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Indonesia’s Limited Liability Company’s Capital Structure

Limited Liability Company (“LLC”) establishment procedure in Indonesia consists of various factors ranging from a certain amount of capital to numerous documents that must be owned. The task of an LLC establishment can prove to be difficult. In this article, we’ll discuss the topic of LLC’s capital structure that will entail details regarding the new LLC regulations and many more. What’s the Law On LLC’s Capital Structure? Taking the latest regulation as reference, Omnibus Law, Article 109 (3) states that a Company is required to have authorized capital, the amount of this capital is determined based on the decision of the company founder and accordingly, at least 25% of the authorized capital must be fully issued and paid-up. This regulation amend some parts of its preceding law, namely Law Number 40 of 2007 on Limited Liability Companies (“Law 40/2007”). What’s the difference Between ‘Issued Capital’ and ‘Paid Up Capital’? ‘Paid Up Capital’ means any amount (even if the capital concerned hasn’t been paid in full) of money that has already been paid by investors in exchange for shares of stock, when the amount of issued share capital has already been fully paid, the ‘Paid Up Capital’ has become ‘Paid Up Share Capital’. Meanwhile, ‘Issued Capital’ means the value of shares the company can actually issue to potential investors, the total amount of shares that have been given to shareholders will then be called ‘Issued Share Capital’. Note: The fully issued and paid-up capital is proven by a valid deposit receipt and any subsequent issue of shares that are performed each time (to increase issued capital) that must be fully paid-up. Prohibitions Concerning Ownership of Company’s Shares Article 36 (1) of Law 40/2007 states, “A Company is prohibited from issuing shares to be owned by itself or to be owned by another company whose shares are directly or indirectly owned by the Company.” This excludes, however, in situations where ownership of shares are acquired from transfer due to law, grant, or bequest. On acquiring shares through mentioned means, the shares concerned must be transferred to another party (not prohibited from owning shares in the Company) within a period of 1 year after the date of acquisition. Stay up to date for more of this insights via our company website: DIGITAL NOMAD INDONESIA DIGITAL NOMAD INDONESIA

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What’s Bali’s New Tourist Tax & What Travelers Need To Know

Starting on February 14, 2024, foreign tourists will have to pay a tax of Rp 150,000 ($10) when they visit Bali. The Minister of Tourism and Creative Economy, Sandiaga Uno, has made it clear that this tax is meant to protect Bali’s culture and natural treasures. “The Provincial Government imposes levies on foreign tourists every time they enter Bali directly from abroad or indirectly through other regions in Indonesia.” – Article 5 (1) of Bali Government Regulation Number 6 of 2023 on Charges For Foreign Tourists For Protection of Bali’s Culture and Natural Environment A regional rule (Perda) that went into effect in November 2023 states that all foreign tourists who come to Bali must make a one-time payment of Rp 150,000.00 ($10) as a requirement for their full stay in Bali. The payment will be processed electronically by Bank Rakyat Indonesia (BRI) through the Love Bali website (https://lovebali.baliprov.go.id/home) and does not enact cash payment method. On the contrary, they can choose from a number of payment options, such as a virtual account, a bank transfer, or QRIS which they can conduct before their arrival in Bali. After successful transfer, the “Love Bali System” will send a digital proof of payment. People who can’t use the Love Bali System can pay at BRI counters in airports or ports with debit or credit cards or electronic data capture (EDC), in this case, tourists will get a printout as proof of payment. It is necessary for foreign tourists to keep their proof of payment as it will be scanned at the arrival gates during the verification process. The goal of the tax is not only contribute to maintain information services about culture tourism in Bali, but also the result of such tax would be utilized for the improvement of public infrastructure and transport. “The levy regulations aim to establish cleanliness, order, comfort, and safety for tourists,” Sandiaga Uno said in a recent statement. Along with helping to protect Bali’s rich culture, the new tourist tax is meant to improve the general experience for visitors by making infrastructure better and payment processes easier

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What Are My Options: The Foreigner’s Guide For Investment

