Setting-up company in indonesia

What is a Company Deed of Amendment?

A Company Deed of Amendment is a legal document that updates or changes the original company deed, reflecting alterations in company structure, name, address, or other key details.

What is the difference between a Deed of Amendment and a new company establishment?

A Deed of Amendment updates an existing company’s details, while a new company establishment involves creating a new legal entity with its own deed.

When is a Deed of Amendment necessary?

It is needed when there are significant changes in the company’s management, business activities, address, or when updating the company’s capital structure.

What are the benefits of amending the company deed?

It ensures that the company’s legal documents reflect the current business structure and operations, which can be crucial for legal compliance and business transactions.

What happens if the Company Deed of Amendment is not filed?

Failure to file the amendment may result in discrepancies between the company’s actual situation and its legal documents, which can lead to compliance issues and legal complications.

Can amendments be made to a company’s articles of association without changing the deed?

No, changes to the articles of association generally require an amendment to the company deed to reflect these changes officially.

What are the types of Company Liquidation in Indonesia?

liquidation can be either voluntary or involuntary. Voluntary liquidation occurs when the company’s shareholders decide to wind up the company, while involuntary liquidation is initiated by a court order due to insolvency or other legal reasons.

What are the steps involved in liquidating a company?

The main steps include: Board of Directors Resolution, Appointment of Liquidator, Notification, Settlement of Debts, Asset Distribution, Final Report and Deregistration.

How long does the liquidation process take?

The process can vary depending on the complexity of the company’s affairs and the efficiency of the liquidator, but it typically takes between 6 to 12 months, or more.

Can the company’s debts be waived during liquidation?

No, the company must settle all its debts before it can proceed with liquidation. If there are insufficient assets to cover the debts, the company will be declared insolvent.

Can the company’s directors or shareholders be held liable after liquidation?

Directors or shareholders are generally not liable beyond their investments. However, if misconduct or fraud is involved, they may face legal consequences.

Are there any tax implications during liquidation?

Yes, the company may need to settle any outstanding taxes.

What happens if the company’s assets are insufficient to cover its liabilities?

If assets are insufficient, the company will be declared insolvent. The liquidator will follow the legal process for insolvency.

What is the process for acquiring property in Indonesia?

The process involves several key steps: identifying and assessing the property, conducting due diligence, negotiating terms, drafting and signing a Sale and Purchase Agreement, and completing the transfer of ownership through the relevant land office. Legal consultation is crucial to ensure compliance with Indonesian regulations.

Can foreigners’ own property in Indonesia?

Foreigners cannot directly own freehold land in Indonesia. However, they can acquire property through a long-term leasehold arrangement or through a foreign investment company (PT PMA). Consult with our firm to explore the best options.

What is the difference between Hak Milik, Hak Guna Bangunan, and Hak Pakai?

Hak Milik (Freehold Title): Full ownership, available only to Indonesian citizens.

Hak Guna Bangunan (Building Rights): Allows construction and use of land for up to 30 years, extendable.

Hak Pakai (Usage Rights): Allows use of land for specific purposes, often for up to 25 years, extendable.

What should be included in a Sale and Purchase Agreement?

The agreement should detail the property description, purchase price, payment terms, timeline, obligations of each party, and any conditions precedent. Our legal team ensures all necessary elements are covered to protect your interests.

What happens if there is a dispute over property ownership?

Disputes can be resolved through negotiation, mediation, or legal proceedings. It’s crucial to address any disputes promptly and seek legal advice to protect your interests. Our firm offers expert guidance and representation in property disputes.

How can your firm assist with property transactions?

We provide comprehensive legal services, including due diligence, drafting and reviewing agreements, ensuring regulatory compliance, and handling all legal aspects of property acquisition to ensure a smooth and secure transaction.

Can a foreign marriage be legally recognized in Indonesia?

Yes, a foreign marriage can be recognized in Indonesia under certain conditions. It must comply with the laws of the country where it took place and meet specific requirements outlined by Indonesian law, such as registration with Indonesian government authorities and Indonesian court.

How do I register a foreign marriage in Indonesia?

To register a foreign marriage in Indonesia, you typically need to submit a marriage certificate issued by the foreign country’s competent authority to the Indonesian Civil Registry Office (Dinas Kependudukan dan Catatan Sipil). Additional documents may be required depending on local regulations. If you do not register it and it has been exceeded by more than 1 (one) year, registration is legally required through the Indonesian court mechanism.

What are the legal implications of not registering a foreign marriage in Indonesia?

Failure to register a foreign marriage in Indonesia may lead to not having a legal standing and complications in legal matters such as property ownership and inheritance matters. It is important to ensure proper registration to secure legal recognition and rights in Indonesia.

How can I file for Divorce in Indonesia?

In Indonesia, divorce can be filed through the Religious Court (for couples of the same Muslim religion), or the District Court (for Non-Muslim religion and mixed-religion marriages). You must meet certain grounds for divorce as stipulated in Indonesian law.

What are the grounds for divorce in Indonesia?

