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, 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) * 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 * 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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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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