Alright, where do I start? First thing first, as a foreigner, you are not given a lot of options. Nonetheless, varying business endeavours and opportunities still remain! In this article, we’ll talk about what are the requirements you need to make investments and give you insight on the business fields available for you to undertake. What do I need to know? According to existing laws regarding Investment Activities in Indonesia, a Business Licence is needed to provide legality for Business Actors to start and operate their businesses and/or activities in Indonesia. Individuals, Business Entities, Representative Offices, and Foreign Business Entities. These Business Actors are determined as Business Actors that have the right to procure a business license in Indonesia. Establishing Business Entity (PT PMA) In order to establish a Business Entity in Indonesia, a foreigner may do so by establishing a PT PMA (Limited Liability Company of Foreign Investment). This is because PT PMA is the form of investing activity that is specified only for foreign investors to do business within the territory of Indonesia which can be done by either fully using foreign capital or in the form of joint venture with domestic investors. Read more about PT PMA here. Note: Business Entities consist of entities that are either an incorporated or unincorporated entities that are established within Indonesia that carries out businesses and/or activities in certain sectors. In Indonesia, PT PMA is classified into the a ‘Large-Scale Business’ category, which means it must comply with a minimum investment value of more than Rp 10.000.000.000,- (10 Billion Rupiahs) or per 5 digit of KBLI Business Sector per project location (excluding land and buildings). Such provision can be exempted if stipulated otherwise by the laws and regulations. However, some cases for the total investment values of certain business sectors are regulated differently, these are: 1.Large-scale trading business activities: Total Investment value must be more than Rp 10.000.000.000,- or as much as per the initial 4 (four) digits of KBLI excluding land and buildings; 2.Food and beverage service business activities: Total Investment value must be more than Rp 10.000.000.000,- or as much as per 2 initial digits of KBLI per one point location excluding land and buildings; 3.Construction service business activities: Total Investment value must be more than Rp 10.000.000.000,- or as much as per 4 initial digits of KBLI excluding land and buildings in one activity; 4.Industrial business activities that produce a type of product with a different 5-digit of KBLI in 1 production line: Total Investment value must be more than Rp 10.000.000.000,- excluding land and buildings; and 5.Property construction and exploitation business activities: a.In the form of property which take form of a complete building or an integrated housing complex, total Investment value must be more than Rp 10.000.000.000,-including land and buildings; and/or b.In the form of a property unit not in 1 building as a whole or 1 integrated housing complex, Total Investment value must be more than Rp 10.000.000.000,- excluding land and buildings. What are the Businesses can I do? In general, all businesses that are commercial in nature is available for investors to invest in. This is referenced as business fields that consist of: a.Priority Business Fields; b.Business Fields allocated to or requiring partnerships with Cooperatives and UMKM; c.Business Fields with certain requirements; and d.Business fields that are not included in letter a, letter b, and letter c (this means this type of business field may be entered by all investors. Further information regarding the descriptions of these specific business fields can be read here. In return, there are Business Sectors that are declared to be closed, which include: a.Cultivation and industry of category I narcotics; b.All forms of gambling and/or casino activities; c.Capture of fish species listed under Appendix I of Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES); d.Utilization or taking of corals (koral) and utilization or taking of reefs (karang) from nature which are used for building materials/lime/calcium, aquarium, and souvenirs/accessories, as well as live coral or recent death coral from nature; e.Chemical weapon manufacturing industry; and f.Chemical industry and ozone-depleting substance industry. As well as, Alcoholic Beverages Industry (KBLI 11010), Alcoholic Beverages Industry: Wine (KBLI 11020), and Malt Beverages Industry (KBLI 1103). A further descriptions on these Business Fields for investing opportunities can be read in our previous article here. Establishing Foreign Business Entity (Representative Office) According to the law, Foreign Business Entities (opening up representative offices) are allowed to receive Business Licensing as a way to conduct business activities in Indonesia. The Representative Office in itself can be established depending upon the line of business and the necessary licenses issued by the related government department. These Foreign Business Entities must be in the forms of either: franchisors from abroad, foreign futures traders, foreign private electronic system organizers, and/or permanent establishment (must include a representative office established to conduct business activities in the oil and gas sector). However, Representative Offices have a limitation in which they are not allowed to conduct direct sales and cannot issue Bills of Lading. Furthermore, in accordance with the BKPM Regulation 4/2021, Article 13, these Foreign Business Entities are exempted from the provision regarding he investment value and capital as referred previously towards PT PMA’s Total Investment requirements. Further informations regardin the establishment of these Foreign Business Entities (Representative Office) will be discussed in upcoming articles. Conclusion Investment opportunities for foreigners in Indonesia is limited to the establishment of PT PMA and Foreign Business Entities (Representative Offices). This means that the capacity of Foreign nationals to conduct business should be done in those methods. The requirements for establishing such entities also vary and may change depending on the ever-changing provisions of Indonesia’s regulation system. Therefore, absolut certainty for understanding the laws and requirements of foreign investment in Indonesia may prove to be difficult. Contact us at DIgital Nomads Indonesia and Selaras Law Firm to book your free consultation! DIGITAL NOMADS INDONESIA Digital Nomads Indonesia is your our one-stop shop in

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Foreigners Working In Bali: What Do I Need To Ensure To Work Legitimately In Indonesia?