Grounds for divorce in Indonesia may vary, it can include adultery, cruelty, abandonment, absence for a certain period, irreconcilable differences, etc.

What is the process of divorce in Indonesia?

The divorce process involves filing a petition, attending mediation (it is required by law), attending court hearings process, and presenting evidence to support grounds for divorce, then an Indonesian court will issue a court decision.

How long does it take to finalize a Divorce in Indonesia?

The duration varies depending on the complexity of the case and whether the parties agree on terms. On average, it can take 6 (six) months, or it will be faster if both parties have agreed on terms.

How can I plan for Inheritance in Indonesia?

Estate planning in Indonesia involves drafting a will (wasiat) to specify asset distribution and minimize tax implications. Consulting with our legal expert can help you ensure your wishes are legally documented and executed.

What is the Prenuptial Agreement?

Prenuptial Agreement, often referred to as “Perjanjian Pra Nikah” in Indonesian, is a legal contract entered into by couples before marriage. It outlines the rights and responsibilities of each party regarding property ownership and distribution, financial arrangements, and other assets in the event of divorce.

What is the Postnuptial Agreement?

Postnuptial Agreement, known as “Perjanjian Setelah Nikah” in Indonesian, is similar to a Prenuptial Agreement but is entered into after marriage.

What are the benefits of having a Prenuptial or Postnuptial Agreement?

These agreements provide certainty and predictability in asset division, protect family wealth, and reduce conflicts in the event of divorce or separation. They allow couples to plan for the future and safeguard their financial interests.

Employing foreign workers requires specific permits, including a Work Permit (IMTA) and a temporary stay permit (KITAS). Employers must also provide a clear reason why the position cannot be filled by an Indonesian worker and ensure the foreign worker’s role aligns with approved positions under the Ministry of Manpower’s regulations.

If a company needs to terminate employees due to economic difficulties, it must follow the procedures outlined in Government Regulation No. 35 of 2021. This includes attempting to negotiate mutual agreements, paying severance packages, and ensuring compliance with the labor law before proceeding with termination.

The Investor KITAS allows foreign nationals who hold significant shares in an Indonesian company to live and manage their investment in Indonesia. Unlike the Work Permit KITAS, the Investor KITAS does not require a separate work permit (IMTA) as it focuses on investment management rather than employment.

What is a tax dispute, and how does it arise in Indonesia?

A tax dispute occurs when there is a disagreement between the taxpayer and the Indonesian Tax Authorities (Direktorat Jenderal Pajak, DJP) regarding tax assessments, tax payments, or the interpretation of tax regulations. Disputes commonly arise after a tax audit when the taxpayer disagrees with the findings of the DJP.

How does a tax audit work?

During a tax audit, the tax authority reviews your financial records and tax filings to ensure compliance. If discrepancies are found, they will issue a notice of their findings.

What can I do if I disagree with a tax audit’s findings?

You can file a Tax Objection within three months of receiving the audit results. This is your formal request for the tax authority to re-examine their decision.

What happens if my Tax Objection is rejected?

If your objection is rejected, you can escalate the matter by filing a Tax Appeal with the Tax Court within three months of receiving the rejection.

What is a Tax Lawsuit?

A Tax Lawsuit challenges administrative actions by the tax authority that are unrelated to assessments, such as disputes over tax refunds or collections.

When can I file a Tax Judicial Review?

A Tax Judicial Review is the final legal step, brought before the Supreme Court to correct substantial legal errors made by the Tax Court. This is done only after exhausting all other avenues.

Can I resolve a tax dispute without going to court?

While negotiation is possible, formal out-of-court settlements are rare in Indonesian tax disputes. Our professional advice is crucial to exploring your options.

What are the typical outcomes of a tax objection?

The outcomes of a tax objection can be varied. The tax authority may fully accept, partially accept, or reject your objection, depending on the strength of your argument and evidence provided.

How long does it take to receive a decision on a Tax Objection?

The tax authority typically takes 12 months from the date of filing to issue a decision on a Tax Objection. If no decision is made within this time, the objection is considered rejected by law.

Can I settle my tax liabilities during the dispute process?

Yes, settling your tax liabilities during the dispute process is possible. However, this may impact the progression of the dispute. Consulting with a tax professional like our firm is advised before making any settlement decisions.

What are the common reasons for a Tax Judicial Review?

Common reasons for a Tax Judicial Review include substantial legal mistakes in the lower courts’ rulings, misinterpretation of tax laws, or procedural violations that affected the fairness of the judgment.

What penalties can I face in a tax dispute?

Penalties can include fines, interest charges, and administrative sanctions depending on the nature of the dispute. If a tax deficiency is found, additional penalties may apply for late payments or underreporting.

What is the time limit to file a Tax Lawsuit?

A Tax Lawsuit must be filed within 90 days of the administrative action you are challenging (such as a refusal of a refund). Missing this deadline can result in the dismissal of your lawsuit.

What types of administrative decisions can be challenged through a Tax Lawsuit?

You can challenge decisions such as denial of tax refunds, incorrect tax collections, or penalties imposed outside of a tax assessment.

