Yes, provided all taxes and regulatory requirements are fulfilled.
Foreign investors enter the Indonesian market with a key objective: to gain sustainable returns and eventually repatriate profits. As Southeast Asia’s largest economy, Indonesia attracts capital across various sectors, from manufacturing and infrastructure to digital technology and natural resources. However, the ability to move capital out of the country—especially profits—is subject to multiple regulatory, legal, and tax considerations.
In this guide, we explore the legal framework and strategic approaches to profit repatriation for foreign investors in Indonesia, including risks, compliance tips, and expert insights from our legal practice.
The primary legal source governing profit repatriation is Law No. 25/2007 on Investment. This law assures foreign investors the right to:
Under Article 8, this right is guaranteed as long as the investor complies with applicable tax and regulatory obligations.
Foreign exchange activities are regulated by Law No. 24/1999 on Foreign Exchange Flow and Exchange Rate System, further enforced by Bank Indonesia Regulation No. 21/2/PBI/2019. This law liberalizes the movement of foreign currency but imposes reporting requirements for prudential oversight. Importantly, Bank Indonesia does not restrict the amount of funds repatriated but focuses on reporting and transparency.
Dividends distributed by Indonesian companies to foreign shareholders are the most common form of repatriated profit. However, dividends are subject to a 20% withholding tax unless reduced by a Double Taxation Avoidance Agreement (DTAA).
Capital gains from the sale of shares, assets, or investments are also repatriable. Such gains are considered part of taxable income and taxed accordingly. Tax planning is essential here to avoid double taxation.
Interest earned on loans to Indonesian entities, royalties for intellectual property, and technical service fees are all repatriable. Each category is subject to specific tax treatment, typically involving withholding tax ranging from 10% to 20%.
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Under Bank Indonesia Regulation No. 17/3/PBI/2015, companies must report:
Reports are submitted through the Bank Indonesia Integrated Reporting System (BI-IRIS).
Funds awaiting repatriation may be held in custodial or escrow accounts, especially in transactions involving share sales or project completion. Proper documentation ensures tax clearance and prevents delays.
Repatriation must be supported by:
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The default withholding tax rate is 20% for dividends to non-resident shareholders. This rate can be lowered to 10%, 5%, or even 0% under applicable DTAAs, such as those with Singapore, the Netherlands, and Japan.
Indonesia has over 70 DTAAs. To claim relief:
Professional tax planning can optimize:
BKPM, now integrated under the Ministry of Investment, requires foreign investors to report their investment activities, including profit repatriation. Reports are submitted quarterly and annually through the OSS system (Online Single Submission).
Failure to comply can result in penalties, including restriction on future investment licenses or even suspension of operations.
All foreign currency transactions, including repatriation, must go through Indonesian banks. These banks report to Bank Indonesia and ensure compliance with prudential principles. Notably, Bank Indonesia requires certain corporations to maintain hedging and liquidity ratios when engaging in foreign loan-related repatriations.
Companies operating in SEZs or those receiving tax holidays/tax allowances enjoy relaxed or zero withholding tax on profit repatriation.
These incentives are granted under GR 78/2019 and MoF Regulation No. 130/PMK.010/2020. Legal support is essential to ensure eligibility and compliance with post-incentive reporting.
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A Singapore-owned manufacturing company attempted to repatriate dividends without obtaining a tax clearance certificate. The result? A 20% penalty and delayed payment of 9 months. With proper legal guidance, this could have been prevented by structuring the dividend distribution through a DTAA jurisdiction and fulfilling documentation requirements in advance.
We’ve helped foreign investors repatriate their profits legally and tax-efficiently. Whether it’s structuring holding companies or securing tax clearance, our firm ensures you avoid costly pitfalls.
| Challenge | Solution |
| Withholding tax inefficiencies | Use DTAA jurisdiction and COD documents |
| Delays in dividend approval | Align internal shareholder processes |
| BI reporting complexity | Hire professional advisors to handle reporting |
| Tax clearance issues | Apply early and maintain compliance |
Navigating profit repatriation for foreign investors in Indonesia requires a blend of legal acumen, tax strategy, and regulatory compliance. With the right planning and expert guidance, repatriating profits can be seamless and cost-effective.
Need help repatriating your profits from Indonesia? Let Kusuma & Partners Law Firm guide you through the process—securely, legally, and profitably. Contact us today for a consultation.
Fill in the form below to get our expert guidance.
“DISCLAIMER: This content is intended for general informational purposes only and should not be treated as legal advice. For professional advice, please consult with us.”
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