First thing first,  Many foreigners working in Indonesia share the same concerns when it comes to their safety and security of working legitimately in Indonesia. Varying between concerns of their ability to get paid or being able to be visibly online for their work. These concerns of course don’t appear without reason, numerous occasions have arisen where foreigners experience difficulties and persecutions for sharing and in some cases, for promoting their works. Let’s break this down even further. Why do foreigners experience these? According to Indonesia’s immigration law, only foreigners that hold certain visas and permit can work in Indonesia. To begin with, a working visa is categorized within the C31- Limited Stay Visa, which falls under the ‘Multiple Entry’ category. Although a B211A visa (‘Single Entry Visa’) may also enable foreigners to work, the scope of its capacity to provide foreigners to work (the other needed rights to work properly) are not determined under this particular visa. Therefore, we suggest applying for C31- type of visas that may provide foreigners with a sound, comfortable, and full proof package of not having to deal with the bureaucracy as often. Additionally, one criteria that might also fall under the Working Visa category is for those who identify as persons that stay in Indonesia for the ‘ease of doing work while on vacation’. This provision falls under its own category and further provisions specifically regulating this is still unclear. However, basing from the visa types and regulations that have existed thus far, it can be concluded that this particular provision also encompasses as a bridge for foreigners who identify as digital nomads in Indonesia. About C31- Limited Stay Visa What does holding a C31- Visa entail? In short, by holding this visa, foreigners are able to choose for a longer period of time that ranges from 6 months, 1 year, and 2 years. Additionally, this visa can be used for ‘Re-entry’ purposes and be extended. Which means, the Limited Stay Visa also provides the ability to gain a Limited Stay Permit. Within the C31- Visa, there are several sub-criterias of visa each with its own purpose, these are: Working Visa (C312 Visa), Foreign Direct Investment (“PT PMA”) Visa (C313 & C314 Visas), Training & Research Visa (C315 Visa), Education (C316 Visa), Family Unification Visa (C317 Visa), and Repatriation Visa (C318 Visa). The visas mentioned above include all the available visas falling under the C31- category. In this article, we’ll talk in further details of the visas you’d need to work properly in Indonesia. 1. Working Visa (C312) This visa is aimed for foreigners who identify as experts and/or workers. The application of such visas can be done through submission for applications by the Foreigner themselves or their Sponsors. An ‘expert’ may also include prospective foreign workers who work as part of a skills trial. Meanwhile, the term ‘workers’ might be vague, thus to give a better understanding, below we mention several conditions that categorized such term: 2. Foreign Direct Investment (PT PMA) Visa [C313 & C314] The Foreign Direct Investment visas only apply towards foreign nationals who conduct foreign investment activities in Indonesia. Foreign investment activities are grouped into Three categories based on the maximum length of stay of two, five and ten years. Based on the maximum period of stay, the maximum period of 5 and 10 years of stay are further broken down into three sub-categories, these are whether the foreigners intend to establish a company in Indonesia; do not intend to establish a company in Indonesia; and if the foreigner will serve as members of the board of directors or members of the board of commissioners in a company to be established in Indonesia which is a branch or subsidiary of a company outside Indonesian Territory. When it comes to Foreign Direct Investment Visa, certain capital expenditures are needed to gain the Foreign Direct Investment Limited Stay Visa. Below are the requirements of each maximum period of stay: 1. 2 years maximum period of stay Applicant of 2-years maximum period of Direct Investment Visa must provide: 2. 5 years maximum period of stay Applicant of 5-years maximum period of Direct Investment Visa must provide: 3. 10 years maximum period of stay Applicant of 10-years maximum period of Direct Investment Visa must provide: Note: Further informations regarding ‘Visa’ can be read here and update for the ‘New Immigration Policy’ can be read here.  Bonus Round: Digital Nomad Visa We must all have heard by now about the appetizing and elusive proposition of the ‘Digital Nomad Visa’. In reality, we might want to hold down our horses as no progress have actually appeared since 2021 (when we first heard of the idea) relating to this actually coming true. In 2022, the Indonesia’s government had instead introduced the ‘Second Home’ Visa. In accordance with the definition provided by existing provision,  a ‘Second Home Limited Stay Visa’ encapsulates a not-in-the-framework of work Visa that’s given to foreigners and/or their family to stay in Indonesia for a period of either 5 years or 10 years, of course, after fulfilling certain requirements. The Second Home Limited Stay Visa, however is given to: people who are planning to do ‘Second Home’ purposes in Indonesia, a person that identifies as a special expertise, world leader; elderly persons aged 60 (sixty) years old or older; and remote worker who is bound by an employment relationship with a company outside Indonesian Territory. Conclusion Foreigners who are planning to work visibly in Indonesia require the fitting visa relevant to the work field. Holding the right visa and understanding the legal capacity it provides for the owners do make life more convenient in the long run for foreigners who just want to be able to work properly and conducively in Indonesia.  Have Further Questions? Contact us at Selaras Law Firm to get your free consultancy on all the legal matters you have.  @selaraslawfirm Selaras Law Firm +62 819 4412 6600 SELARAS COMPANY PROFILE Selaras is a Market Entry and Investment Consulting Firm.

