21 Mar 2016
How to do Multi Level Marketing (MLM) in Indonesia
Are you interested to do business in Indonesia that has more than 250 million people? Indonesia is the fourth biggest population country in the globe, which is 60% of population live in Java Island and 20% in Sumatera.
Initially, setting up a Joint Venture Company (or a PT/Perseroan Terbatas) is recommended. By regulation the composition of shareholder should be:
- 95% share owned by foreign companies / individuals (maximum)
- And 5% by local
To start the operation of a PT legally, it will takes around 1 up to 2 months.
Secondly, there are some tax registrations and legal licenses that a Joint Venture for MLM should obtain among others are:
- Tax ID Number (NPWP) and VAT Able Firm (PKP)
- Import License
- Product License (from BPOM)
- Business License for Direct Marketing (SIUP-L)
To obtain the legal licenses, it will take around 2 up to 3 months since the all required documents / information completed. Tax ID and VAT Able Firm can be obtained in 1 week after the all required documents submitted to tax office.
In addition, for renting the office space, we do not recommend to use virtual office as it will be hard to set the registration as VAT Able Firm (PKP). PKP is a must in order to do the obligation to levy and claim VAT upon selling and purchase / import.
Good Luck and Welcome to the 4th biggest market in the globe!
Agung Tjahjady SH, CPA, MM, BKP
Registered Tax Consultant, Advocate
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