What happens if I win a Tax Appeal or Tax Lawsuit?

If you win, the court may order the tax authority to revise or cancel their previous decision. This could result in a refund, removal of penalties, or a corrected tax assessment.

Can I request an extension for filing a Tax Objection or Tax Appeal?

No, deadlines for filing Tax Objections and Tax Appeals are strictly enforced under Indonesian tax law.

What is the burden of proof in a tax dispute?

In Indonesian tax disputes, the burden of proof lies with the taxpayer. You must provide evidence and documentation that supports your claim against the tax authority’s assessment or decision.

What happens if I fail to provide sufficient evidence in a Tax Objection or Tax Appeal?

If you fail to provide enough evidence, the tax authority or the Tax Court may rule in favor of the government. Therefore, it is crucial to present a well-prepared and substantiated case.

What is the impact of a Tax Dispute on my business operations?

While a tax dispute is ongoing, it may cause financial uncertainty. However, unless there are severe violations, the tax authority generally does not halt business operations during the dispute. Consulting with tax professionals like our firm can help mitigate risks.

Can I negotiate with the tax authority before filing an objection or appeal?

Informal negotiations or discussions can sometimes lead to clarification or resolution before entering the formal dispute resolution process. However, once a decision has been made, formal procedures are required to challenge it.

What is Suspension of Debt Payment (PKPU)?

A legal process in Indonesia that allows debtors to propose a restructuring plan to its creditors to avoid bankruptcy.

What is Bankruptcy?

It is a legal status declared by the commercial court for a debtor who is unable to pay its debt when they fall due and whose financial condition is deemed irreparable. This process involves liquidating the debtor’s asset to pay off creditors.

What is the prevailing law of Suspension of Debt Payment (PKPU) and Indonesian Bankruptcy matters?

Indonesian Law Number 37 of 2004, and related regulations.

What are the criteria of Debtor to be declared under Suspension of Debt Payment (PKPU) or Bankruptcy status?

Debtor shall have at least 2 (two) creditors and have failed to pay at least one debt that is due and payable, and the debt criteria can be proven simply.

Who may file a Suspension of Debt Payment (PKPU and Bankruptcy petition?

Both debtor and creditor are eligible to file the petition to Indonesian Commercial Court.

What is the role of Administrator and Receiver?

The Administrator is appointed by commercial court to carry its duty and supervised by a Supervisory Judge during Suspension of Debt Payment (PKPU) process. While the Receiver runs its duty and supervised by a Supervisory Judge during Bankruptcy process.

What happens during PKPU process?

Creditors cannot take enforcement actions against debtor; an Administrator is appointed to oversee the process and a restructuring plan is proposed and voted on by creditors.

Can I settle debts for less than what I owe through PKPU?

Yes, PKPU allows for negotiation with creditors, and it is possible to settle debts for a reduced amount if an agreement is reached.

What if a PKPU plan is rejected by creditors?

The court may declare debtor bankrupts, and debtor’s assets could be liquidated to pay off debts.

How long does the PKPU process take?

The Temporary PKPU period is 45 days, which can be extended to a maximum of 270 days (Permanent PKPU) upon approval if a feasible restructuring plan is in progress. This provides ample time to negotiate and implement a debt repayment strategy.

What happens if Restructuring Plan (Proposal) during PKPU process is approved?

The Restructuring Plan (Proposal) becomes legally binding, and creditors must adhere to the agreed-upon terms. The Debtor will follow the new repayment schedule as proposed in Restructuring Plan, which provides relief and helps stabilize its financial situation.

What happens to my business during bankruptcy?

A Receiver will manage and liquidate your business assets to pay off creditors.

Can I appeal a bankruptcy decision?

Yes, within a certain timeframe and if a bankruptcy status comes directly from a petition of bankruptcy.

How can I prevent my business from going bankrupt?

Timely debt restructuring, effective financial management, and utilizing legal protections like PKPU can help prevent bankruptcy. Engaging our legal services early can provide the guidance needed to avoid financial insolvency.

How does bankruptcy impact my personal assets as a business owner?

For incorporated entities, bankruptcy generally affects the company’s assets only. However, for sole proprietorships or personal guarantees, your personal assets may be at risk. We can advise on the best course of action to protect your interests.

Can I recover from bankruptcy and start a new business?

Yes, once your bankruptcy proceedings are completed, you can start anew. Bankruptcy laws aim to give individuals and businesses a fresh start, though there may be restrictions and considerations to address.

How can I ensure a successful PKPU process?

Success depends on presenting a feasible Restructuring Plan, effective negotiations, and legal compliance. Engaging our experienced lawyers increases your chances of a favorable outcome, providing strategic advice and representation.

How do I start the process of debt restructuring or bankruptcy?

Contact us for a consultation. We will assess your situation, provide legal advice, and guide you through the necessary steps to initiate debt restructuring, PKPU, or bankruptcy proceedings.

The duration varies depending on the complexity of the case and whether the parties agree on terms. On average, it can take 6 (six) months, or it will be faster if both parties have agreed on terms.