Home Blog Company Incorporation Differences Between Indonesia and Singapore Business Setup | Company Registration | Indonesia Company Incorporation Differences Between Indonesia and Singapore InCorp Editorial Team 25 May 2023 5 minutes reading time Table of Contents Company Incorporation in Southeast Asia: Indonesia vs Singapore Company Registration in Indonesia from Singapore with InCorp Indonesia With some of the employment and business opportunities, it’s no surprise both Indonesia and Singapore are among the top investment destinations in Southeast Asia. These dynamic countries attract foreign investors worldwide to establish a business. Ever wondered how different countries handle company incorporation in Southeast Asia? This article is for you. Company Incorporation in Southeast Asia: Indonesia vs Singapore The following table summarises all the important information you need regarding company incorporation in both countries before going deeper into each most relevant topic. Singapore Indonesia Common Business Structure Private Limited Company (Pte. Ltd) Sole Proprietorship Ordinary Business Partnership Limited Partnership (LP) Limited Liability Partnership (LLP) Private Company Limited By Shares Foreign Company (PT PMA) Local Company (PT) Representative Office Time Required 1 to 3 days 4 to 6 weeks Foreign Ownership No restrictions Negative Investment List Shareholder Min. 1 Min. 2 Capital Contribution SGD 1 Min. IDR 10 million a paid up capital for PT PMA 1. Foreign Ownership Regarding the company incorporation, the Singapore government permits foreign ownership of 100% for private limited companies. In other words, a local partner is optional if you want to establish a company in Singapore. You just need to appoint a shareholder and a resident company director. Indonesia offers a different scheme than Singapore in this regard. A foreigner can have a 100% foreign limited liability company or a joint-venture limited liability company that requires at least 5% of local shares. Furthermore, foreign investors must look at Positive Investment List to conduct business accordingly. 2. Requirements The Singaporean government requires foreign investors to meet minimum requirements before they set up company incorporation and run their businesses. These requirements include appointing a resident company secretary and a director with an employment pass certificate, having between 1 and 50 shareholders, and showing S$1 paid-up capital. The requirements for company incorporation in Indonesia are stricter. You need to set up a commissioner and have paid-up capital of IDR 10 billion. 3. Company Incorporation Procedure Due to its effective process and system, you can go through company registration in Singapore quickly and efficiently. There are also fewer red tapes that you need to deal with, making an even more hassle-free incorporation procedure. A 24-hour incorporation process is normal in Singapore. However, the company registration process in Indonesia can take up to 1.5 months. This tedious and complex process sometimes poses a great challenge for foreigners intending to establish a business in Indonesia. Therefore, company incorporation should not be done without advice from a professional advisor, as they can ensure you have all the necessary paperwork and comply with all the requirements. 4. Employment Singapore’s workforce is mostly highly skilled with good command of English, and that’s why Singaporeans are preferable for foreign companies’ employment in the country. For foreigners working in Singapore, they must first acquire a work permit. There are many steps and costs involved. Hence it is crucial for businesses to fully understand the application process. As for Indonesia, the local workforce is less qualified or highly educated than in Singapore. Therefore, many foreign companies are still seeking foreign talent from outside Indonesia. Work permits are also required for foreigners with more restrictive quotas. 5. Tax Obligations In Singapore, companies can enjoy low corporate tax between 0 and 17%. Furthermore, Singapore has a wide range of tax treaties with more than 60 countries worldwide, allowing companies to enjoy even more tax benefits. Singapore doesn’t have a VAT and uses Goods & Services Tax (GST) at 8%, which will increase to 9% on 2024 In Indonesia, the corporate tax rate is between 1% and 25%. Your corporate tax rate percentage depends on your profit level and industry. Indonesia has tax treaties with over 64 countries worldwide, benefiting foreign investors. The value-added tax (VAT) in Indonesia is 11%. Company Registration in Indonesia from Singapore with InCorp Indonesia Even though it is easier to set up a company in Singapore, Indonesia makes an enticing investment destination because of its huge population, growing middle class, low operational and labor costs, and diverse landscape, among others. As a business owner in Singapore interested in expanding to Indonesia, you may be concerned about having to fly to Indonesia to take care of the company registration process. You do not have to visit Indonesia if you