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ContentsExecutive summary4DisclaimerForeword6Introduction – Doing business in Indonesia8This document is issued byHongkong and Shanghai BankingCorporation Limited (the ‘Bank’)in Indonesia in partnership withPricewaterhouseCoopers (PwC).It is not intended as an offer orsolicitation for business to anyonein any jurisdiction. It is not intendedfor distribution to anyone located inor resident in jurisdictions whichrestrict the distribution of thisdocument. It shall not be copied,reproduced, transmitted or furtherdistributed by any recipient.Conducting business in Indonesia12Taxation in Indonesia18Audit and accountancy26Human Resources and Employment Law28Trade30Banking in Indonesia32HSBC in Indonesia34Country overview36Contacts38The information contained in thisdocument is of a general nature only.It is not meant to be comprehensiveand does not constitute financial,legal, tax or other professionaladvice. You should not act uponthe information contained in thispublication without obtaining specificprofessional advice. This documentis produced by the Bank togetherwith PricewaterhouseCoopers(‘PwC’). Whilst every care has beentaken in preparing this document,neither the Bank nor PwC makesany guarantee, representation orwarranty (express or implied) asto its accuracy or completeness,and under no circumstances willthe Bank or PwC be liable for anyloss caused by reliance on anyopinion or statement made in thisdocument. Except as specificallyindicated, the expressions of opinionare those of the Bank and/or PwConly and are subject to changewithout notice. This documentis not a ‘Financial Promotion’.The materials contained in thispublication were assembled inAugust 2012 and were based onthe law enforceable and informationavailable at that time.
Executive summaryAs the fourth most populouscountry in the world, supportedby good political and economicstability, Indonesia’s largedomestic market offers awide range of investmentopportunities for foreign anddomestic investors.With a target economicgrowth of more than 6% forthe coming years, there isa growing emphasis for thegovernment of Indonesiaon attracting more foreigninvestment in order for theoverall investment to reach theprojected levels of IndonesianRupiah (IDR) 2,000 trillion, orapproximately US 222 billion,by 2014.For the last 10 years thegovernment of Indonesiahas been actively introducingmeasures directed atencouraging investing inIndonesia and improvingthe country’s regulatory andeconomic environment. Keymeasures recently introducedcan be summarised as follows:1. Amending the InvestmentLaw in 2007 to provide moreassurance on matters suchas equal treatment amonginvestors, ability to repatriateprofit from Indonesia,investment incentives andprotection from nationalisation.42. Issuingthe Negative List ofInvestment in June 2010 toopen more business sectorsto foreign investors.railways, power and utilities.Investments in mining andagriculture sections are alsoactively encouraged.3. AmendingWith a population of almost240 million of which morethan 80% are Moslem, Islamiceconomics and banking is alsoa potential growing sector inIndonesia.4. AmendingCurrently, establishing anIndonesian limited liabilitycompany is the most commonform of operating as a foreigninvestor in Indonesia.Tax Laws in 2008and 2009 to improve taxadministration and to reducethe corporate income tax rateto a flat 25% rate startingfrom 2010.laws andregulations in certain sectorssuch as shipping and mining inorder to improve the licensingprocess and attract moreinvestment in these sectors.5. Developingan integratedservice for both, the centraland regional governments tosimplify the licensing processfor businesses operating andinvesting in Indonesia.Another area of focus for thegovernment is to improve thearchipelago’s infrastructure.Through the Public PrivatePartnership (PPP) scheme,the government offersinvestment opportunities forthe infrastructure projects todevelop the country’s roads,Other types of presence,such as representativeoffices or branches, couldbe established, but aresubject to certain limitationson commercial activities andrestrictions for certain sectors.Continued focus on developingthe regulatory and tax aspectsof operating a business inIndonesia together withthe adoption of internationalaccounting and reportingstandards should furtherbenefit Indonesia’s drive toattract more investment andimprove its competitiveness.
