Part of the series: The Reporting Year
- PT PMA Reporting Obligations: The Indonesian Company Reporting Year Mapped
- Why a PT PMA Carries the Large Enterprise Classification
- Why a PT PMA Pays the Same Corporate Income Tax as a Local Company
The Reporting Year · TraceWorthy Financial Services
A lean foreign-owned company sits in the same size band as a multinational.
The label tracks the size of the investment a company commits, and a domestic company of the same scale carries it too.
A foreign-owned company in Indonesia is classified as a large enterprise from the day it is set up, sitting in the same size band as multinationals and listed groups, even when it operates as a small business with two shareholders and a handful of staff. That classification follows a capital threshold written into Indonesian law, and it attaches by the size of the declared investment rather than the nationality of the owner.
The large enterprise classification can feel disproportionate to an owner at that scale. The mechanism behind it is precise, and it applies equally to a domestic company that commits the same capital.
The figures that set the classification
The Company Law requires at least 25 per cent of a company’s authorised capital to be issued and fully paid, and the Job Creation Law removed the earlier fixed minimum for authorised capital, leaving the figure to the founders. For a foreign-owned company, the binding floor is the minimum paid-up capital, which Regulation of the Minister of Investment and Downstreaming / Head of the Investment Coordinating Board (Badan Koordinasi Penanaman Modal, or BKPM) No. 5 of 2025 on Risk-Based Business Licensing and Investment Facilities, effective 2 October 2025, set at IDR 2,500,000,000 (two billion, five hundred million Indonesian Rupiah), reduced from the previous figure. In practice the authorised capital is set at IDR 10,000,000,000 (ten billion Indonesian Rupiah), so that the 25 per cent issued and paid meets that floor.
Separately from the cash paid in, a PT PMA declares a total investment plan, and that plan must exceed IDR 10,000,000,000 (ten billion Indonesian Rupiah) for each five-digit business classification code, per project location. The plan is the long-term commitment a foreign investor undertakes, realised progressively across the business rather than deposited at incorporation. The reduced paid-up figure now sits inside that larger commitment, which a company draws down as it builds.
How Indonesian law defines business size
Indonesian law sizes a business by its capital or by its annual sales, and the criteria sit in Government Regulation No. 7 of 2021 on the Facilitation, Protection and Empowerment of Cooperatives and Micro, Small and Medium Enterprises. Land and buildings are excluded from the capital figure. A newly established company is sized by its capital, and an existing one may be sized by its annual sales.
| Size | Business capital (excluding land and buildings) | Annual sales |
|---|---|---|
| Micro | Up to IDR 1 billion | Up to IDR 2 billion |
| Small | Over IDR 1 billion to IDR 5 billion | Over IDR 2 billion to IDR 15 billion |
| Medium | Over IDR 5 billion to IDR 10 billion | Over IDR 15 billion to IDR 50 billion |
| Large | Over IDR 10 billion | Over IDR 50 billion |
A PT PMA crosses into the large band on the capital criterion, because the investment commitment it declares exceeds the IDR 10,000,000,000 (ten billion Indonesian Rupiah) ceiling that marks the top of the medium category. The licensing framework reinforces this, treating foreign investment as large business regardless of the cash injected at incorporation, unless a specific law provides otherwise.
The large label tracks the size of the investment a company commits.
A domestic company that commits the same amount carries the same classification.
Why the reduced paid-up capital did not change the label
The 2025 reduction lowered the cash a foreign owner deposits at the start, without moving a PT PMA into a smaller size band. The declared investment plan exceeding IDR 10,000,000,000 (ten billion Indonesian Rupiah) remains the entry condition for foreign investment, which keeps the company in the large band on the capital criterion. The licensing framework also continues to treat foreign investment as large business, so the size classification follows the declared investment commitment, which sits above the large-enterprise threshold.
For an owner, this means the lower paid-up figure eases the cash needed at incorporation while leaving the obligations of large status in place. The label, and the duties attached to it, follow the scale of the venture the company has committed to build.