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New Immigration Policy

What’s the ‘New Immigration Policy’? Introduced on November 1st 2023 in the Regulation of the Minister of Law and Human Rights No. 22 of 2023 on Visas and Stay Permits, new policy changes related to Shares within the framework of Foreign Direct Investment (FDI) regulations in Indonesia take into effect. This means that PT PMA that apply for ITAS will need to pay attention to the number of shares owned by foreign nationals (WNA) in its company structure.  What does the ‘New Immigration Policy’ entail? For Limited Stay Permit (ITAS) As well as some additional requirements that is applicable to PMA who wish to apply for a new application or extension of ITAS since November 1st 2023: For Permanent Resident Permit (ITAP) Aside from policy changes relating to the minimum shares value of Directors/Commissioners and shareholders without position, following the “New Immigration Policy” PMA is required to make changes to the share value and capital value in the Company Deed before a Notary. How long is the ‘New Immigration Policy’ transition period? All applications and extensions of ITAS PMA will follow the new policy effective as of January 1st 2025. Meanwhile, new applications and extensions of PMA ITAS for companies with the number of shares that are below 10 billion is temporarily allowed until December 31st 2024 with a period of stay that will only be granted following the visa owned.

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Panama, Guatemala and Macau Are Now Eligible to UseIndonesia Visa on Arrival

Indonesia’s Ministry of Immigration officially added Panama, Guatemala and Macau to the list of Countries and Special Administrative Regions subject to Indonesia Visa on Arrival (VOA). The new regulation was announced through Circular Letter Number IMI-0133.GR.OI.OI Year 2023. At the moment this article is published, there are 92 countries eligible to use Indonesia Visa on Arrival. Prior to the regulation coming into effect, the Indonesian immigration ministry had granted permission to use visas on arrival gradually for 89 other countries. The most recent are Kenya and Rwanda in February 2023, joining Kazakhstan which has pocketed the Indonesian VOA eligibility in January. See the picture below to understand the complete list of countries subject to Visa on Arrival: About Indonesia visa on Arrival From the first quarter of 2022, the VOA scheme has helped simplify many nationals’ access to travel to Indonesia. As an alternative to a tourist visa, Visa on Arrival allows foreigners to stay for 30 days and is often regarded as the simplest entrance permission to obtain instantly upon arrival. This visa provides foreign nationals with an initial 30-day visa to Indonesia. The visa is also extendable for 30 days, granting a maximum stay of 60 days within the country. Applying for VOA is also easy. Foreigners can ask the Immigration officer or straight look for the BRI counter (Official Bank of Indonesia) upon their arrival and make the payment for the visa application on the spot.Furthermore, applying for a Visa on Arrival can also be done using an Electronic Visa on Arrival (e-VoA) through molina.immigration.go.id before leaving for Indonesia. Both the eVoA and VOA applications would not require a guarantor with a flexible payment gateway, using cash, credit/debit card with a Visa, Mastercard or JCB logo.To apply for a Visa on Arrival on the spot, we recommend you prepare IDR 500,000 IDR or USD 35 in cash as the best option. Stay longer in Indonesia using visa on Arrival Extension Questions are spreading around wondering if we could stay longer in Indonesia with a Visa on Arrival. Is it really possible?Initially, Indonesia Immigration provides another 30 days you can get after extending your VOA. The fee charged for a foreigner toextend their Indonesia VOA is 500,000 IDR. With the price, applicants still have to visit the immigration office 3 times to performseveral technical procedures before finally getting their visa extended.

