How to register a company in Indonesia: A comprehensive guide

Expand your business in Indonesia: Asia’s rising powerhouse!

Indonesia, the largest economy in Southeast Asia, is a thriving hub for businesses. Many reports project this country to be Asia’s fastest-growing digital economy. It is home to diverse industries, including manufacturing, technology, fintech, e-commerce, and renewable energy. A combination of regulatory reforms and digitalization makes it an exciting market for global companies.

However, navigating local dynamics can prove frustrating for many. If your business wants a quick, flexible, low-risk market entry, an Employer of Record (EOR) can be a good alternative to establishing a local entity.

In the article, we explore the key business benefits of registering a company in Indonesia and also explore a smarter, faster, and more cost-effective alternative for your expansion here.

The business benefits of registering your company in Indonesia

Indonesia’s dynamic economy, strategic location, and investment-friendly policies make it an attractive destination for global businesses. From tax incentives to a large talent pool, here’s why setting up a company in Indonesia can be a game-changer for your business:

• Access to a massive consumer base: With over 270 million people, Indonesia has one of the world’s largest and fastest-growing consumer markets. Businesses can tap into a young, tech-savvy population with increasing purchasing power.
• Favorable foreign investment policies: The Indonesian government actively encourages foreign investment by allowing 100% foreign ownership in many industries, simplifying business registration, and offering tax incentives.
• Growing digital economy: Indonesia is home to a thriving e-commerce and fintech sector, driven by a rapidly expanding internet user base. Companies in tech-related industries can benefit from the country’s digital transformation.
• Competitive labor costs: Compared to other Southeast Asian markets, Indonesia offers affordable labor costs, making it an attractive destination for companies looking to scale their operations cost-effectively.
• Free trade agreements: As a member of ASEAN and a participant in various trade agreements, Indonesia provides businesses with preferential access to regional and international markets.
• Government incentives and tax benefits: Foreign investors can take advantage of corporate tax reductions, import duty exemptions, and investment allowances in designated priority sectors.
• Strategic geographical location: Located between major global trade routes, Indonesia is a gateway to Southeast Asia, Australia, and China, making it an ideal hub for logistics and regional operations.

Registering a company in Indonesia offers long-term growth potential, complete operational control, and increased market credibility. But, for businesses seeking quick, hassle-free market entry, an EOR provides a strategic alternative to company registration.

What is the difference between standard company registration and Employer of Record (EOR) in Indonesia?

If you want to expand into Indonesia, you can choose between standard company registration or partnering with an Employer of Record (EOR), depending on your business needs.

To help you decide, here is a quick comparison:

Aspect	Standard company registration	Employer of Record (EOR)
Purpose	Establish a legal entity in Indonesia.	Hire employees and operate without setting up a legal entity.
Control	Full control, and responsibility, over operations, hiring, and business decisions.	EOR manages legal responsibilities while your company oversees work responsibilities.
Cost	Higher upfront costs (registration fees, legal setup, accounting, payroll, and taxes).	Lower costs—fixed monthly fee covers compliance, payroll, and related tax compliance.
Compliance	Must comply with Indonesian tax laws, labor regulations, and corporate filings.	EOR handles all compliance, reducing your administrative and legal risks.
Setup time	2–4 weeks or more, depending on business structure and paperwork.	A few days—with an EOR, you can start hiring immediately.
Scalability	Requires entity registration for each location; exiting the market can be complex.	Flexible hiring, scale up or downsize quickly. Expand or exit without legal complications.

Standard registration is ideal for businesses planning a long-term presence and operational control, while an EOR is perfect for companies that want fast, cost-effective market entry.

How an EOR simplifies Indonesia company registration

Expanding into Indonesia offers incredible business opportunities, but setting up a legal entity here involves complex regulatory, tax, and compliance challenges. Businesses must navigate foreign investment restrictions, corporate tax filings, labor laws, and payroll processing—which can delay market entry and increase operational costs.

An Employer of Record (EOR) provides a simpler, cost-effective route. You needn’t set up a local entity; instead, the EOR hires employees on your behalf. It also manages payroll, tax compliance, and many HR tasks for you.