What the large enterprise classification changes
The classification adds obligations a smaller company avoids and closes sectors a large foreign-owned company cannot enter.
| Effect | What it means in practice |
|---|---|
| Quarterly investment reporting | A PT PMA files the investment activity report every quarter, where a small enterprise reports twice a year |
| Full corporate reporting | The reporting year set out in the first article of this series applies in full |
| Reserved business lines closed | Business lines reserved for cooperatives and MSMEs are not open to a large foreign-owned company |
| Partnership expectations | Certain sectors expect a large business to partner with a cooperative or an MSME |
| Turnover-based tax reliefs | Access to small-business tax reliefs tied to low turnover is examined in the third article of this series |
| Investor stay permit | An individual investor applying for the investor stay permit must own a personal shareholding valued at IDR 10,000,000,000 (ten billion Indonesian Rupiah), set by Minister of Law and Human Rights Regulation No. 22 of 2023 as amended |
The policy behind the size rule
The size rule connects to Presidential Regulation No. 10 of 2021 on Business Lines for Investment, which reserves certain activities for cooperatives and Micro, Small and Medium Enterprises. Among them are labour-intensive activities and lines connected to cultural heritage, together with operations whose capital sits below IDR 10,000,000,000 (ten billion Indonesian Rupiah). It also designates lines where a large business is expected to partner with a cooperative or an MSME.
A foreign-owned company, classified as large, sits outside the reserved lines and within the partnership expectations. The stated aim of this framework is to keep space for smaller domestic enterprises as foreign investment grows, which places the size threshold at the centre of how Indonesia admits foreign capital.
How other countries draw the same line
Setting a capital floor for foreign investment, and reserving smaller-scale activity for local enterprises, is a common feature of investment regimes across the region. Read in one currency, the Indonesian paid-up floor of around USD 140,000 sits between the Thai and Philippine figures.
| Jurisdiction | Statutory minimum capital | Approximate USD * |
|---|---|---|
| Indonesia | Paid-up capital, IDR 2.5 billion | USD 140,000 |
| Philippines | Paid-in capital, USD 200,000, or USD 100,000 with advanced technology or fifty staff | USD 200,000, or USD 100,000 |
| Thailand | Minimum capital, THB 2 million, or THB 3 million if a licence is required | USD 62,000, or USD 92,000 |
The Philippine figures come from the Foreign Investments Act of 1991, and enterprises below the floor are reserved for Philippine nationals. The Thai figures come from the Foreign Business Act of 1999, the higher amount applying to businesses on its restricted lists. Indonesia adds a feature the others do not, a total investment plan exceeding IDR 10,000,000,000 (ten billion Indonesian Rupiah), around USD 565,000, realised over time alongside the paid-up capital.
* The United States Dollar equivalents are approximate, converted at exchange rates in May 2026, and they move with the market.
Working with the classification at set-up
The classification is fixed by law, and the room a foreign owner has lies in how the structure is built around it. The five-digit business classification codes a PT PMA registers determine both the investment plan the company must meet and the licenses and sectors open to it, so the codes selected at incorporation shape the cost of large status. Planning those codes against the genuine business activity, and structuring the capital to match the investment plan, is the work the advisory team at TraceWorthy handles for foreign owners at set-up. Settling the classification and the codes at the start avoids a structural amendment later, which reaches the Ministry of Law as a notarial deed.
A starting point for prospective investors
A prospective foreign investor gains the most from settling the sector and the structure early. The Beyond Bali, Beyond Tourism series sets out industry sectors and Indonesia-wide opportunities, and it is a useful first read for anyone deciding where a venture might sit. Once a direction takes shape, the TraceWorthy team is glad to talk through the plan and map it to the business classification codes and the capital and reporting they bring, so the structure is built around the venture from the start.
Frequently asked questions
Is a PT PMA always classified as a large enterprise?
In almost all cases, yes. The declared investment plan exceeds IDR 10,000,000,000 (ten billion Indonesian Rupiah), and the licensing framework treats foreign investment as large business, so a PT PMA sits in the large band. Reducing the paid-up capital to IDR 2,500,000,000 (two billion, five hundred million Indonesian Rupiah) did not change this.
Did the 2025 capital reduction move a PT PMA into the medium category?
No. The 2025 regulation lowered the upfront paid-up capital to IDR 2,500,000,000 (two billion, five hundred million Indonesian Rupiah), while the total investment plan exceeding IDR 10,000,000,000 (ten billion Indonesian Rupiah) and the large-business treatment of foreign investment both remain.
