Setup Representative Office in Indonesia 2026

Entering the Indonesian market in 2026 requires a careful, strategic, and regulation-aligned approach. Not all foreign companies are ready to immediately establish a Foreign Direct Investment Limited Liability Company (PT PMA) with a large investment commitment.

For organizations that are still in the stage of market exploration, business validation, operational supervision, or partner engagement, a representative office (Kantor Perwakilan Perusahaan Asing or KPPA) provides a safer and more efficient market entry path.

Through this structure, the parent company can establish an official presence in Indonesia without paid-up capital requirements, without commercial operating pressure on the entity, while remaining fully compliant with the legal framework under the Indonesia Investment Authority Regulation BKPM 5/2025.

XPND assists global companies in setting up a representative office in Indonesia through a structured and accurate process that is ready for administrative verification within the OSS RBA online licensing system, which is already integrated with taxation, manpower, and immigration authorities.

We position the KPPA as the appropriate business vehicle for the initial expansion stage. Our primary objective is to ensure that the company is legally present, cost efficient, and protected from compliance risks that are often overlooked in practice.

Why Choose a Representative Office in 2026

Under the current regulatory framework where the establishment of a PT PMA still requires paid-up capital, a representative office provides a market entry route without any capital deposit requirement. This becomes an efficient solution for companies that are still in the market exploration stage and are not yet ready to commit to a full investment structure.

Following the enactment of Regulation BKPM 5/2025, the initial paid-up capital for a PT PMA may begin at IDR 2.5 billion. However, beyond that amount, companies are still subject to obligations such as:

• Investment planning of more than IDR 10 billion for each business classification (KBLI)
• Paid-up capital placement that remains locked for 12 months
• Strict investment reporting and monitoring obligations
• A lengthy liquidation process if business activities are discontinued

The representative office remains a relevant low-risk market entry solution for companies that intend to:

• Conduct market research prior to committing to PT PMA formation
• Build networks and channels without direct sales activities
• Supervise production quality, projects, or suppliers in Indonesia
• Avoid early exposure to corporate taxation and Permanent Establishment risks

Through a representative office, companies benefit from:

• No paid-up capital requirement
• Operating funds allocated purely for administrative and office expenses
• A structure that functions as a cost center rather than a profit center
• A simpler office closure process compared to PT PMA liquidation

For many global companies, the combination of zero capital obligations and controlled operating flexibility makes the Kantor Perwakilan Perusahaan Asing a rational market entry route in 2026.

Types of Representative Offices Supported by XPND

Indonesia recognizes several types of representative offices, each governed by different regulatory frameworks depending on the nature of the parent company’s business activities.

XPND provides end-to-end support for all major representative office structures, including:

• KPPA (Kantor Perwakilan Perusahaan Asing)
  A representative office for non-commercial and service-based activities, commonly used for market exploration, liaison, supervision, and coordination functions. KPPA establishments are restricted to provincial capital cities.
• KP3A (Kantor Perwakilan Perusahaan Perdagangan Asing)
  A representative office for foreign trading companies, including supervision, promotion, and coordination of overseas trading activities. KP3A offices may be established in any city across Indonesia, subject to applicable licensing requirements.
• KP3A in the Field of Electronic Commerce (PMSE)
  A specialized form of KP3A for foreign electronic commerce operators, appointed to represent overseas digital trading platforms conducting cross-border electronic transactions with Indonesian users.
  This structure is led by one or more appointed individuals, either Indonesian or foreign nationals, acting as the official representative in Indonesia.
• BUJKA Representative Office (Construction Services)
  A representative office for foreign construction service providers, legally recognized as equivalent to a limited liability company for regulatory purposes within the construction sector. This structure is subject to sector-specific supervision and project-based compliance obligations.

XPND assists clients in determining the most appropriate representative office structure based on business scope, regulatory exposure, location flexibility, and long-term expansion plans.

XPND Representative Office Registration Services

XPND provides integrated services for the establishment and management of a representative office covering legal setup, immigration processes, and post-licensing compliance.

Legal Setup through OSS RBA

The XPND team manages the entire legal setup process for representative offices in Indonesia, covering all regulatory and administrative stages, including:

• Determination of the representative office type, based on whether the parent company operates in the services sector or trading sector. Service-based companies establish a KPPA (Kantor Perwakilan Perusahaan Asing), while trading activities fall under KP3A (Kantor Perwakilan Perdagangan Asing).
  Please note that KPPA may only be established in a provincial capital, whereas KP3A can be registered in any city across Indonesia.
• Preparation of core legal documents, including the Letter of Appointment, Letter of Intent, Letter of Statement, and Articles of Association, followed by Apostille legalization in the parent company’s country of origin.
• Submission of a formal application to the Indonesian Embassy in the parent company’s home country, including coordination for the mandatory presentation session before Embassy officials.
  This presentation covers the purpose of establishing a representative office in Indonesia and the parent company’s business profile and portfolio.
• Issuance of a Letter of Reference by the Indonesian Embassy upon completion of the interview and internal review process.
• Registration in the OSS RBA system after the Letter of Reference is obtained.
  For representative offices, no KBLI business classification selection is required at this stage.
• Issuance of the Business Identification Number (NIB) as the primary output from the OSS RBA registration.
• Processing of the company tax registration (NPWP) once the NIB has been successfully issued.