Here’s how an EOR proves helpful:

• Fast and simple setup: Expand into Indonesia without company registration and begin operations within days instead of months.
• Effortless payroll and tax management: Accurately process salaries in compliance with local tax and labor laws. The EOR will also handle your social security contributions.
• Full compliance with labor laws: Reduce legal risks by adhering to Indonesia’s employment laws, tax codes, and workforce regulations.
• Significant cost savings: Eliminate high upfront costs associated with company registration, legal fees, and payroll administration.
• Workforce scalability and flexibility: Easily hire, expand, or downsize without the long-term commitment and liabilities of entity registration.
• Seamless talent acquisition: Access Indonesia’s skilled workforce. Simplify hiring, onboarding, and retention with compliant employment contracts and benefits.
• Risk mitigation and legal protection: Proper employment classification and tax filings mitigates the risk of employee disputes and financial penalties.

These reasons make an EOR the perfect solution for businesses wanting to swiftly hire in Indonesia while avoiding unnecessary complexities, risks, and bureaucratic red tape.

A step-by-step guide to registering a company in Indonesia

Expanding into Indonesia means navigating legal requirements, tax obligations, and labor laws.

Here’s how to register your company step-by-step:

Step 1: Choose your business structure

• Foreign-Owned Limited Liability Company (PT PMA): This is a common choice for foreign investors, allowing up to 100% foreign ownership in many sectors.
• Local Limited Liability Company (PT): PT requires Indonesian shareholders and is better suited for domestic businesses.
• Representative Office (RO): An RO is ideal for market research, marketing, or liaisons with local partners. It cannot generate revenue or participate in commercial activities.

Step 2: Reserve a business name

• Verify name availability through the Indonesian Ministry of Law and Human Rights.
• Ensure compliance with naming regulations. For instance, your name must consist of at least three words and should not have any prohibited terms.

Step 3: Register your company

• Submit documents to the Investment Coordinating Board (BKPM).
• Obtain a Company Registration Certificate (NIB) and Taxpayer Identification Number (NPWP).

This process can take several weeks, depending on approvals and document verification. Businesses that need a faster market entry often opt for an EOR to bypass this waiting period and start hiring immediately.

Step 4: Open a corporate bank account

• Choose an Indonesian or international bank to manage finances.
• Provide company registration documents and proof of business address.

Step 5: Register for taxes and social security

• Enroll with the Indonesian Tax Office (Direktorat Jenderal Pajak) for VAT and corporate tax compliance.
• In Indonesia, you must also register with the Workers Social Security Agency (BPJS Ketenagakerjaan) for employee benefits.
• However, if you partner with an EOR, you can skip this step as the EOR takes care of employee hiring and benefits)

Step 6: Obtain business licenses and permits

• Consult the OSS system for sector-specific licenses you may require for finance, healthcare, manufacturing, and other industries.

As you can see, registering a company in Indonesia comes with bureaucratic hurdles, changing regulations, language barriers, and high setup costs. Navigating permits, tax filings, and compliance can be time-consuming, adding complexity to your expansion.

An Employer of Record (EOR) is an efficient alternative if you are unsure about your long-term expansion plans, need a more cost-effective approach, or would like to begin hiring faster.

To help you decide, let’s break down the real costs of setting up a legal entity in Indonesia, and how an EOR simplifies expansion.

Understand the costs of company registration in Indonesia

Understanding the actual costs of company registration in Indonesia is essential for financial planning and can be a deciding factor in your expansion plans. Beyond the initial setup fees, businesses must account for ongoing compliance, tax obligations, and operational expenses.

Here are some indicative costs to help you decide:

Registration and initial setup costs

These are the mandatory costs you will incur when legally establishing a company in Indonesia:

• Company registration fees: $1,000–$3,000, depending on business structure.
• Notary and legal fees: $500–$2,000, including contract drafting and document authentication.
• Company seal and documentation fees: $100–$500 for official business registration paperwork.
• Minimum capital requirement: $10,000–$1,000,000+, based on the industry and foreign ownership regulations. For example, for PT PMA entities, you need a minimum investment plan of IDR 10 billion ($680,000), with at least 25% ($170,000) as paid-up capital.

