnecessary delays during incorporation and reduces the risk of compliance issues as the business grows.
Key Terms for Avoiding PT PMA Mistakes
| Term | Definition |
|---|---|
| PPh 21, 23, 26 | Specific articles of the Indonesian Income Tax Law related to withholding taxes on employee income (21), vendor payments (23), and cross-border transactions (26). |
| UMKM Regime | A special tax regime with a final tax rate of 0.5% is intended for small, locally owned enterprises. Foreign-owned companies (PT PMAs) are generally not eligible for this benefit. |
| Dividend Distribution | The process of distributing a portion of a company’s profits to its shareholders. In Indonesia, this is only permissible after meeting all tax obligations and allocating funds to a mandatory reserve. |
Setting up a PT PMA is just the first step. The actual value and security of your investment depend on consistently fulfilling your post-setup obligations and avoiding common mistakes that can lead to significant legal and financial issues.
Don’t let a small oversight compromise your entire venture. Contact ILA Global Consulting today to ensure your PT PMA is not only open but also fully compliant and secure for long-term success in Indonesia.
Frequently Asked Questions
Missing an LKPM submission can result in the suspension of your Business Identification Number (NIB). Without an active NIB, your company cannot renew permits, apply for new licenses, or continue operating legally. The company must submit the report between the 1st and 10th of January, April, July, and October each year, regardless of whether the company has generated any income.
Not entirely. Your company must enroll at least two people in the BPJS Ketenagakerjaan social security system from the start. The director and commissioner can fill these roles. The company calculates monthly contributions based on the declared salary. This obligation applies from the moment the company is established, not from when it starts generating revenue.
Yes. The director of a PT PMA must obtain a personal NPWP to report company taxes. To get a personal NPWP, the director must first hold a valid KITAS. This is a prerequisite that many foreign investors overlook in the early stages of setup, which can delay tax registration and create compliance gaps down the line.
This is a common workaround that carries significant risk. Intercompany loans and cash withdrawals are subject to scrutiny by the Indonesian tax office. Improper fund withdrawals that the company fails to document as loans or salaries can prompt authorities to reclassify them as dividends and tax them accordingly. The company should properly structure and document all fund flows between itself and its shareholders.
The lease cannot be recorded as a company asset, so it cannot be used for financing or operations. It also creates personal tax obligations instead of corporate ones and complicates any future sale or transfer of the business. All property leases intended for business use should be registered under the PT PMA from the start.
From day one. Many investors assume compliance obligations only begin once the company starts generating income. This is incorrect. Tax registration, BPJS enrolment, and LKPM reporting are all required immediately after incorporation, regardless of revenue. Delaying these steps creates back compliance issues that are more costly and time-consuming to resolve later.
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This article has been updated to reflect the latest regulatory changes and compliance requirements applicable in Indonesia.
