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Common myths regarding doing business in Bali

We learned from our clients that there are a few misconceptions about doing business in Bali. We gathered the most common of these and discussed them below.

#1 Foreigner cannot be a director of a local company


There is no law that prohibits foreigners from being directors of a local company in Indonesia. Only one director in a local company has to be a citizen of Indonesia. Other directors can be foreigners.

#2 Local companies cannot sponsor work permits for foreigners

Local companies can sponsor work permits (KITAS) for foreigners. However, this depends on the size of the capital of the company. The number of work permits a company can sponsor also depends on its capital.

Foreign directors can get working KITAS as long as the local company fulfills requirements. For other positions, Indonesia’s Ministry of Manpower must approve the working KITAS.

#3 Local companies pay lower taxes

Businesses with foreign ownership have the same tax rates as local businesses. The general tax rate for businesses in Indonesia ranges from 11% to 22%.

Note that some businesses must report additional taxes. For example, hospitality businesses must report tourism taxes.VIVO ASIA can help you compute your corporate income tax. Our consultants will also report your taxes in Bali to comply with local laws.

#4 Having a local partner makes the company registration process faster

In Indonesia, a company with partial foreign ownership is a foreign-owned company. As such, having a local partner does not change the registration process or requirements.

#5 Companies in Indonesia can only sponsor a limited number of work permits for foreigners

There is no regulation that specifies the number of work permits (KITAS) a company can sponsor. As stated above, the number of KITAS a local company can sponsor depends on its capital. There is no such restriction for a foreign-owned company.

The table below shows the number of KITAS a company can sponsor depending on the role.

Type

Foreign-owned company

Local company

Director

As many as needed

As many as needed

Commissioner

As many as needed

None*


*Foreigners cannot be commissioners in local companies


Other positions

Subject to the approval of the Ministry of Manpower

Subject to the approval of the Ministry of Manpower

Ultimately, though, granting KITAS to foreign workers is at the discretion of Indonesia’s Ministry of Manpower. The ministry will decide how many KITAS a company can sponsor.




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