A guide to different types of legal entities in Indonesia.
Representative offices are offices set up by companies abroad. It is a simple and fast way to establish a legal entity in a foreign market. Representative offices handle business activities for their parent companies locally.
One type of representative office in Indonesia is the representative office for trading (KP3A). This type of representative office can conduct trading activities for its parent company.
KP3As can act as the parent company’s selling, manufacturing, and buying agent in Indonesia. The parent company may also delegate tasks related to establishing branch offices in Indonesian cities to its KP3A.
However, because representative offices cannot generate income in Indonesia or issue invoices, all transactions should be under the parent company’s name.
Opening a KP3A is a good choice for a company with plans to create a network of agents and distributors in Indonesia.
To open a KP3A, the applying company must meet the following conditions:
The parent company should also prepare the following documents:
The process to open a representative office in Indonesia is quicker and simpler than opening a limited liability company. The table below shows how long it takes for Emerhub to acquire the documents necessary to establish a KP3A.
|Documents obtained||Timeline in working days|
KP3As cannot earn income but will still need to report withholding taxes on a monthly basis. The KP3A pays withholding tax on:
The representative office must submit an activity report once a year to the Investment Coordinating Board (BKPM) of Indonesia. The activity report will be the basis for a license extension.
KP3As with more than 10 employees must also have an Institution of Social Security for Manpower (BJPS) registration.