ForewordConnecting Indonesiato the WorldIn the fast changing and dynamicworld that we live in, we havewitnessed a re-balancing of theworld economies as emergingmarkets increasingly driveglobal economic growth.Indonesia is one of the world’sleading emerging economies,and the third-fastest growingeconomy in Asia. It is also thelargest economy in SoutheastAsia, supported by: GDP of more than US 800billion in 2011, and forecast togrow by 6.1% in 2012. Strong domestic consumption. Strong trade andinvestment flows, includingintra-regional flows. An Investor-friendlygovernment. An abundance ofnatural resources. An ample and increasinglytalented work force,underpinned by the world’sfourth-largest populationby country.6Having operated in Indonesiasince 1884, HSBC’s knowledgeof the dynamics, and resultantopportunities, of the Indonesianmarkets sets it apart from itscompetitors. HSBC has theability to combine both its localpresence (with an extensivebranch network throughout thecountry) and global strength tooffer the full range of financialservices to businesses wishingto tap into this exciting andvibrant market.We hope that you will findthis guide book both useful andinformative, and look forwardto helping your business unlockthe tremendous potentialof Indonesia.Alan RichardsCEOHSBC Indonesia
IntroductionDoing business in IndonesiaIndonesia is the world’s largestarchipelago and is composedof approximately seventeenthousand islands lying alongthe equator. These includeseveral large islands whichinclude Java, Sumatera,Kalimantan, Sulawesi andPapua, as well as variousislands that are popular touristdestinations, such as Bali,Lombok and Komodo.Java is the main and mostdeveloped island wherealmost 60% of the Indonesianpopulation live and most of thebusiness and governmentalactivities are carried out.With a population of almost240 million, Indonesia is thefourth most populous countryin the world which means ithas a large domestic marketopen for investment.The Indonesian Constitutionguarantees the right to freedomof religion. However, thegovernment only recognisessix official religions, namelyIslam (86.1%), Protestantism(5.7%), Catholicism (3%),Hinduism (1.8%), Buddhismand Confucianism (3.4%).8The Indonesian labour forcenumbers around 113 million.A rapidly rising population isputting strain on the Indonesianemployment market, withsome 2 million new entrantsestimated to be seeking jobseach year. Agriculture andservices are the two biggestsectors, employing respectively43% and 44% of the workforce.
Economic Structureand GrowthThe major economic sector inIndonesia is the manufacturingand processing sector whichcontributes around 24.3% ofthe Gross Domestic Product(GDP). Some major industriesin this sector are food andbeverages, machinery andtransportation, chemical andtextiles.The manufacturing sector isfollowed by the agriculturalsector, which includes forestry,plantation, farming and fishery,and the trading and hospitalitysector. These togethercontribute around 14.3%of the GDP.The mining sector, which hasbeen one of the priority sectors,contributes around 11.9% ofthe GDP. More than half of thiscomes from oil and gas mining.Indonesia proved less exposedto the recent global recessionthan many of its neighbours,largely because exports accountfor a relatively small proportionof the country’s GDP. In 2011the real GDP grew by 6.5%,making Indonesia one of theworld’s best-performing largeeconomies. Growth is expectedto be accelerated in 2012 with anestimated growth rate of 6.1%.10Exports are also expectedto grow, driven largely byhealthy demand from China forIndonesia’s commodity exports.Physical InfrastructureLegal FrameworkInfrastructure has beenone of the challenges forthe Indonesian governmentin attracting foreign investmentin Indonesia. Currently,Indonesia has around 391thousand kilometers of roads,6.5 thousand kilometers ofrailways, and 21.5 kilometersof waterways. In addition,Indonesia developed anextensive air transport networkthat encompasses 652 airportsto ensure that all Indonesia’sislands are accessible, byeither sea or air, althoughsafety remains a key issue.Indonesian legislation comesin different forms.The current infrastructurestill needs to be significantlydeveloped to support the targetedeconomic growth. The priorityareas for the government toencourage further investmentinclude the power and energysectors, water and sanitationfacilities, roads, transportationand telecommunications.The Indonesian governmentis actively promoting a PublicPrivate Partnership (PPP)scheme as an instrumentto invite investment in theinfrastructure sector.Under the PPP scheme, thegovernment provides a listof potential infrastructureprojects around Indonesiato be developed undercooperation with theprivate sector.The following official hierarchyof Indonesian legislation (fromtop to bottom) is enumeratedunder Law No. 10 Year 2004on the Formulation of Lawsand Regulations:Most disputes are heard beforethe courts of general jurisdiction,with the State Court being thecourt of first instance. Appealsfrom the State Court are heardbefore the High Court, while theSupreme Court can hear a finalappeal from lower courts.1. 1945In 1998, the Commercial Courtwas also established to handleinsolvency cases as well asother commercial matters.2. LawBuilding andmaintaining relationshipsConstitution (UndangUndang Dasar 1945 or UUD’45).