Set up a holding company in Indonesia

When you actually need a holding company

Three common reasons foreign investors form an Indonesian holding: (1) consolidating multiple Indonesian subsidiaries under one entity for governance, exit, or financing; (2) holding a stake in an Indonesian operating company without participating in its operations; (3) holding Indonesian real estate or other assets where direct foreign ownership is restricted. The decision is rarely about "do we need a holding" — it's about which of those three is the real driver, since they imply very different structures.

Active vs passive holdings — why the distinction matters

A passive holding only owns shares and receives dividends — minimal operational activity. Indonesian tax law treats inter-company dividends from majority-owned subsidiaries as exempt under specific conditions (UU PPh Article 4(3)(f)). An active holding that also provides management services to its subsidiaries falls under different treatment, with the management fees becoming taxable income. Get the structure wrong and you create double taxation that wasn't there before.

Foreign-ownership rules for holdings

KBLI 64200 (Holding company activities) is 100% PMA-open under Pres. Reg. 10/2021. The hidden constraint is downstream: the operating subsidiaries the holding owns may individually have foreign-ownership caps (e.g. an Indonesian-owned PT operating in a sector with a 49% PMA cap can't be 100% owned by a foreign holding without restructuring).

KBLI codes that fit this goal

Permits you'll typically need

• NIB (Nomor Induk Berusaha)

  OSS / BKPM

  Standard business identification — auto-issued on incorporation.

• NPWP + tax registration

  Directorate General of Taxes

  Required immediately after PT PMA formation; determines tax-residency and inter-company dividend treatment.

How much capital and what ownership rules apply

Standard PMA capital floor applies (IDR 2.5b paid-up, IDR 10b total investment value per KBLI per location). A pure-holding PT PMA usually meets the IDR 10b commitment through the value of the shares it acquires in subsidiaries — the LKPM tracks investment realisation including share acquisitions, not just cash deployment. Foreign ownership of the holding itself: 100% open. Foreign ownership of the underlying operating subsidiaries: governed by each subsidiary's KBLI under Pres. Reg. 10/2021.

Step-by-step setup

1. 01
   Decide on active vs passive structure — has tax + KBLI implications. Often best confirmed in a 30-min adviser call.
2. 02
   Confirm the operating subsidiaries can be 100% (or majority) owned by a foreign holding given their own KBLI restrictions.
3. 03
   Incorporate the holding PT PMA → notary deed → AHU. Register KBLI 64200 + 70100 if active.
4. 04
   NIB issued on registration, NPWP + tax registration in parallel.
5. 05
   Acquire shares in target subsidiaries via share-purchase agreement → AHU updates → BKPM notification under LKPM.
6. 06
   Open a corporate bank account at one of the BKPM-recommended banks.
7. 07
   Annual: corporate tax return + financial statements + LKPM quarterly reports.

Common gotchas worth knowing

• ·Inter-company dividends are tax-exempt only when the holding owns ≥25% of the subsidiary's capital and the subsidiary has paid out from accumulated earnings — short-of-25% holdings get withheld at standard 20% (or treaty rate).
• ·Indonesian tax authorities may challenge "substance" of a holding with no Indonesian employees or office — having genuine local activity (board meetings, employees, decisions) helps survive scrutiny.
• ·Acquiring a controlling stake in an Indonesian listed company triggers Bapepam tender-offer rules — different regulatory track from the OSS/BKPM path.
• ·Some subsidiary KBLIs have foreign-ownership caps — a holding majority-owned by a foreign parent cannot fully own a 49%-PMA-capped operating subsidiary without restructuring.

Frequently asked