This structured approach enables clients to benefit from the automatic approval mechanism within the OSS RBA validation process.

Well-prepared and properly aligned documentation from the outset significantly reduces the risk of administrative revisions and supports faster approval within the applicable Service Level Agreement (SLA).

Immigration Requirements for the Chief Representative Officer

Under the 2026 regulatory environment, the Chief Representative Officer (CRO) is a central point of regulatory oversight.

The CRO is required to:

• Be appointed as an individual, not a legal entity
• Reside in Indonesia and hold a valid work stay permit (KITAS)
• Be accountable onsite as the official person in charge of the representative office

XPND assists clients in:

• Structuring the CRO position and preparing the Expatriate Manpower Utilization Plan (RPTKA) in compliance with Ministry of Manpower regulations
• Managing manpower notifications and calculating the Expatriate Compensation Fund (DKP TKA)
• Processing immigration and local registration, including of e-Visa, KITAS, SKTT (Certificate of Residence) from the Civil Registration Office, and STM (Police Registration Certificate) from the Police Station
• Designing the manpower structure to maintain a compliant ratio between foreign and local employees

With this approach, the appointment of the CRO and the organizational structure of the representative office can pass cross-system data verification between immigration and manpower authorities with higher certainty.

Tax Compliance and Cost Center Bookkeeping

XPND supports clients in maintaining a representative office structure that does not create indications of business activities classified as a Permanent Establishment. 

This is achieved by ensuring that representative office activities remain within a non-commercial framework administratively, operationally, and financially.

Although the representative office is not permitted to conduct commercial transactions, the entity is still subject to certain administrative tax obligations such as:

• Payroll withholding tax for employees
• Withholding tax on office rental and certain services
• Recording office operational expenses under representative office cost accounting

XPND ensures that all fund flows are recorded as transfers from the parent company rather than local revenue. 

This allows the representative office to remain within the definition of a non-revenue entity and mitigates the risk of reclassification into a Permanent Establishment with higher tax exposure.

2026 Compliance Update

The 2026 regulatory framework places representative offices under closer administrative supervision. Within this context, XPND ensures that clients remain protected from OSS RBA-related compliance sanctions, particularly regarding LKPM investment activity reporting deadlines and Chief Representative Officer residency obligations.

Key areas managed for clients include:

Residency Obligation for the Chief Representative Officer

Immigration travel data is now connected to the OSS RBA licensing system. 

A CRO who is formally registered as head of office but does not reside in Indonesia may trigger regulatory review.

XPND assists clients in structuring CRO placement that is:

• Valid from a residency and permit perspective
• Aligned with day-to-day work practices
• Consistent with data recorded across OSS and immigration systems

LKPM Reporting Obligations for Representative Offices

Representative offices are required to submit Investment Activity Reports (LKPM) periodically, even where no investment realization or revenue is recorded.

Beginning in 2026, the reporting deadline is set for the fifteenth of the following month.

Delays may result in:

• Automatic warnings in the OSS RBA system
• Temporary suspension of the Business Identification Number (NIB) affecting visa and administrative processes
• Revocation of representative office licensing if non-compliance persists

XPND provides LKPM preparation and submission services, including zero-activity reports, helping clients avoid systemic sanctions caused by administrative oversight.

Protection Against Hidden Tax Risks

In practice, tax exposure risk may arise where representative office activities are interpreted as sales or income-generating transactions in Indonesia.

XPND assists clients in maintaining non-commercial positioning by:

• Ensuring sales contracts are executed by company directors outside Indonesia
• Directing payments to the parent company’s offshore bank account
• Structuring negotiation and promotion activities so that they do not create administrative traces of local income receipt

Our focus is to provide tangible protection against Permanent Establishment risk rather than merely fulfilling formal registration procedures.

Ready to Set Up a Representative Office in Indonesia 2026

Administrative tolerance for non-compliance continues to narrow in the era of OSS RBA integration with taxation and immigration systems. At the same time, opportunities to establish a presence in Indonesia through a Kantor Perwakilan Perusahaan Asing remain open for companies that prioritize prudence and capital efficiency.

If your organization is considering a representative office as an initial market entry step, XPND can assist in assessing structural feasibility, preparing documentation, and managing the registration process until the representative office is fully ready to operate.

Please contact our team to schedule an initial consultation and receive a tailored structural assessment that aligns with your business model, risk profile, and expansion objectives.