(Undang-Undang or UU)and Government Regulationin Lieu of Law (PeraturanPemerintah PenggantiUndang-Undang or Perpu).3. GovernmentRegulation(Peraturan Pemerintah or PP).4. PresidentialRegulation(Peraturan Presiden or Perpres).5. Regional Regulation(Peraturan Daerah or Perda).In practice, there are alsoPresidential Instructions(Instruksi Presiden or Inpres),Ministerial Decrees (KeputusanMenteri or Kepmen) andCirculation Letters (SuratEdaran), which sometimesconflict with each other.The judicial system comprisesseveral stages of courtsoverseen by the SupremeCourt, which often createsa time consuming courtprocess for a dispute settlement.In general, English is spokenat a business level in Indonesia.However, if dealing withgovernment or undertakingbusiness outside the maincities, e.g. Jakarta, sometranslation may be required.Some basic businessetiquette includes: Avoiding using the left handto pass or receive anything,including business cardsand gifts. If you are being introduced toseveral people, it is customaryto introduce yourself to theeldest member of the group.It is acceptable to shake handswith women.Negotiations can be quitelengthy so to give enoughtime to carefully consider thebusiness proposal. Often ittakes several meetings beforecoming to an agreement. Initialmeetings generally serve tomake acquaintances. Indonesiais a relationship-driven market.Companies may not respondvery quickly to emails especiallyif the sender is not well knownto them. Patience is a keyelement in doing businesssuccessfully in Indonesia.Business relationships inIndonesia are based on trustand familiarity, thereforepersonal contacts andnetworks are importantin making business deals.As Indonesians place greatemphasis on age and respecttowards elders in Indonesiansociety is expected.
Value of Realised Investment Projects in Indonesia (in USD Million)12,000Primary Sector10,000Manufacturing i.e.6,0004,000With an investment targetof IDR2,000 trillion (equivalentto US 222 billion) to 2014,the Indonesian government,through the Capital InvestmentCoordinating Board (BKPM),is actively promoting foreigninvestment in Indonesia andstrengthening the investmentclimate by, among others,improving the regulatoryframework, simplifying thelicensing process and improvingthe business infrastructures.The main legislation governingforeign direct investment inIndonesia is Capital InvestmentLaw No. 25/2007 which wasissued in 2007.The general investment policycovered under this current Lawincludes the following:a. Equaltreatment of domesticinvestors and foreigninvestors. However, certainnational interests must still beconsidered, such as limitationon investment in certainstrategic sectors or in sectorswhich are reserved to developlocal micro, small or mediumbusiness players.12b. Toshorten the length of timerequired to do business inIndonesia, a one-stop integratedservice is being developed bothby the central government andregional government to simplifythe licensing process. An onlineapplication system has also beendeveloped to submit applications.Further development in thislicensing area is still requiredto implement a full one-stopintegrated service.e. Certaininvestment facilitiessuch as tax facilities canbe granted based on certaininvestment criteria. Examplesinclude absorbing a largenumber of manpower, includedin high priority scale business,infrastructure development,undertaking transfer oftechnology, a pioneer industryor located in remote, lessdeveloped or border areas.f.c. Aforeign investor is given theright to employ expatriates incertain positions by obtainingthe proper permit and fulfillingthe obligation to improve skillsand expertise of local manpowerthrough training.d. TheIndonesian governmentensures the right of foreigninvestors to repatriate profitfrom Indonesia which can be inthe form of payment of dividend,reduction of capital, paymentliquidation proceeds or paymentof royalties or technical fees.The Indonesian government,however, has the right to deferthe repatriation of profit if theinvestor has any unsettled legalliabilities in Indonesia.The Indonesian governmentwill not perform nationalisationof foreign investments unlessbased on the Law. In the caseof nationalisation, thegovernment shall providecompensation based on marketvalue. To be more focused inattracting more investors, theIndonesian government hasalso set several key and priorityinvestment sectors whichinclude infrastructure, energyand oil and gas. In addition,seven provinces were identifiedas priority investment areas;these are Riau, West NusaTenggara, Papua, West Java,East Java, East Kalimantanand North Sulawesi.The graph top right illustratesthe value of foreign investmentprojects approved in Indonesiaby business sector for 2010and 2011. Garment Food Leather goods Chemical Automotive OtherTertiary Sector2,000 Electricity, Gas and Water Supply Construction Trade Hotel &Restaurant Transport, Storage and0General Investment PolicyFood crops Plantation Livestock,Forestry Fishery MiningSecondary Sector8,000Conducting business in Indonesia Communication Housing Other20102011Source: Investment Coordinating Board (www.bkpm.go.id)Investment RestrictionsNot all types of business areopen for foreign investors.Presidential Regulation No.36/2010 has been issued tostipulate the lines of businessopen and closed to foreigninvestors (Negative List ofInvestment/NLI). Under theNLI, foreign investors canidentify business areas closedfor foreign investment, businessareas which can be fully ownedby a foreign investor or thosewhich require joint venture witha domestic investor.A certain privilege is givento investors from ASEANcountries where the NLI, basedon ASEAN agreement, canprovide a higher shareholdingpercentage compared toinvestors from other countries.The NLI will be reviewed everythree years to accommodatethe recent business updates.As of the beginning of 2012,BKPM has set out a policyfor a minimum investmentof IDR10,000,000,000 oran amount equivalent toUS 1,075,000 (using 1US IDR9,300). This is basedon the assumption that theforeign investment company isacknowledged as large scalecompany. This policy alsogeneralises the investmentamount which previously variedbetween each business sector.