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Company Registration: Setup A PT PMA in Indonesia

As the largest economy in Southeast Asia, Indonesia offers promising opportunities for foreign investors to own and operate businesses from one sector to another. However, navigating the legal and regulatory requirements in the country can seem daunting. Establishing a PT PMA could be the ideal pathway for a business to engage in various activities in Indonesia, subject to regulations and licenses, and actively contribute to the country’s economic growth while maintaining the foreign ownership status. In this article, we will guide you through the essential comprehension and provide valuable insights on how to establish a PT PMA in Indonesia. From understanding the legal framework to obtaining necessary permits, this guide will equip you with the knowledge and confidence to embark on your entrepreneurial journey and explore business opportunities in Indonesia. What is a PMA? PMA or Penanaman Modal Asing, refers to a foreign-owned company in Indonesia. PMA addresses the PT (Perseroan Terbatas or Limited Liability Company in Indonesia) owned by a foreigner or incorporated upon Foreign Investment. This form of legal entity allows foreign investors to establish and conduct business in Indonesia after completing a set of Company Registration processes according to Indonesian Law. As a foreign investor, you become a shareholder in the PT PMA that could contribute capital, generate revenue and oversee company operations. What is considered a Foreign Company? A business entity in Indonesia can take the form of a local or foreign limited liability company, which is specifically denoted by a direct investment company. A foreign company refers to any private company where the majority of ownership or control is held by foreign investors or shareholders. It is established by foreign individuals or organizations seeking to conduct business activities in Indonesia. The shareholders should provide the paid-up capital requirement and other resources necessary for the establishment and operation of the company. These people typically have a stake in the company’s shares and are actively involved in its decision-making processes. What benefits of a PMA (Foreign-Owned) Company? This type of company offers several benefits for foreign investors: How do I register a Foreign Company In Indonesia? Registering this type of company involves a series of steps and requirements. As a foreign investor, it is important to navigate theregistration process while adhering to Indonesian regulations. Steps for the Establishment of PT PMA To set up a foreign company in Indonesia, determine the desired business activities and secure a local company name that complies with Indonesian naming conventions. The business field you would like to acquire should match the recent Indonesian Investment List. Next, prepare the necessary documents, such as the company’s Articles of Association (Anggaran Dasar) and the Investment Plan (Rencana Investasi). These documents outline the company’s structure, purpose, and investment details.Once the documents are prepared, apply to the Indonesian Investment Coordinating Board (BKPM) online or through its regional office. This application should include relevant information about the shareholders, including their identities and investment shares. There should be at least two shareholders, as Indonesian shareholders are required to hold at least 5% of the company’s shares, while foreign shareholders can hold the remaining shares. Upon receiving approval from the BKPM, obtain a Deed of Establishment (Akta Pendirian) from a notary. This legalizes the establishment of the PT PMA. Following this, apply for a Taxpayer Identification Number (Nomor Pokok Wajib Pajak, NPWP) and register for social security programs. Additionally, secure any necessary business licenses and permits specific to the company’s industry and activities. These may include operational licenses, environmental permits, and other sector-specific requirements. Finally, register the PT PMA with the Ministry of Law and Human Rights, which grants the official legal status of the company.

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Indonesia Proposes New Regulations for Visa Onshore Application and Visa Exemptions

Overview of the visa application process in Indonesia The COVID-19 pandemic has brought about significant changes in various aspects of life, including travel and immigration procedures. Since 2021, Indonesian Immigration has issued several additional regulations regarding visas and residence permits for foreigners willing to enter the country. An online visa application scheme was released to accommodate the easy process of getting a visa to Indonesia. However, recent developments indicate that some services might undergo massive amendments. This article discusses the recent updates about upcoming visa regulations coming around the middle starter of 2023. Visa Online Onshore Disablement Visa Onshore is a way of applying for a visa that serves as a residence permit for foreigners already in Indonesian territory. Before the COVID-19 outbreak, the concept of visa online onshore application did not exist in Indonesia. These measures were to respond to the lockdown regulation, allowing individuals to apply for visas within Indonesia to repress international traffic in and out of the country. However, with the pandemic situation gradually improving and restrictions revoked, the immigration authorities have decided to deactivate the online process for the onshore visa application process. Immigration proposes to abolish the online onshore visa application policy that would require foreigners to continue the visa application process in their respective countries (offshore). Despite the changes in visa regulations, the option to change the status from B21 IA (visitor visa) to ITAS (Limited Stay Permit) will still be available. This process existed even before the pandemic and will continue to be a viable option for individuals who wish to extend their stay in Indonesia. Changes in Visa Health Requirements As we are slightly surpassing the pandemic situation, the need to provide additional documents such as vaccination certificates andhealth insurance is proposed to no longer be mandatory for visa applications. When will the regulations become effective? While the regulations have been proposed, it may take some time for the immigration authorities to update the other regulations accordingly. There may be a new circular issued by the immigration authorities in the near future. This circular could provide further guidance and updates on visa regulations, including any changes to the visa application process or requirements. Therefore, it is important to keep updated and stay on top of the Indonesian visa regulations. Check out our articles to understand the latest visa updates in Indonesia.

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