If you own a business registered in Indonesia or are thinking about entering the market, you must ensure compliance with the country’s local regulations. Corporate compliance covers licensing and governance, tax filing, payroll, and your investment reports to the BPKM.
The main challenge for business owners is managing the requirements for each compliance and meeting deadlines for various government agencies. This guide can help you understand what are your core compliance responsibilities as a business owner in Indonesia.
Summary of Corporate Compliance in Indonesia
Here is every obligation covered in this guide in one table, so you can check what applies to your company and when it is due.
| Compliance Area | Deadline |
|---|---|
| Business Licensing | Before commencing operations, and on any change to business activity |
| Annual General Meeting | Within 6 months of fiscal year end, with 14 days' shareholder notice |
| MOLHR Annual Report | Within 6 months of fiscal year end |
| Corporate Income Tax | By the 15th of the following month |
| Corporate Income Tax | End of the 4th month after fiscal year end (April 30 for calendar year) |
| VAT | End of the month following the taxable period |
| Withholding Tax (PPh 21, 23, 26, 4(2), 22) | Monthly, per applicable article |
| BPJS Kesehatan and Ketenagakerjaan | Monthly |
| THR | At least 7 days before the relevant holiday |
| LKPM | Quarterly (medium/large business) or semi-annually (small business), by the 15th of the month following the period |
| WLKP | Within 30 days of establishment, then annually in the same month |
These deadlines interact with each other. For example, a revoked NIB, blocks tax filing, work permit sponsorship, and import approvals, since all three route through OSS. Staying current on each obligation keeps the others from stalling.
Business Licensing and Corporate Governance Compliance
Obtaining the Correct Business License
Your compliance obligations start when your company receives its Business Identification Number (NIB) through the OSS-RBA system. Under Government Regulation No. 28 of 2025 and BKPM Regulation No. 5 of 2025, your company must hold an NIB, and depending on their risk classification, obtain either a standard certificate (Sertifikat Standar) or a formal business license (Izin).
OSS-RBA sorts every business activity into a risk tier (from low to high) based on your KBLI code. The NIB alone is enough to operate a low-risk business. However, higher-risk activities need one or more additional approvals. Industries such as manufacturing, construction, or anything involving a physical premises, need one or more additional approvals to legally operate in Indonesia.
Under Government Regulation No. 28 of 2025 and BKPM Regulation No. 5 of 2025, these can include:
- Conformity of Spatial Utilization (KKPR): confirms your business location matches the local zoning and land use plan. Required before you build, renovate, or occupy a site.
- Environmental Approval: required for activities with an environmental impact, ranging from a simple self-declaration for lower-risk activities to a full Environmental Impact Assessment (AMDAL) for larger or higher-risk ones.
- Building Approval (PBG): the the construction permit needed before putting up or significantly renovating a building, replacing the old IMB system.
- Certificate of Proper Function (SLF): confirms a completed building is safe to occupy and matches its approved design. Required before you move into a new or renovated building.
If you want to expand your business or your business activities, your KBLI should reflect those changes. Operating outside your registered KBLI puts your license at risk, even if the change was unintentional.
Emerhub can help you confirm what business licenses you need depending on your company’s risk level. Get in touch with us for a free consultation.
Holding Your Annual General Meeting (AGM)
The AGM is the yearly shareholder meeting where a company formally approves its financial statements and reviews the board's performance for the year. Under Indonesian Company Law (Law No. 40 of 2007), every limited liability company (PT) must hold an AGM within six months of its financial year end. Shareholders must receive notice at least 14 days before the meeting.
During the AGM, the board presents the annual financial statements for shareholder approval, and shareholders formally discharge the board from liability for the year under review (a process called "acquit et de charge").
Read more about AGM for companies in Indonesia with our guide.
Filing Your Annual Report with MOLHR
The annual report is the document that records your AGM outcomes. These include changes to the Board of Directors, Board of Commissioners, or share capital structures. These changes must be formalized via a notary and registered in the MOLHR's AHU database within 30 days of the AGM. If you miss the deadline you cannot register director changes, increase capital, or renew licenses until you hold the meeting and file a notarized AGM deed.
This is often called "corporate paralysis," since the company's legal records fall out of date and every downstream filing that depends on them stalls. Banks may also freeze your corporate account during their annual KYC review. The board of directors can be held personally liable for losses that result from missing this obligation, so it's worth treating the AGM as a hard deadline rather than a formality.
Tax Compliance in Indonesia
Since 2025, tax compliance is managed through Coretax, the government's centralized tax administration platform that replaced the older e-Faktur and DJP Online systems. Coretax cross-checks VAT filings, income tax records, banking data, and customs information in real time. A mismatch between your reporting can easily get flagged.
