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Closing your company in Indonesia and Cessation of Tax Payments

Dissolving a company in Indonesia is a complex process, but once completed, it entails the discontinuation of company tax payments. This can be especially challenging for those unfamiliar with the country's regulations and requirements. Thankfully, there are steps you can take to ensure a seamless dissolution and the termination of tax obligations. In this blog post, we will delve into the obstacles associated with dissolving an Indonesian company and provide guidance on navigating them effectively. We will address queries such as which taxes must be settled prior to dissolution and how to calculate retroactive tax payments, among others.


Reasons for Dissolving a Company in Indonesia:

The decision to dissolve a company in Indonesia can be a challenging one and is motivated by various factors, such as the need to downsize, restructure, financial losses, or legal issues. Regardless of the reason, it is crucial for companies to carefully assess their options and ensure compliance with local regulations. Dissolving a company in Indonesia can be intricate and time-consuming due to the intricacies of domestic laws governing corporate dissolution. Moreover, it is imperative to correctly cease all tax payments during the dissolution process to avoid substantial penalties imposed by Indonesian tax authorities. Fortunately, with careful planning and research, companies can overcome these challenges and successfully complete the dissolution process in Indonesia. The Legal Process of Dissolving a Company:

The legal process of dissolving a company in Indonesia mandates strict adherence to prevailing regulations. The initial step involves initiating court liquidation, where an application for commencing winding-up proceedings is submitted to the relevant Commercial Court, following approval by either a shareholders' meeting or a board resolution. This decision is subsequently published in a local newspaper. Once approved, creditors are notified and given specific time frames to raise objections. Following this, any remaining assets are distributed in accordance with the company's articles of association. Subsequently, all necessary measures to discontinue company tax payments must be undertaken to finalize the company's dissolution. Consequences of Discontinuing Tax Payments:

Tax payments play a pivotal role in the process of dissolving a company in Indonesia and should not be halted until the dissolution process is completed. Failing to do so may result in severe consequences, including financial penalties and potential legal repercussions. It is crucial that companies ensure their accounts are up-to-date with all tax obligations before initiating the dissolution process, as any outstanding payments must be settled before the company's closure. Businesses should familiarize themselves with Indonesian tax laws and maintain compliance throughout the dissolution process to avert costly fines.


Strategies to Minimize Disruption During the Transition: During the dissolution of a company in Indonesia and the discontinuation of company tax payments, it is essential to implement strategies that minimize disruptions. Creating an effective plan that outlines each step of the process can ensure a smooth transition. Open communication with staff, creditors, shareholders, and suppliers throughout the dissolution process is vital for maintaining positive relationships. Seeking professional advice from legal or financial advisors can provide valuable insights for navigating potential legal or accounting challenges that may arise during the dissolution process. These proactive measures are instrumental in achieving a seamless transition when concluding operations in Indonesia and discontinuing company tax payments. Dissolution Procedures for Different Types of Companies: There are two types of PT (Perseroan Terbatas) closure processes: closure without liquidation and closure with liquidation, which typically takes more than one year to complete. For closing a PT without liquidation, the procedure includes:

  1. Holding a General Meeting of Shareholders for dissolution.

  2. Creating a Dissolution Deed in the presence of a Notary.

  3. Obtaining a Ministerial Decree of dissolution.

  4. Requesting the deactivation or revocation of the Taxpayer Identification Number (NPWP) at the Tax Office.

For dissolving a Foreign Investment Company (PT PMA) without liquidation, the steps are similar:

  1. Holding a General Meeting of Shareholders for dissolution.

  2. Creating a Dissolution Deed in the presence of a Notary.

  3. Obtaining a Ministerial Decree of dissolution.

  4. Requesting the deactivation or revocation of the Taxpayer Identification Number (NPWP) at the Tax Office.

Legal Basis: The dissolution process is governed by several legal regulations, including:

  • "Law No. 40/2007 on Limited Liability Company"

  • Ministry of Law and Human Rights Regulation No. 21/2021 on Procedures for Establishment, Amendment, and Dissolution of PT in Indonesia

  • "Head of Investment Coordinating Board Regulation No. 4/2021 on Procedures for Licensing and Investment Facilities for PT PMA"

Our team is available to provide you with a free consultation and guide you through the entire process. Don't hesitate to contact us for assistance. Dissolution of PMA PT Without Liquidation Package Price: IDR 28,000,000 This package includes services such as drafting Circular for Dissolution General Meeting of Shareholders, Dissolution Deed Minutes, Ministerial Decree of Dissolution, Revocation of Business License, and Deactivation of Taxpayer Identification Number (NPWP). Additionally, it covers the cost of newspaper announcements, which is required. For those looking to dissolve their company in Indonesia and discontinue company tax payments, Indofastvisa is here to assist and provide advice. Feel free to reach out to us for guidance!





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