Frequently Asked Questions: #annualreporting

PMA companies in Indonesia have several ongoing compliance requirements to maintain their legal status and good standing. These include:

Annual Reporting and Filings * Investment Activity Report (LKPM) to be submitted to the Ministry of Investment and Downstream Industry (BKPM) via the OSS system — quarterly for medium and large businesses (due by the 15th of the month following each quarter), every 6 months for small businesses * Annual tax returns for corporate income tax, employee income tax, and VAT (if applicable) * Annual financial statements to be submitted to the tax office * Annual report to the Ministry of Law (Kementerian Hukum)

Tax Compliance * Monthly tax payments and reporting for employee income tax and VAT (if applicable) * Monthly installments of corporate income tax (PPh 25) * Withholding tax obligations on various transactions

Employment Regulations * Compliance with Indonesian labor laws, including minimum wage requirements * Regular reporting to the Ministry of Manpower * Stay permit (ITAS/KITAS) renewals and RPTKA ratification for foreign employees

Business Licenses * Renewal of business licenses as required (varies by industry) * Keeping company data current in the OSS (Online Single Submission) system

Corporate Governance * Holding annual general meetings of shareholders * Maintaining proper company records and minutes of meetings * Updating company information with relevant authorities when changes occur

Foreign Investment Regulations * Adherence to foreign ownership conditions as per the Positive Investment List (Presidential Regulation 10/2021, as amended) * Compliance with minimum capital requirements for PMA companies

Industry-Specific Regulations * Compliance with sector-specific regulations and reporting requirements

Bookkeeping and Accounting * Maintaining proper accounting records in accordance with Indonesian accounting standards * Preparing financial statements in Indonesian language and Rupiah currency

To ensure full compliance, many PMA companies engage professional services firms like Okusi Associates for ongoing support in areas such as:

• Accountancy and taxation services
• Corporate secretarial services
• Regulatory compliance monitoring and reporting
• Work permit and visa management for foreign employees

Staying compliant with these requirements is crucial for PMA companies to operate legally and avoid penalties or operational disruptions in Indonesia.

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Yes. This is one of the most common — and most expensive — misunderstandings among foreign company owners in Indonesia. A registered company’s filing obligations run with its tax number, not with its level of business activity. Key points:

• Nil returns are still returns: a company with no transactions must still file “nil” (zero) tax returns. For a VAT-registered (PKP) company, the monthly VAT return is mandatory every month without exception, even with zero transactions — a position the tax office restated in January 2026 specifically for companies that have not yet started, or have stopped, business activity.

• December employee tax return is always required: the December PPh 21 return must be filed even if nil, as it doubles as the annual employee reconciliation.

• Narrow reliefs exist: the unified withholding return (PPh Unifikasi) may be skipped in a month with genuinely no transactions, and a nil PPh 25 instalment needs no separate filing.

• The cost of not filing accumulates quickly: late-filing fines are IDR 500,000 per missed monthly VAT return and IDR 100,000 per other return. A dormant VAT-registered company that files nothing for a year accrues roughly IDR 6 million in fines before any tax or interest, and unresolved defaults escalate to collection letters (STP), formal requests for explanation (SP2DK), and ultimately a tax audit.

• Investment reporting continues too: a dormant PMA usually also stops filing its quarterly LKPM investment reports — and repeated non-filing or nil-realisation reports are themselves sanction triggers under the investment regulations, escalating as far as revocation of the business licence.

• The clean route to going quiet: a company that genuinely intends to cease activity can apply for non-active taxpayer status (Wajib Pajak Nonaktif), which suspends filing obligations once granted — prospectively only, never retroactively. Alternatively, formal liquidation ends the obligations permanently.

Okusi Associates provides a zero-activity tax reporting service that keeps dormant companies fully compliant at minimal cost, covering all mandatory nil returns and LKPM filings. See also the guide to monthly tax reporting for PMA companies.

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The LKPM (Laporan Kegiatan Penanaman Modal) is the quarterly investment activity report every PMA company must lodge with BKPM through the OSS system, whether or not anything happened in the quarter. A missed quarter is common — new companies often do not realise the obligation starts immediately — and it is recoverable if addressed promptly.

What actually happens:

• BKPM’s sanction ladder is progressive: written warnings come first, and only sustained non-compliance escalates towards suspension and, ultimately, revocation of business licensing
• The system flags non-filers; ignoring the flag is what converts an administrative slip into a licensing problem
• A company with one missed quarter and an otherwise clean record regularises by resuming filing and responding to any warning received — the earlier, the cleaner

To regularise you will need the company’s OSS access in order, the investment realisation figures for the missed period (capital expenditure, workforce, and for newer companies the realisation against the investment plan), and consistent numbers: LKPM figures should reconcile with the accounts, because BKPM and the tax office increasingly compare notes.

Two related points from client questions:

• One filing covers the company, per project/location — a company with several KBLI lines reports its activity accordingly; confirm scope rather than assuming one line was “included” in another’s filing
• Dormant does not mean exempt — a zero-activity company files a zero-activity LKPM

Okusi prepares and lodges LKPM filings as part of compliance packages, including catch-up filings for companies that have fallen behind.

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A PMA company must have its annual financial statements audited by a registered public accountant if it meets the criteria of Article 68 of the Company Law (UU 40/2007). Here are the key points regarding financial audits for PMA companies:

• When an Audit Is Mandatory: Under Article 68 of UU 40/2007, an audit is required if the company has total assets and/or annual turnover of at least Rp 50 billion, collects or manages public funds, issues debt instruments to the public, is publicly listed or state-owned, or where other regulations require it. Companies meeting any of these criteria must be audited every year.

• Voluntary Audits: PMA companies outside these criteria are not legally obliged to be audited, but many conduct voluntary annual audits for good governance and to provide assurance to lenders and shareholders.

• Deadline: The audited financial statements must be prepared within 6 months after the end of the company’s fiscal year.

• Auditor Qualifications: The audit must be conducted by a licensed public accountant registered with the Indonesian Ministry of Finance.

• Scope: The audit covers the company’s financial statements, including the balance sheet, income statement, cash flow statement, and notes to the financial statements.

• Purpose:

  • To ensure compliance with Indonesian Financial Accounting Standards (PSAK)
  • To provide assurance to stakeholders about the company’s financial position
  • To fulfill regulatory requirements for tax reporting and other statutory obligations

• Exceptions: PMA companies with total assets and annual turnover below the Rp 50 billion threshold — and which fall outside the other Article 68 categories — are exempt from the statutory audit requirement. It’s advisable to consult with a professional or refer to the latest regulations to confirm your company’s status.

• Additional Audits: Some industries or specific circumstances may require more frequent or specialized audits. Always check the regulations specific to your business sector.

• Preparation: It’s recommended to maintain proper bookkeeping and financial records throughout the year to facilitate a smooth audit process.

Remember that where an audit is required, it is an annual obligation — and maintaining accurate and up-to-date financial records should be an ongoing process throughout the year regardless.

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