In general, there are three taxes that make up the bulk of your company’s filing calendar:
- Corporate income tax
- VAT
- Withholding tax on employees and other payments
Corporate Income Tax (CIT)
Corporate income tax (PPh Badan) is the tax on your company's annual profit, and it's the one most business owners already expect. The standard rate is 22%. You pay it in two stages:
- Monthly installments due by the 15th of the following month
- Annual tax return (SPT Tahunan) due by the end of the fourth month after your fiscal year closes. For companies on the calendar year, that annual return is due April 30
Here is our full guide about Corporate Income Tax in Indonesia.
Value Added Tax
Under PMK No. 131 of 2024, the standard statutory VAT rate is 12%. However, for non-luxury goods and services, the government applies an "Other Value" (DPP Nilai Lain) tax base multiplier of 11/12. This brings the effective VAT rate to 11% for most standard business transactions. The full 12% VAT rate applies strictly to specified luxury goods (e.g., luxury properties, private jets, yachts, and high-end motor vehicles).
Certain essential goods and services are Zero-rated or VAT exempt. These special treatments can apply to basic foodstuffs, some education and health services, basic financial services, public transport, etc.
Both the VAT return and payment are due by the end of the month following the taxable period. Every tax invoice (faktur pajak) must be generated and cleared through Coretax in real time to be valid.
You can read about VAT rules and regulations in our full guide.
Employee and Other Withholding Taxes
Withholding taxes are deductions from payments remitted to your employees or others on their behalf. Indonesia splits this obligation across several tax articles, each covering a different type of payment:
- PPh 21: withheld monthly from employee salaries, using the TER (Tarif Efektif Rata-rata) effective rate system, with a full annual reconciliation each December against the progressive tax brackets.
- PPh 23: Withheld at 2% on payments to domestic residents for services, and 15% on royalties, interest, and asset rentals. Dividends received by domestic corporate taxpayers are tax-exempt, while dividends paid to domestic individual taxpayers are subject to a 10% final tax (or exempt if reinvested).
- PPh 26: withheld on payments to non-residents without a permanent establishment in Indonesia, such as cross-border service fees, dividends, or royalties. The standard rate is 20%, reduced to 10-15% if you hold a valid tax treaty and Certificate of Residence.
- PPh 4(2): a final withholding tax on specific transactions, including land and building rental (10%), construction services (rates vary by qualification), and interest on time deposits.
- PPh 22: withheld on certain purchases and import transactions, including goods bought from government treasuries and specific industries such as automotive and cement.
Here is a full guide on how to manage your withholding taxes as a business owner in Indonesia.
Emerhub’s tax and accounting service can help you remain compliant with tax laws in Indonesia.
Payroll and Employee Compliance
If you employ staff in Indonesia, payroll compliance covers four separate obligations:
- Paying at least the minimum wage
- Contributing to the BPJS social security programs
- Meeting statutory benefits like the 13th-month holiday bonus
- Manpower reporting
Minimum wage in Indonesia
Indonesia doesn't have a single national minimum wage. Instead, each province sets its own provincial minimum wage (UMP). Regencies or cities can set a higher local minimum wage (UMK) on top of that provincial minimum wage.
On top of salary, employees are entitled to the Tunjangan Hari Raya (THR), a religious holiday bonus equal to one month's salary, paid at least seven days before the relevant holiday. Employees also accrue at least 12 days of annual paid leave, plus public holidays.
BPJS contributions
Every employer must register staff with the BPJS Kesehatan for healthcare and BPJS Ketenagakerjaan for employment-related social security. Foreign employees working in Indonesia for six months or longer are enrolled on the same basis as local staff.
Here's is a breakdown of contributions:
| Program | Employer | Employee | Wage cap |
|---|---|---|---|
| BPJS Kesehatan | 4% | 1% | IDR 12,000,000/month |
| Work Accident (JKK) | 0.24% - 1.74%, based on industry risk | 0% | No cap |
| Death Benefit (JKM) | 0.3% | 0% | No cap |
| Old Age Savings (JHT) | 3.7% | 2% | No cap |
| Pension (JP) | 2% | 1% | IDR 11,086,300 per month (effective March 1, 2026, via BPJS Ketenagakerjaan Notification No. B/1226/022026), |
Contributions are due monthly, and unpaid balances accrue a 2% penalty per month for BPJS Ketenagakerjaan programs. At the same time BPJS Kesehatan applied a 5% monthly penalty capped at IDR 30 million.
For companies who want to expand into Indonesia without a local entity, you can consider engaging with an Employer of Record. Our partners from RecruitGo can help you get started.