Annual maintenance and compliance costs

Once your business is registered, consider the recurring costs for adhering to Indonesian regulations:

• Business license renewal: $100–$500 annually, depending on industry-specific requirements.
• Corporate tax filings and audits: $1,000–$5,000 per year for mandatory financial reporting and tax submissions.
• Accounting and bookkeeping services: $100–$500 per month, based on transaction volume and complexity.

Payroll, taxes, and employee-related costs

If hiring employees in Indonesia, you must adhere to payroll laws and social contribution regulations:

• Corporate tax: 22% on net profits, with potential reductions for businesses in Special Economic Zones (SEZs).
• Value-added tax (VAT): Since 2025, a standard VAT of 12% applies to most businesses.
• Employer social security contributions: Around 10%–15% of employee salary, covering pension, health insurance, and labor insurance.
• Payroll processing fees: $50–$200 per employee (monthly), if outsourced.

Hidden costs and administrative expenses

Beyond standard registration fees, your business should anticipate additional costs related to business operations, regulatory changes, and administrative processing:

• Work permits and visa fees: $1,000–$3,000 per expatriate employee, depending on job role.
• Industry-specific permits and compliance fees: Varies based on sector (e.g., finance, healthcare, and e-commerce require additional licenses).
• Office space and operational costs: $500–$5,000 per month, depending on business size and location.

For businesses that want to test the market, hire employees quickly, or reduce costs, an EOR provides an effective alternative to company registration.

Comparing costs: Legal entity registration vs. Employer of Record (EOR)

Let’s understand the cost differences between legal entity registration and an EOR solution.

Below is a side-by-side cost comparison:

Cost category	Standard company registration	Employer of Record (EOR)
Setup costs	IDR 10,000,000 – IDR 25,000,000	No setup costs
Minimum capital requirement	IDR 10 billion (approx. USD 650,000 for foreign entities)	Not required
Business licenses	IDR 1,000,000 – IDR 5,000,000	Included in EOR service
Legal and compliance costs	IDR 5,000,000 – IDR 15,000,000 per year	Included in EOR service
Accounting and bookkeeping	IDR 5,000,000 – IDR 15,000,000 per year	Included in EOR service
Scalability and market exit	High costs & legal complexity	Easy entry & exit without liabilities

Of course, the costs above are approximate and may vary. We recommend consulting our experts on company registration in Indonesia to get a more precise estimate based on your business needs.

That said, an EOR like Multiplier offers a flexible, low-risk, and elegant alternative for businesses seeking market entry with minimal upfront investment.

Choose Multiplier for your Indonesia expansion

Expanding into Indonesia needn’t be complex. You can test the market or hire immediately with a robust Employer of Record (EOR) like Multiplier.

Here is why we’re the best choice for hiring and growing teams here:

• Quick market entry: Avoid the lengthy registration process and start operations immediately.
• Full compliance assurance: Our experts handle payroll, taxes, employment contracts, and statutory benefits.
• Cost savings: No need for a physical office, local legal teams, or capital investments.
• Streamlined hiring: Hire top talent in Indonesia without setting up a local entity.
• Efficient payroll management: We ensure timely salary payments, accurate tax deductions, and complete compliance with BPJS Ketenagakerjaan and BPJS Kesehatan requirements.
• Multi-currency payments: Pay employees in Indonesian Rupiah (IDR) or any preferred currency with ease.
• Employment contract management: Generate compliant contracts in Bahasa Indonesia and English.
• Risk mitigation: Avoid penalties and legal issues associated with misclassification or non-compliance.

Multiplier takes the hassle out of managing your workforce in Indonesia, letting you focus on driving results and scaling your business. With expert compliance, seamless payroll, and a platform designed for deep operational efficiency, we’re your partner in hassle-free growth.

Accelerate your market entry with Multiplier—Book a demo today!