What capital does a PT PMA need at incorporation?
The minimum paid-up capital is IDR 2,500,000,000 (two billion, five hundred million Indonesian Rupiah) under the 2025 regulation, and the Company Law requires the paid-up amount to be at least 25 per cent of the authorised capital. The total investment plan exceeding IDR 10,000,000,000 (ten billion Indonesian Rupiah) is realised progressively across the business plan.
Does the large classification mean a PT PMA pays more tax?
No. The corporate income tax rate is the same for every resident company. The third article in this series examines tax and the turnover-based reliefs in detail.
Can a large foreign-owned company operate in MSME-reserved sectors?
No. Presidential Regulation No. 10 of 2021 reserves certain business lines for cooperatives and Micro, Small and Medium Enterprises, and a large foreign-owned company sits outside those reserved lines.
This article provides general information on Indonesian investment and company classification as at May 2026 and does not constitute legal, tax or accounting advice. Regulations, capital requirements and reserved business lines change, and the position for any individual company depends on its sector, licensing and structure. Obtain advice specific to your circumstances before acting on any point set out above.
Acronyms and Indonesian-language terms
| Term | Full form | Meaning in this series |
|---|---|---|
| BKPM | Badan Koordinasi Penanaman Modal | The Investment Coordinating Board, now within the Ministry of Investment and Downstreaming, which receives the investment activity report and sets the licensing and capital rules. |
| BPJS | Badan Penyelenggara Jaminan Sosial | The social security administering bodies for health and for employment, to which an employer pays monthly contributions. |
| HPP | Harmonisasi Peraturan Perpajakan | The Harmonisation of Tax Regulations Law, Law No. 7 of 2021, which fixed the corporate income tax rate and the value added tax rate. |
| IDX | Indonesia Stock Exchange (Bursa Efek Indonesia) | The exchange on which a company lists to reach the 19 per cent public-company rate. |
| LKPM | Laporan Kegiatan Penanaman Modal | The investment activity report, the quarterly return on the realisation of a company’s investment. |
| NIB | Nomor Induk Berusaha | The Business Identification Number, the foundational licence issued through OSS. |
| OSS | Online Single Submission | The risk-based electronic licensing system that issues the NIB and receives the LKPM. |
| PKP | Pengusaha Kena Pajak | A Taxable Enterprise, the status a company takes for value added tax once its turnover reaches the registration threshold. |
| PPN | Pajak Pertambahan Nilai | Value added tax. |
| PPnBM | Pajak Penjualan atas Barang Mewah | The Sales Tax on Luxury Goods, charged on designated luxury items alongside value added tax. |
| PT PMA | Perseroan Terbatas Penanaman Modal Asing | A foreign-investment limited liability company, the entity through which a foreign investor operates in Indonesia. |
| RPTKA | Rencana Penggunaan Tenaga Kerja Asing | The Foreign Worker Utilisation Plan, the approval an employer secures before engaging a foreign worker. |
| SABH | Sistem Administrasi Badan Hukum | The Legal Entity Administration System of the Ministry of Law, through which corporate changes and the annual report deed are lodged. |
| WLKP | Wajib Lapor Ketenagakerjaan Perusahaan | The mandatory company manpower report filed with the Ministry of Manpower. |
Legal instruments cited in the series
| Instrument | Full title | What it governs in the series | Article |
|---|---|---|---|
| Entity, capital and governance | |||
| Law No. 40 of 2007 | Law on Limited Liability Companies | The requirement that at least 25 per cent of authorised capital is issued and fully paid. | 2 |
| Law No. 6 of 2023 | Job Creation Law, enacting the Government Regulation in Lieu of Law on Job Creation | The removal of the fixed minimum authorised capital for a company. | 2 |
| Govt Regulation No. 7 of 2021 | Ease, Protection and Empowerment of Cooperatives and Micro, Small and Medium Enterprises | The enterprise size bands that classify a PT PMA as a large enterprise. | 2 |
| Minister of Law Regulation No. 49 of 2025 | Requirements and Procedures for the Establishment, Amendment and Dissolution of Limited Liability Company Legal Entities | The annual report, approved by deed and lodged through SABH. | 1 |
