Contents:
You’ve Pushed It Too Far.
The situation I described as "illegal KITAS issuance" or "opening mass shell companies" has finally triggered a response from the Indonesian government.
What are the illegal KITAS schemes? – https://bali-legal.com/en/deshevyij-kitas-en.
And what happens to those who use these schemes? – https://bali-legal.com/en/deportaciya-na-bali-en.
For those of you too lazy to read, here’s a summary: companies of 10 people were formed, each receiving a KITAS (long-term residency permit) without even knowing:
The name of their company?
What the company does?
Who the other shareholders are?
Whether capital is being deposited or not?
If the business reports are being submitted? And so on…
Due to these schemes, Indonesia has almost failed its policy of attracting wealthy investors—millionaires. The government wants large businesses to pour in millions of dollars, but in reality...
In practice, over the last 3-4 years, the market has been flooded with shell companies that don’t file reports, don’t engage in real business activities, and sponsor KITAS for just about anyone (no offense, but this is exactly how it looks from the authorities' perspective).
What steps is the government taking now?
The Government issues a resolution - https://peraturan.go.id/files/permenkumham-no-22-tahun-2023.pdf.
The Indonesian authorities intend for this regulation to more accurately describe all types of visas and KITAS (Limited Stay Permits) currently available to foreigners, as well as to regulate their issuance.
But why has this regulation stirred public outcry?
Two MAIN MEASURES have emerged that could FOREVER SHATTER the lives of many living on the island with a KITAS but without a REAL BUSINESS.
Read the article to the end — I’ll explain what to do and how to respond under these circumstances.
1 - MEASURES ON INVESTMENT AMOUNTS
A bit of history:
- About 2 years ago, to open a company, your minimum capital had to be at least 1,000,000,000 IDR (approximately 70,000 USD).
- About a year ago, this amount was raised to a minimum of 10,000,000,000 IDR (now approximately 700,000 USD).
HOW DID COMPANIES RESPOND TO THIS THAT OPEN KITAS FOR FOREIGN OWNERS OF LOCAL BUSINESSES? - They didn't react at all. They simply continued to set up nominal businesses without reports, stating on paper that the invested capital was 700,000 USD.
- In the new regulation, the minimum share in the capital for an investor who wants to obtain a KITAS is 10,000,000,000 IDR. This share also cannot be less than 10 percent.
This means that for a company with 10 co-investors, the minimum capital would be around 700,000 USD. And for those with a real business and 2 co-founders, it would be approximately 1,400,000 USD.
You might think, "No big deal—just don’t pay it and continue as before." Well, I’m not so sure…
2 - MEASURES ON INVESTMENT QUALITY
So now, your newly opened company will need to significantly inflate its initial capital to millions of dollars. However, just this alone is not enough to attract a flood of investors into the country, as practice has shown.
Indonesia has identified the root of the problem — they are combining the efforts of the immigration service and the agency responsible for enforcing government programs..
NOW, TO ISSUE A KITAS UNDER THE NEW LAW, YOU WILL NEED TO PROVIDE PROOF OF PAYMENT OF THE CAPITAL REQUIRED BY THE INVESTOR.
On paper, this means that after the company is established, a C314 visa will be issued for the investor (to read about the procedure for opening a company and obtaining a KITAS, visit - https://bali-legal.com/en/kitas-company-en). After you convert this visa into a real KITAS, you will be given a deadline to deposit the capital into the company.
For different types of KITAS, the procedure will vary, and yes, that's correct—there will now be several types of KITAS that we didn’t know about before.
Herein lies, perhaps, the main source of concern for current entrepreneurs, those who want to start their own business, and of course, for owners of companies that do not maintain proper accounting and are merely nominal.
It is precisely these companies that have ALREADY STARTED TO BE CLEANED OUT from the island.
Just a week ago, the foreign investment monitoring agency sent notifications to 400 companies (WHICH HAD NOT SUBMITTED REPORTS) stating that they are required to submit their investment reports.
They must also change their office from a virtual one to a real one (why this is important has already been discussed here - https://bali-legal.com/en/office-bali-en).
Additionally, they need to confirm at least 10% of the stated capital contribution. If this is not the case, they must write a letter explaining when and how the company plans to inject the promised funds into the capital.
All of this must be completed within 30 days. Otherwise, their licenses will be revoked, and they will not be allowed to engage in entrepreneurial activities.
Furthermore, it was clearly hinted that the KITAS of such entrepreneurs will also become invalid, and they themselves could face deportation..
I am attaching a link to the document itself. Check if your company is also on the list - https://drive.google.com/file/d/15kdX5z0rHVQkfZFNbKIVZNLfEbx0bjP_/view?usp=sharing.
THE DECREE COMES INTO FORCE ON OCTOBER 24, 2023!!
What to Do for Those with a Real Business but No Paid-Up Capital?
А) Contribute the capital that you can.
Just a reminder that you can, for instance, withdraw the money that represents your current profits as dividends and return it to the company's account as capital without paying taxes. This is legal. Then, in the report for October 2023, you can show these changes.
B) Check if all your reports have been submitted: monthly, quarterly, and yearly reports, as well as personal investor reports.
C) If your company has a virtual office, change it to a real one.
You can use ours - https://bali-legal.com/en/office-bali-en and we will assist you with the registration and all necessary changes.
D) If you don’t have the capital, you may need to pay what’s referred to as "MONKEY MONEY." Of course, the amount will depend on the greed of the inspecting officer. Current estimates range from 4 - 5 000 USD.
CONTACT US via - TELEGRAM OR WHATSAPP for quick communication.
What to Do If You Have a Nominal Company and Nominal KITAS?
First of all, get rid of your status urgently. You are residing in the country illegally, and the government is fully aware of this. You are the first victims of a potential future crackdown.
А) Check that you have all the company information ready for any unexpected immigration summons. A short list of such questions was provided earlier.
B) Cancel your KITAS (this can be done through us or your visa agent).
C) Step down as a shareholder in the company and simply buy a new visasuch as the B211.
D) If you receive a summons from immigration, CONTACT US via TELEGRAM OR WHATSAPP, and we will do our best to assist you. The estimated amount for MONKEY MONEY is around $8,000 to $10,000.
What should those who want to open a company and get KITAS do?
Now is a great time to open a company and apply for KITAS because the capital requirements are still the same.
This means that if YOU PLAN TO RUN YOUR BUSINESS LEGALLY, SUBMIT ALL THE NECESSARY REPORTS, AND OPERATE WITHIN THE LAW, it’s the perfect moment to take advantage of the current situation before the law is fully implemented.
CONTACT US via - TELEGRAM OR WHATSAPP for quick communication.
Postscript
For all of us, as current or future entrepreneurs, significant changes are coming.
A quick reminder: the new regulation comes into effect on October 24, 2023.
No one knows yet if this law will only exist on paper or if we will truly have to pay what I consider UNREASONABLY HIGH FEES for the right to live in Indonesia long-term.
One thing is clear — in the future, the costs of opening a company and obtaining KITAS will increase, and the processes will become more complicated..
It’s very important now to get your finances in order, keeping an extra cushion in case of unexpected expenses, like “MONKEY MONEY,” and to try to legalize at least part of the government’s investment attraction program for the island.
CONTACT US via - TELEGRAM OR WHATSAPP for quick communication.
Together, we will make life on the island comfortable.
