How to remotely manage an Indonesian company?

In connection with the recent mass deportations of almost 200 foreigners who own companies in Indonesia, I have collected approximate statistics of “guilty” and “innocent” companies and tried to understand what is the main reason for the deportations and how not to be among those sent away?

Who are the guilty? - Those who deliberately violated the basic rules of Indonesian laws and:

They are always more than 95% of the total. For the “guilty” who have not yet been caught by the authorities, I wrote an article HOW TO GET YOUR BUSINESS IN ORDER IN 2025? - https://bali-legal.com/en/putanicza-2025-biznes-v-menyayushhixsya-usloviyax-en.

Who are the innocent? - Those who ran a business, filed reports, paid taxes, but got caught in the “hot hand”. In Indonesia and in Asia as a whole, the practice of public vices is considered, apparently, one of the most effective and almost no one can be insured, ALTHOUGH THERE ARE OPTIONS.

"Beat your own so that strangers are afraid" - Constitution of Indonesia, Article 1 =).

Several companies that had their licenses revoked on November 1, 2024 were actually operating businesses. Some of them even fulfilled the requirement for contributing the authorized capital by at least 25%, which is, in principle, a huge rarity for the entire market as a whole.

All these companies are united by TWO IMPORTANT FACTORS:.

1 - The license was revoked OFFICIALLY due to FAILURE TO FULFILL THE REQUIREMENT TO CONTRIBUTE THE AUTHORIZED CAPITAL.

2 - Most of the investors in such companies were deported or are awaiting deportation right now, due to the fact that THEY HAD INVESTOR'S KITAS AND USED IT FOR AN INTENDED PURPOSES OR ILLEGALLY.

From here, you can understand the main risks of doing business in 2025:

1 - Failure to contribute 100% of the authorized capital (and this, let me remind you, is from 700,000 USD). Here is more about the authorized capital and business rules - https://bali-legal.com/en/osobennosti-biznesa-polnyij-gajd-2024-en.

2 - Oddly enough - the presence of an investor KITAS. Right now, this document itself is the basis for the authorities to check the status and legality of the investor's presence in Bali.

BUT!!! TO FIGURE OUT HOW TO AVOID THESE RISKS, LET'S START FROM THE BEGINNING. WITH THE PROCEDURE FOR OPENING A COMPANY!

Company formation - basic requirements of the authorities

To form a PT PMA company (a company with foreign capital) you need:

1 - at least 2 founders - foreigners (possibly foreigners + locals)

Here lies the key to what many foreigners “suffer” for - the risk of deportations, as in the case above.

Why are at least 2 founders required? - Because the company's business structure cannot do without at least two officials according to local legislation - a director and a commissioner.

A director is an active official. The director is responsible for signing contracts, opening bank, brokerage, crypto accounts, hiring personnel, obtaining a tax number, monitoring the submission of tax reports and reports to LKPM, in general - ALL NECESSARY BUREAUCRATIC PROCEDURES.

A commissioner is a passive official who oversees the conduct of business. Since PT PMA is a full-fledged analogue of JSC, it is, in fact, a representative of the state regulator, which collects financial statements and ensures that the company operates legally. In practice, the commissioner does nothing.

Both positions are needed and, if you are on the island, at least the director must obtain KITAS (what is it? - https://bali-legal.com/en/kitas-en, in order to carry out his position on the island legally. In general, it is the duties of the director described above that his powers as an investor - director - a foreigner rest. Anything broader is illegal.

The company in this case is a sponsor for obtaining KITAS (residence permit for 2 years) for the investor - director or investor - commissioner.

2 - Place of company registration

This place must EXIST and, ideally, have permission to conduct the relevant business in the relevant territory.

Often many received an “office as a gift” and with this gift - problems with regulatory authorities, also, probably, as a gift.

Check where your office is located and does it meet these requirements? - https://bali-legal.com/en/office-bali-en.

During inspections, if the business is not located at the declared place of “registration” - it can also be deprived of a license to conduct business.

3 - Types of activities permitted for foreign companies

Not all types of activities are permitted for foreign companies. Some, such as:

PROHIBITED... This list is constantly changing.

And the most interesting thing is that you can include such types of activities in your statutory documents and when registering a company, no one will even check them, but the discrepancy will be found later and this will lead to the cancellation of the license and then the cancellation of KITAS.

4 - Readiness to conduct business and partially contribute the authorized capital

Without this, the company can be recognized as fictitious and also deprived of the license first and then - KITAS of all founders can be canceled.

Cash flow reports and quarterly reports on changes in authorized capital are the most important proof that your business is working.

The procedure for forced cancellation of KITAS, if you are on the island, is ONLY THROUGH DEPORTATION.

Can anything be done about this?

At first glance it seems that it cannot =).

As if everything is deliberately so confusing that there is simply no way out. However, there are always two sources of nitpicking:

1 - failure to contribute authorized capital

You need to accept that if you open a business in Indonesia, you are either ready to contribute $700,000 (at least) to the company's bank account, or you are not.

