Frequently Asked Questions: #annualreporting

PMA companies in Indonesia are required to conduct financial audits annually. Here are the key points regarding financial audits for PMA companies:

• Annual Requirement: All PMA companies must undergo a financial audit once a year.

• 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: Small companies with total assets or annual revenue below certain thresholds may be exempt from the mandatory audit requirement. However, 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 while the audit is an annual requirement, maintaining accurate and up-to-date financial records should be an ongoing process throughout the year.

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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 BKPM every 6 months
• 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 and Human Rights

Tax Compliance

• Monthly tax payments and reporting for employee income tax and VAT (if applicable)
• Quarterly installments of corporate income tax
• Withholding tax obligations on various transactions

Employment Regulations

• Compliance with Indonesian labor laws, including minimum wage requirements
• Regular reporting to the Ministry of Manpower
• Work permit (KITAS) renewals for foreign employees

Business Licenses

• Renewal of business licenses as required (varies by industry)
• Maintaining valid Company Domicile Certificate

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 restrictions as per the Negative Investment List (DNI)
• 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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