The Benefits of a Work Permit and Tax ID for Foreign Directors in a PMA in Indonesia

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Indonesia provides immense investment opportunities to domestic and foreign investors owing to its large domestic market and a stable political environment. The nation attracts more foreign investment today after the government has introduced favorable changes in its laws and regulations. As an investor, it is advisable to hire a professional registration business service provider well-versed in the legalities required for setting up a company here. A Limited Liability Company or PT PMA is the most popular business structure for foreign investors in Indonesia.

Why you need a work permit and a Tax ID as a foreign director in a PMA

As per rules, both the director and commissioner members can be foreigners in a PMA. However, it is advisable to appoint a local director also for conducting business operations smoothly. If there is no local director, and the foreign director has no work permit or tax ID, it impacts functions, such as opening a bank account or EFIn (Electronic Tax System).

For registration of EFIn, foreign directors need to have a Tax Id and personal EFIn. This is possible only if the foreign director has a work permit. Acquiring a Tax ID will also enable the director to get the privilege of a local tax rate for income tax. Not having a Tax ID means an additional tax cut of 20% on personal income tax.

Why Do Foreign Directors Need to Apply for a KITAS?

If the foreign director is not to be located in Indonesia but needs to visit the nation frequently to supervise the business, he or she should obtain a KITAS. The KITAS is a limited stay permit or a work visa that helps the foreign directors avoid entry issues with the customs.

Forming a Limited Liability Company provides several advantages to overseas investors. 3E Accounting Indonesia is a reputed firm offering Indonesia company incorporation services to investors at competitive rates. We guide you on all matters related to company formation, like registration business, preparing documents, and acquiring the essential licenses and permits. With our professional services, we help you focus stress-free on other business operations that require your time and attention.