Setting up a businessThere are various ways for aninvestor to set up a presencein Indonesia, depending on theinvestor’s type of business.1. IndonesianLimitedLiability Company (PMA)The common type of presencefor a foreign investor who wantsto invest and engage in businessin Indonesia is by establishing anIndonesian incorporated limitedliability company, commonlyknown as a PMA company.There must be two partiesholding shares in a PMAcompany. These can be a legalentity or an individual. Theforeign investor’s shareholdingpercentage must meet therequirement under the NLI.The shareholders must alsoappoint at least one directorand at least one commissionerof the PMA company. Thedirector serves as managementof the PMA company and hasthe authority to represent thePMA company, while thecommissioner supervises andprovides advice to the director.The World Bank in its latestDoing Business 2011 studymentions that it takes 45days and a minimum of eightprocedures to start businessin Indonesia in the form of aPMA company, which is animprovement compared to the2010 study which indicated60 days. This improvementis part of the Indonesian14government’s effort to developa one-stop integrated serviceand simplification of licensingrequirements.2. RepresentativeOfficeForeign companies are permittedto establish a representativeoffice in Indonesia. However,unlike a PMA company, arepresentative office has morerestrictions on its activities.A representative office canonly perform marketingor promotion activities,market research and reviewof business opportunities inIndonesia. It cannot engagein any commercial activities orgenerating revenue in Indonesia.Representative offices areavailable for foreign companiesengaged in certain sectorswhich include trading, services,oil and gas mining and banking.An exception applies torepresentative offices offoreign companies engagedin construction services. Thistype of representative office isallowed to deliver constructionservices in Indonesia undera joint operation with a localconstruction company.3. BranchA branch office is generallynot allowed, except for thebanking sector.4. OthersOther types of presencefor conducting business inIndonesia include a ProductionSharing Contract with theIndonesian government. Thisis common in the oil and gasmining upstream sectors.A foreign company can alsochoose an indirect presenceby appointing a local companyas an agent or as a distributorto market and sell its productsin Indonesia.Land rightsIndonesian land legislation doesnot recognise the concept offreehold land rights. Instead,various rights attached toland are divided into separateelements and areas subjectto separate titles. The BasicAgrarian Law recognises severaltypes of land rights:1. Theright of ownership(hak milik) is an inheritableright that can be held only byIndonesian citizens.2. Fora company, including PMAcompany, there are three mainrights where the differences liein the rights duration of validity,the nature of utilisation, theopportunities to mortgage andproof of title:a. Rightof exploitation (hak gunausaha). This is a right to cultivatestate-owned land for agricultureand plantation purposes.The duration is a maximumof 35 years, extendable foranother 25 years.b. Rightof building (hak gunabangunan). This is a right toconstruct and own buildings.This right can be grantedfor a maximum of 30 years,extendable for 20 yearsand may be renewed atthe discretion of the localgovernment.c. Right of Use (Hak Pakai) Foreigninvestors who have obtainedmining rights from theMinister of Energy and MineralResources or the Minister ofForestry have automaticallyobtained the right to use theland within their concessionboundaries for purposes directlyNo.connected with the operationsof the companies.All land rights should beregistered at the Land Registerat the National Land Agency(Badan Pertanahan National –BPN).Special EconomicZones (SEZ)The Indonesian SpecialEconomic Zone (SEZ) is adesignated area within theterritory of Indonesia designedto become a business andindustrial centre for domesticand foreign investors.As its main purpose is to boostthe investment and businessactivities in the area, SEZ offersvarious administrative incentives,such as easier licensingprocess, taxation incentivesand availability of completeinfrastructure to support thebusinesses and industries inthe field of trading, services,industry, energy and mining,transportation, fishery,tourism etc.The incentives are designedto improve the competitivenessof SEZ and attract furtherinvestment in the designatedarea or business sector.Incentives that can be grantedin a SEZ vary and can consistof the following:TypeFacilities1TaxCorporate income tax facilities in accordance with the prevailing regulations.Reduction of land and building tax for a certain period.2Customs and ImportationImport duty deferment.Excise exemption for raw and supporting materials for production.Non-collection of value added tax and luxury goods tax.Non-collection of corporate income tax on importation.3Delivery of taxable goods toSEZ from other Indonesiancustoms areaNon-collection of value added tax and luxury goods tax in accordance withthe prevailing regulations.4Regional taxand/or retributionExemption or reduction of regional tax and/or retribution.5LandEasiness to obtain land right.6Licences/permitsEasiness to obtain licences/permits and expatriate employment.7Requirement offoreign shareholdingDoes not apply except for certain businesses which are reservedfor cooperative or micro/small/medium-scale companies.