| Licensing and investment reporting | |||
| Law No. 25 of 2007 | Law on Investment | The duty on every investor to report investment realisation, the basis of the LKPM. | 1, 4 |
| BKPM Regulation No. 5 of 2025 | Regulation of the Minister of Investment and Downstreaming, also Head of BKPM, on Risk-Based Business Licensing and Investment Facilities | The minimum paid-up capital, the investment plan, and the LKPM frequency and sanctions. | 2, 4 |
| Minister of Law and Human Rights Regulation No. 22 of 2023 | On the investor stay permit, as amended in 2024 and 2025 | The personal shareholding figure of IDR 10,000,000,000 (ten billion Indonesian Rupiah) for the investor permit. | 2 |
| Corporate and indirect tax | |||
| Income Tax Law | Law No. 7 of 1983 on Income Tax, as amended | The corporate income tax base, the Article 25 instalments, the Article 26 withholding on payments abroad, and the Article 31E turnover relief. | 3 |
| Law No. 7 of 2021 | Law on the Harmonisation of Tax Regulations | The 22 per cent corporate income tax rate and the value added tax rate. | 1, 3 |
| Govt Regulation No. 30 of 2020 | Reduction of the Income Tax Rate for Domestic Corporate Taxpayers in the Form of Public Companies | The 19 per cent rate for a qualifying listed company. | 3 |
| Govt Regulation No. 55 of 2022 | Adjustment of Income Tax Regulations | The 0.5 per cent final tax on turnover up to the small-business ceiling. | 3 |
| MoF Regulation No. 131 of 2024 | On Value Added Tax on Goods and Services | The value added tax base and the 12 per cent rate on goods carrying the Sales Tax on Luxury Goods. | 1 |
| MoF Regulation No. 136 of 2024 | On the Global Minimum Tax | The 15 per cent minimum effective rate for groups with consolidated revenue of EUR 750,000,000 (seven hundred and fifty million Euros) and above. | 3 |
| Employment, social security and records | |||
| Law No. 7 of 1981 | Law on Mandatory Manpower Reporting in Companies | The basis of the WLKP. | 1 |
| Govt Regulation No. 34 of 2021 | On the Utilisation of Foreign Workers | The RPTKA, and the WLKP as a precondition for a foreign-worker permit. | 1 |
| Law No. 24 of 2011 | Law on the Social Security Administering Bodies | The basis of the monthly BPJS contributions. | 1 |
| Law No. 8 of 1997 | Law on Company Documents | The ten (10)-year retention period for company records. | 1 |
| Regional comparators | |||
| Foreign Investments Act of 1991 | Philippine Foreign Investments Act | The minimum paid-in capital for a foreign-owned domestic-market enterprise, set beside the Indonesian figure. | 2 |
| Foreign Business Act of 1999 | Thai Foreign Business Act | The minimum capital for a foreign business, set beside the Indonesian figure. | 2 |
Where to read these instruments
The text of every Indonesian law, government regulation and ministerial regulation listed above sits in the national legal database maintained by the Audit Board, at peraturan.bpk.go.id, and on the government portal peraturan.go.id. As an example, Law No. 25 of 2007 on Investment is at peraturan.bpk.go.id/Details/39903.
For the operational side, the tax authority at pajak.go.id carries guidance on the income tax and value added tax points, while the licensing system at oss.go.id and the investment ministry at bkpm.go.id carry the licensing and capital procedures, together with the forms for the investment activity report. The two regional comparators sit with their own authorities, the Philippine Securities and Exchange Commission and the Thai Department of Business Development.
Each instrument in the reference table above links to its authoritative source. Most resolve to the Audit Board database, with the two Minister of Finance regulations housed in the Ministry of Finance database and the two foreign comparators housed by the Philippine Official Gazette and the Thai Department of Business Development. A direct document link can move when a database is reorganised, so the database root and portals above remain the reliable point of re-entry should any link change.
This reference summarises instruments as cited in the Reporting Year series, current at May 2026, and does not constitute legal, tax or accounting advice. Regulations are amended and replaced, and the position for any individual company depends on its own facts. Confirm the current text of any instrument at the source before relying on it.