Representative Office | Legal Entity

Representative Office (Kantor Perwakilan): Your Gateway to the Indonesian Market
A Representative Office (RO) or Kantor Perwakilan is the perfect stepping stone for foreign companies looking to establish a presence in Indonesia. It serves as an extension of the parent company overseas, allowing businesses to explore the local market without engaging in direct commercial activities like selling products or generating revenue. Instead, an RO focuses on non-commercial activities that lay the foundation for future growth, such as:

1. Promotion and Marketing: Showcasing your products or services to the local market.
2. Market Research and Development: Gathering valuable insights about the industry and identifying business opportunities.
3. Coordination and Public Relations: Building relationships with potential business partners, government entities, and customers.
4. Technical Support: Providing after-sales services or technical assistance for your parent company’s products.

An RO is ideal for foreign companies aiming to understand the local market dynamics before committing to a more permanent business entity, such as a PT (Limited Liability Company) or a joint venture.

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Regulations for Representative Offices in Indonesia
In Indonesia, the establishment and operation of a Representative Office are governed by various regulations, primarily under the coordination of the Ministry of Law and Human Rights (Kemenkumham) and the Investment Coordinating Board (BKPM).

1. Types of Representative Offices

In Indonesia, there are several types of Representative Offices, including:

• Foreign Company Representative Office (KPPA): For foreign companies engaging in non-commercial activities.
• Foreign Trade Representative Office (KPPA): Specifically for foreign companies in the trade sector.
• Foreign Construction Representative Office (KPPA Konstruksi): For foreign companies in the construction industry.

2. Requirements for Establishment

• The parent company must be a legally registered entity in its home country.
• Obtain official permits from Kemenkumham or BKPM.
• Appoint a representative responsible for the office’s operations.
• Have a clear and valid office address in Indonesia.

3. Establishment Process

• Submit an application for a permit to BKPM or Kemenkumham.
• Provide necessary documents, such as:
  • The parent company’s deed of establishment.
  • A letter of appointment for the representative.
  • A detailed plan of the RO’s activities.
  • Proof of office ownership or lease.
• Once the permit is issued, the RO must regularly report its activities to the relevant authorities.

4. Activity Restrictions

• Direct commercial transactions are not allowed.
• Cannot issue invoices or receive payments from customers.
• Serves solely as an extension of the parent company.

5. Taxation

• ROs are taxed on operational expenses, which are considered income.
• Must comply with Indonesian tax regulations, including Article 21 Income Tax for employees and VAT for certain transactions.

6. Relevant Regulations

• Law No. 25 of 2007 on Investment.
• BKPM Regulations regarding the establishment and operation of Representative Offices.
• Ministerial Regulations from the Ministry of Law and Human Rights on the procedures for establishing foreign company Representative Offices.

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Why Choose a Representative Office?
A Representative Office is a popular choice for foreign companies looking to explore the Indonesian market without making a significant initial investment. While it has limitations in terms of commercial activities, an RO plays a crucial role in building business networks and understanding local market dynamics. Companies planning to establish an RO must adhere to applicable regulations and ensure compliance with Indonesian laws.

With a Representative Office, you can test the waters, build relationships, and prepare for a successful long-term presence in one of the world’s most promising markets. Start your journey today and unlock the potential of Indonesia!