The government has appointedBatam, Bintan and Karimun(BBK) islands in Riau Islandsprovince as a Free Trade Zone,a variation of the SEZ.Government AgenciesThe main government agenciesand their areas of licensingauthority for foreign investorslooking to do business inIndonesia are as follows:1. CapitalInvestmentCoordinating Board (BKPM)As the primary interfacebetween business andgovernment, BKPM is aministerial level agencymandated to boost domesticand foreign direct investmentthrough creating a conduciveinvestment climate.BKPM has multiple functionsranging from being aninvestment promotion agency,a regulatory body as well as theagency in charge of approvinginvestment planned in Indonesia.BKPM is the first entrancefor foreign investors planningto do business in Indonesia.Several regional governmentshave established a regionalinvestment office in a responseto provide a better service todomestic and foreign investment.162. Ministryof Laws andHuman RightsThe Ministry of Laws andHuman Rights is a governmentbody which has the authorityto approve the establishmentof a limited liability companyin Indonesia.In addition to that, it has alsothe authority to implementgovernment affairs in thefield of law and human rights,guide and coordinate theimplementation of ministerialduties and administrativeservices and implement appliedresearch and development,education and specific trainingand preparation of legislation.of TradeThe Ministry of Trade’s role isto facilitate, encourage, enhanceand promote the commercialsector and activity in Indonesiaby acting as a service andsupport structure for thedomestic and internationalcommercial and trading sector. Legislative function, to issueregulations, implement taxlaws and provide aninterpretation of tax laws madeby a separate agency under theMinistry of Finance. Judiciary function, to handleany tax objection to a taxassessment.5. DirectorateGeneral ofCustoms and ExciseSimilar to the DirectorateGeneral of Taxation, the dutiesand functions of the DirectorateGeneral of Customs and Exciseare closely related to collectionof State Revenue from importactivities such as collection ofimport duties.3. Ministry4. DirectorateGeneralof Taxes (DGT)As one of the governmentagencies responsible forcollection of State Revenueunder the Ministry of Finance,the Directorate Generalof Taxation has threemain functions: Executive function, namelyto collect taxes and ensurethe compliance of taxpayers.6. EnvironmentalControlAgencyThe government is now payingmore attention to environmentalprotection. In this regard, theEnvironmental Control Agencywas formed to coordinateand control the environmentincluding corporate governance,conservation and disastermitigation and environmentalcapacity development.A company wishing to carryout certain activities wouldhave to obtain an Analysis ofEnvironmental Impact certificatefrom this agency, which isalso formed on a regional orprovincial level.7. Ministryof ManpowerThe Ministry of Manpower hasauthority as a regulatory bodyand has the aim to enhancegood corporate governanceand to support the growthof employment opportunitiesin Indonesia.This ministry also grants workpermits to enable a company toemploy expatriates in Indonesia.8. DirectorateGeneralof ImmigrationThe Directorate Generalof Immigration monitors theimmigration flows and grantsentry visas for expatriatesentering Indonesia. ThisDirectorate also grants staypermits for expatriates workingand residing in Indonesia.For specific sectors, investorswould also need to deal withor obtain licences from othertechnical departments suchas the Ministry of Agriculturefor the plantation sector, theMinistry of Transportationfor the shipping sector andthe Upstream Oil and GasSupervisory Agency (BPMIGAS)and Ministry of Energy andMineral Resources for the oiland gas, mining and generalmining sector.