choose Cekindo as your business incorporation specialist in Singapore. As part of In.Corp Group in Singapore, one of the largest Asian-based corporate service providers, Cekindo has assisted with 20,000+ entity incorporations in the last decade and successfully completed 12,000+ compliance transactions every year. Our expert advisors in Singapore will handle the entire company registration process. We can also assist you in business licensing, visas and permits, banking, and other legal and business formalities per Indonesian law. Reach out to us, and we’ll gladly assist with company incorporation in Indonesia. Complete the form below. Read Full Bio Verified by Daris Salam COO Indonesia at InCorp Indonesia With more than 10 years of expertise in accounting and finance, Daris Salam dedicates his knowledge to consistently improving the performance of InCorp Indonesia and maintaining clients and partnerships. Frequently Asked Questions Are there investment facilities provided for foreign investors in Indonesia? A newly established PMA company in Indonesia is typically provided with import facilities, tax holidays, tax allowances, or investment allowances. Import facilities Investors in Indonesia, particularly in manufacturing, may benefit from import tax exemptions for capital goods and raw materials through the Master List Facility. The imported goods must meet specific criteria, such as not being produced locally or not meeting industry demand despite local production. Tax holiday The government offers CIT reductions of 50% or 100% for 5–20 years for listed pioneer industries, based on investment value. After this period, a CIT reduction of 25% or 50% applies for two fiscal years. Non-listed sectors can also apply by meeting criteria demonstrating pioneer industry status. Pioneer industries are industries that have a wide range of connections, provide additional value and high externalities, introduce new technologies, and have strategic value for the national economy. Tax allowance For companies in certain designated areas or regions, the government may provide the following tax concessions: Net income reduction up to 30% of the amount invested, prorated at 5% annually for six years, on condition that the assets invested are retained for the same duration. Accelerated depreciation and/or amortisation deductions An extension of tax losses carried forward for a maximum of ten years A 10% (or lower if treaty relief is available) withholding tax rate on dividends paid to non-residents The applicant eligible has to meet high-level-criteria for the above tax facilities: High investment value or for export purposes High manpower absorption High level of local content Investment allowance The government offers a reduction in net income of up to 60% of the investment, distributed at 5% annually over six years of commercial production, contingent upon the retention of invested assets for the same duration. To qualify, applicants must meet business line eligibility criteria and employ a minimum of 300 Indonesian workers in the project. Super deduction This facility could be granted to certain businesses, such as: 60% reduction in net income of the amount of tangible fixed assets invested for labor-intensive industries, distributed throughout a certain time frame. Up to 200% reduction in the gross income of the amount spent for human resources development in certain competency activities. Up to 300% reduction in gross income of the amount spent for certain R&D activities in Indonesia. What duties do investors have when they own shares in a company that has been liquidated? Shareholders must appoint a liquidator during the shareholders’ meeting approving liquidation. If no liquidator is appointed, the Board of Directors assumes the role. Creditors can submit claims within two years of the liquidation announcement, provided there are proceeds available. If proceeds have been distributed, shareholders must return them proportionally to settle creditor claims. Whereas employee termination packages vary based on employee status, service years, and reason for liquidation. What are the shareholder rights in a PMA company? Shareholders of a PMA Company in Indonesia have various rights, including voting rights in general meetings, entitlement to dividends and liquidation proceeds, and access to information. They must approve significant matters through general meetings of shareholders with specified quorums, such as: Amending articles of association Changing share capital Appointing or dismissing directors and commissioners Approving major transactions, dividends, and financial statements Company reorganization How do investors choose a holding jurisdiction for a PMA firm in Indonesia? Investors considering investments in Indonesia should assess existing International Investment Agreements between Indonesia and other countries. Having a business presence in countries with such agreements may offer incentives like stronger investment protection and higher foreign shareholding in Indonesia. Get in touch with us. 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