No one will check the fact of having capital when registering a legal entity, and when issuing KITAS, they may ask for an additional bribe of $200-300 USD to turn a blind eye to the fact of failure to contribute. And for most businesses, it simply does not make sense to contribute such a large amount to the account IMMEDIATELY, because in the business activities of an average cafe, consulting project, real estate agency or SPA, such money has nowhere to be spent.

Strangely enough, it is easiest for developers in this regard, who initially invest in the rent/purchase of land, building materials and work amounts exceeding the authorized capital. Hence the understanding that it is now easiest to legalize such a business in Indonesia.

However, over 95% of businesses in Indonesia there is always a sword of “NOT CONTRIBUTING THE AUTHORIZED CAPITAL”, which can only be neutralized by:

2 - the presence of KITAS on companies with problems (guilty companies)

Any inspection of the KITAS holder will check the sponsor company that issued it. For investors from abroad, this is usually a company or companies registered in their name. Companies in which foreign investors have a share and position.

I recently thought that in order to check all KITAS holders on the island, the migration service needs 8 people and 3 months of work. I believe that in 2025 this is quite realistic.

Well, during the verification process, all the details that I described earlier are already clarified. Hence, KITAS is a red flag for the inspecting party in Indonesia.

How is this treated?

How to manage a company from abroad without KITAS?

The first thing you need to understand is that YOU DO NOT HAVE TO LIVE IN INDONESIA AND DO YOUR BUSINESS THERE. Business in Indonesia is good, but the political risks are also quite significant.

Indonesia is telling us with its actions - “We want your money, your taxes, but we don’t want you.” So why not earn money in Bali, while living in more attractive places?

You can’t force someone to like you, and if you don’t get attached to an island that starts to get pretty boring after 2-3 years of permanent residence, the option of living in at least 2 countries (Indonesia + ……..?) is one of the best in the world right now.

About a year ago, I defined the concept for myself: “Business, cash and taxes in Bali, and life in Bangkok, Hong Kong, Ho Chi Minh City (optional).

Is it legal and how to organize it?

In terms of your residence permit (KITAS) that you received when opening a company to complete mandatory bureaucratic procedures (including obtaining resident status and a tax number), your work is already complete.

YOU ARE NOT OBLIGATED TO RENEW YOUR STATUS IN BALI IF YOU DO NOT RESIDE ON THE ISLAND.

In addition, during the time you have been doing business, you have probably found a trusted manager/director who, if necessary, is able to solve (under supervision, of course) a simple task of going to the bank or representing in tax structures.

To register his rights to represent the company's interests in regulatory authorities and before leaving the island, make several changes to the statutory documents:

If such an attorney has not appeared - YOU CAN LEGALLY REMAIN THE DIRECTOR OF YOUR OWN COMPANY, SIMPLY WITHOUT HAVING A REPRESENTATIVE ON THE ISLAND and make the same changes, except for adding a new director to the Charter.

Start a business in Indonesia at the best price

The lowest price on the market for 2 KITAS + company. Leave your request, and our manager will contact you shortly!

Submit a request

The most pleasant part of this question is that YOU CAN WORK REMOTELY WITH YOUR BUSINESS CLIENTS WITHOUT BEING ON THE ISLAND AND IF YOUR CLIENTS ARE ALSO NOT ON THE ISLAND.

This way you do not violate Indonesian law, and the company receives income and pays taxes =).

After making all the changes and assessing the convenience of remote business management - fly out and do not forget to cancel KITAS. No one can do this without you. And I will remind you that if the company is deprived of a license, then the only way to cancel KITAS if you are caught during an inspection is DEPORTATION.

VERY IMPORTANT REMARK

If you arrive on the island without KITAS in the future - your OFFICIAL stay on the island should not be related to business (even if you have one). To officially resolve business matters, you need to get KITAS again.

Using offshore jurisdictions to manage a company and store money.

The previous section shows how you can get rid of KITAS while continuing to maintain control over the company.

And if you want to withdraw money from a company that earns in Bali, including from the tax legislation of the island - a great way is USING THE HONG KONG OFFSHORE ZONE.

Money should not be sent as “use of services”, since in this case you have to pay a “robbery” 31% tax percentage. Money can be withdrawn as investments or a loan from one company to another. Needless to say, the loan may never be repaid.

In this case, the Indonesian company will continue its work and in 3 years it may even be closed as bankrupt. You simply open a new company and continue to work and earn.

The main disadvantage of this scheme is the relatively high cost of opening and maintaining a company in Hong Kong.

An approximate calculation allows you to understand that with a company's turnover in Indonesia from 300,000 USD (including for VAT evasion), or with a high business margin (when the safety of money is more important than its quantity), the costs of opening and maintaining a business in Hong Kong are fully justified.

The measures that I described in this article will allow you to temporarily (if necessary) escape from the jurisdiction of Indonesia and not become an object for illegal enrichment of the authorities and migration services of Bali.

or fill out the form below to receive a free consultation on running a business, calculating taxes and supporting business processes on a turnkey basis.

Together, we will make life on the island comfortable!