Taxation in IndonesiaCorporate Income TaxUnder the prevailing Indonesiantax law, a company is treated asa resident of Indonesia fortax purposes by virtue of havingits establishment or its placeof management in Indonesia.A foreign company carrying outbusiness activities through apermanent establishment (PE)in Indonesia will generally have toassume the same tax obligationsas a resident taxpayer.Resident taxpayers andIndonesian PEs of foreigncompanies have to settletheir tax liabilities by directpayments, third-partywithholdings, or a combinationof both. Foreign companieswithout a PE in Indonesiahave to settle their tax liabilitiesfor their Indonesian-sourcedincome through withholdingof the tax by the Indonesianparty paying the income.2. TaxincentivesPublic companies that satisfya minimum listing requirementof 40% and certain otherconditions are entitled to a taxdiscount of 5% off the standardrate, providing an effective taxrate of 20%. Small enterprises(i.e. corporate taxpayers withan annual turnover of notmore than IDR50 billion orequivalent to US 5.4 million)are entitled to a 50% discountof the standard tax rate, whichis imposed proportionallyon taxable income of thepart of gross turnover up toIDR4.8 billion or equivalent toUS 518,000.rate and periodFrom 2010, a flat rate of 25%applies for corporate taxpayers.The normal tax period is Januaryto December. If corporatetaxpayers would like to usea different tax period, e.g. Julyto June, they would have toobtain an approval from theDirector General of Tax (DGT)and then maintain the approvedtax period consistently.Investment Incentive: TheDGT, on behalf of the Ministerof Finance and based onthe recommendation of theInvestment Coordinating Board(BKPM) Chairman, may providethe following tax concessionsto Indonesian Limited Liability(PT) companies followingtheir investment in certaindesignated business areas orin certain designated regions:Branch (or PE) profits aresubject to the same corporatetax rate of 25%, but theafter-tax profits are subjectto withholding tax (WHT) at A reduction in net income of upto 30% of the amount invested,pro-rated at 5% for six yearsof the commercial production,provided that the assets1. Tax1820%, regardless of whetherthe profits are remitted tothe home country. However,a reduced WHT rate may beapplicable where a tax treatyis in force.invested are not transferredout within six years; Acceleration of fiscaldepreciation deductions; Extension of tax losses carryforwards for up to ten years; A reduction of the withholdingtax rate on dividends paid tonon-residents to 10%.The same tax incentivescan be granted by the DGTto companies conductingbusiness in an IntegratedEconomic Development Zone(KAPET). Specific approvalmust be obtained from theDGT to qualify for thesetax incentives.If the company has bondedzone (Kawasan Berikat/KB)status, the tax facilities will alsoinclude those typically enjoyedby a KB company, for example: Non-collection of Value AddedTax (VAT) and Luxury-goodsSales Tax on certain luxurygoods transactions; Exemption from prepaid incometax (Article 22) on theimportation of capital goodsand other equipment directlyrelated to production activities; Postponement of importduty on capital goods andequipment and goods andmaterials for processing;
In the case of dividends receivedby a resident shareholder,‘portfolio shareholding’ refers toshare ownership of less than 25%of the paid-up capital. In this respect,the dividend tax withheld by thepayer constitutes a prepaymentof the income tax liability ofthe shareholder. ‘Substantialshareholding’ refers to the shareownership of 25% of the paid-upcapital or more. Exemption from import dutyfor four years on machineryand certain spare parts.Tax holiday: New corporatetaxpayers in certain pioneerindustries may enjoy a CITexemption for a period of fiveto ten years from the start ofcommercial production. After theend of the CIT exemption, thecompany will receive a 50% CITreduction for two years.To be eligible for the abovefacilities, taxpayers should benewly incorporated in Indonesia(not earlier than 14 August2010), should have a legalisednew capital investment plan ofa minimum IDR 1 trillion, shoulddeposit a minimum of 10% oftheir planned investment value inbanks located in Indonesia, andshould not withdraw the depositprior to the realisation of theinvestment plan.An application for the taxholiday must be submitted tothe Minister of Ind
Conducting business in Indonesia 12 Taxation in Indonesia 18 Audit and accountancy 26 Human Resources and Employment Law 28 Trade 30 Banking in Indonesia 32 HSBC in Indonesia 34 Country overview 36 Contacts 38 Disclaimer This document is issued by Hongkong and Shanghai Banking Corporation Limited (the 'Bank') in Indonesia in partnership with