Manpower Reporting (WLKP)
Under Law No. 7 of 1981, every company that employs staff, regardless of size or sector, must report its workforce data to the Ministry of Manpower. WLKP is important since it's a prerequisite for hiring foreign workers.
The initial report is due within 30 days of your company's establishment, and then annually after that, in the same month as your original filing. The report covers your workforce composition, employment agreements, wage structure, and social security enrollment.
Investment Reporting (LKPM)
The Investment Activity Report (Laporan Kegiatan Penanaman Modal - LKPM) tracks how your registered investment plan is being realized in Indonesia. Arguably, it is one of the most commonly overlooked compliance items for any first-time investor in Indonesia. Your LKPM is a separate obligation from tax, filed to the Ministry of Investment and Downstream Industry (BKPM) through the OSS system.
Under BKPM Regulation No. 5 of 2025, nearly every company with an NIB must file. Even sectors that used to be excluded, like upstream oil and gas, banking, and insurance, are now brought into the reporting framework. The only exceptions are micro-scale businesses and activities funded through the state or regional budget exempt.
Reporting frequency depends on business scale:
- Medium and large businesses, including every PT PMA regardless of investment size, file quarterly.
- Small businesses file twice a year, covering January to June and July to December.
The 2025 regulation extended the submission window from the 10th to the 15th of the month following each reporting period. This gives companies breathing room to prepare accurate figures.
However, the report itself needs to be more detailed. In addition to investment realization and workforce numbers, companies must now also report on licensing compliance, environmental management, and corporate governance status.
If there's genuinely no realization to report for a period, you still need to submit the LKPM and explain why that is the case. However, repeated zero-realization filings without explanation, or missed submissions altogether, trigger escalating sanctions:
- Written warning
- Suspension of business activities
- Revocation of your NIB
Losing your NIB cuts off access to tax filing through OSS, work permit sponsorship, import approvals, and virtually every other government service tied to that number.
Our full guide on LKPM explains what are the contents of the report and the submission process.
Full Compliance Calendar with Emerhub
Emerhub's team manages this full compliance calendar for companies operating in Indonesia, from monthly tax filings and BPJS contributions to quarterly LKPM reports and annual AGM administration.
Contact our team for a no-obligation consultation on what your company needs to file and when.
Frequently asked questions
What is the difference between LKPM and annual tax reporting?
LKPM is a quarterly or semi-annual report to BKPM on how your registered investment plan is being realized, covering capital, workforce, and production. Annual tax reporting is a yearly filing to the Directorate General of Taxes on your taxable profit. They run on separate calendars, go to separate authorities, and one doesn't substitute for the other.
Do small companies need to submit LKPM?
Small businesses do need to submit LKPM unless your business qualifies as micro-scale (generally capital of IDR 1 billion or less, excluding land and buildings) or is financed through the state or regional budget. Small businesses file semi-annually rather than quarterly, but the obligation still applies.
What is the current corporate income tax rate in Indonesia?
The standard corporate income tax rate is 22%. Certain small businesses may qualify for reduced rates or facilities under specific government regulations, so it's worth checking your eligibility with a tax advisor.
Is the effective VAT rate 11% or 12% in Indonesia?
VAT rates depend primarily on what you're selling. The statutory rate is 12%, but for most goods and services it's applied against an adjusted 11/12 tax base. This brings the effective rate to 11%. The full 12% rate applies only to selected luxury goods.
What happens if a company misses its BPJS contribution deadline?
BPJS Ketenagakerjaan applies a 2% penalty per month of delay, while BPJS Kesehatan applies a 5% monthly penalty capped at IDR 30 million. If contributions remain unpaid for more than six months, the agency can suspend the company's participation, which cuts off employee access to healthcare and other benefits.
Does the minimum wage apply equally across Indonesia?
Minimum wages are set at the provincial level (UMP) and can be set higher at the regency or city level (UMK). Employers must pay at least the minimum wage for the specific location where the employee actually works, which can vary significantly even within the same province.
What is WLKP and who needs to file it?
WLKP is the mandatory manpower report submitted to the Ministry of Manpower. Every company that employs staff must file an initial report within 30 days of establishment and an annual report after that. It's also a prerequisite for hiring foreign workers, since it feeds into the recommendation needed for a foreign worker utilization plan.
Can a company recover after its NIB is revoked for compliance failures?
It's possible, but the process to restore a revoked NIB is significantly more complex and time-consuming than staying compliant in the first place. It often requires a fresh application and review by BKPM. Companies typically lose access to tax filing, licensing, and import approvals in the meantime, which is why timely compliance is worth prioritizing over catching up later.