When and Why You Should Close a Company in Indonesia

In the past, many foreigners established businesses in Indonesia primarily to obtain an investor KITAS—a visa that allowed long-term residency in Bali and easy travel in and out of the country. However, Indonesia has recently introduced new visa options that enable extended stays, are easier to acquire, and no longer require setting up a company.

If your PT PMA (foreign investment company) is no longer operational, you're planning to leave Indonesia, or you're switching to another visa like the remote worker KITAS, it's crucial to remember that your company still has ongoing obligations. In such cases, closing the company may be the best course of action.

Closing a company isn’t just a formal step; it’s essential for preventing potential future legal and financial complications.

Why Is Closing Your Company Important?

1. Avoid Penalties and Tax Liabilities

   Even if your company is no longer active, it remains listed in official records. This means you're still required to file financial statements, submit tax declarations, and pay any outstanding taxes. Failure to meet these obligations can result in fines, interest charges, and even asset freezes.

2. Reduce Administrative Costs

   Operating a business in Indonesia comes with ongoing administrative tasks, such as annual audits, government reporting, and license renewals. These obligations incur costs, even if the company is inactive. By closing the company, you eliminate these unnecessary expenses.

3. Ensure Legal Protection

   An inactive company can still pose legal risks, such as accumulating debts or obligations to government agencies or business partners. In the worst-case scenario, this can lead to lawsuits or other legal complications. Properly closing the company helps you avoid these risks.

When Should You Close Your Company?

1. No Active Business Operations

   If your PT PMA is registered but no longer operating, it's worth considering closure. Even inactive companies must comply with all legal and financial obligations.

2. Switching to Another Visa

   If you're transitioning from an investor KITAS to another visa, such as the remote worker KITAS (which allows you to live and work in Indonesia without running a business), it’s advisable to close the company.

3. Leaving Indonesia

   If you're planning to leave Indonesia and will no longer reside or do business in the country, closing your company is a logical step. This will relieve you of future administrative and tax responsibilities.

How Does the Company Closure Process Work?

Closing a company in Indonesia is a legal process that involves several key steps:

1. Submitting an Application

   The first step is submitting an official closure application to the relevant government authorities.

2. Conducting Tax and Accounting Audits

   A thorough audit of the company’s tax and accounting records must be completed to ensure all obligations have been met.

3. Fulfilling Outstanding Obligations

   All outstanding financial and legal obligations must be settled with the government and any business partners.

4. Deregistering the Company

   Finally, the company must be formally deregistered from official records.

This process requires careful attention to detail, as mishandling any step can lead to errors and delays.

At Legal Indonesia, our team has years of experience in managing company closures. We ensure that the process is handled efficiently and correctly, guaranteeing all procedures are completed on time and in full compliance with Indonesian law.

Cost of Closing a PT PMA

The cost of closing a PT PMA starts at IDR 10,500,000, with the final amount depending on the company's financial situation and the status of its tax and accounting records.

We are here to guide you through the entire process, providing full support and expert advice at every step.

Contact us