Holding Company in Indonesia: Onshore or Offshore Parent?
Holding company in Indonesia: when a PT PMA can be the parent, how holding and head-office activity differ, and a parent onshore or offshore.
References (12)
- PP No. 28 Tahun 2025 on risk-based business licensing. Article 185(2)(e) places holding company activity in the investment sector. Annex I.T, row 1, makes it low risk at every business size, licensed by an NIB issued automatically, with a quarterly LKPM through OSS.
- Perpres No. 10 Tahun 2021 on the investment list, as amended by Perpres No. 49 Tahun 2021. Annex III, the list of fields open with conditions, has no row for holding or head-office activity.
- Peraturan BPS No. 7 Tahun 2025, the Indonesian business classification (KBLI 2025). Its descriptions of holding company activity and head-office activity separate owning subsidiaries from managing them.
- UU No. 25 Tahun 2007 (the Investment Law). Article 1, point 8, counts capital owned by an Indonesian company that is partly or wholly foreign-owned as foreign capital.
- Peraturan Menteri Investasi dan Hilirisasi/Kepala BKPM No. 5 Tahun 2025. Article 23(9) sorts investment into domestic and foreign. Article 26 sets the PT PMA investment plan and paid-up capital. Article 227(2)(b), (4) and (6) moves a company, and then its subsidiaries, to PT PMA status.
- UU No. 40 Tahun 2007 (the Company Law), as amended by UU No. 6 Tahun 2023. Article 7(1) requires at least two shareholders. Article 36 and its elucidation bar a company from issuing shares to a company it owns, directly or indirectly.
- The Income Tax Law, UU No. 7 Tahun 1983, as amended, latest by UU No. 7 Tahun 2021 and UU No. 6 Tahun 2023. Article 4(3)(f) excludes from tax the dividends a resident company receives from an Indonesian company. Article 18(3) lets the tax office re-determine income between related parties.
- The same Law, continued. Article 18(3c) covers the sale of an intermediary company abroad. Article 23(1)(c) requires withholding on management fees paid to a resident. Article 26 requires withholding on dividends and service fees paid abroad.
- PP No. 55 Tahun 2022. Article 9(2)(l) takes those dividends out of withholding.
- PMK No. 112 Tahun 2025 on applying tax treaties. Article 8(2)(c) sets the declarations on the DGT form, including an active business beyond receiving dividends, interest or royalties, and beneficial ownership.
- PMK No. 172 Tahun 2023 on transfer pricing. Article 13(1) sets the tests for a service between related companies. Article 13(2) lists the shareholder activity that is not a service.
- UU No. 28 Tahun 2007 (the tax procedures law, KUP). Article 4(4a) makes the financial statements attached to a return each taxpayer’s own.
Yes. A PT PMA (Perseroan Terbatas Penanaman Modal Asing), a foreign-invested limited liability company, can be a holding company in Indonesia. Holding activity is low risk at every business size, and its licence is the business identification number (NIB), issued automatically through the online licensing system, OSS (Government Regulation (PP) 28/2025, Article 185(2)(e) and Annex I.T, row 1). Holding activity is not among the fields the investment list makes conditional, so the list sets no foreign-ownership limit on it (Presidential Regulation (Perpres) 10/2021, as amended by Perpres 49/2021, Annex III). Its standing duty is a quarterly investment activity report (Laporan Kegiatan Penanaman Modal, LKPM) through OSS.
So the licence is simple. The two decisions that shape the group are which activity the parent registers, and whether the parent sits in Indonesia or abroad. An Indonesian parent receives dividends from its Indonesian subsidiaries untaxed. A foreign parent has them withheld, and needs the treaty form for a treaty rate. Which suits depends on the group, and we advise on that.
Holding or head office: two different activities
The Indonesian business classification, KBLI (Klasifikasi Baku Lapangan Usaha Indonesia), lists the two separately (KBLI 2025, Statistics Indonesia regulation (Peraturan BPS) 7/2025). In plain words:
Holding company activity
Owns the shares of one or more subsidiaries and answers for them as their owner. It may control them and consolidate their accounts, but does not manage them or provide them with services.
Head-office activity
Supervises and manages the other units of the company or group: strategy, organisational planning and decisions, and operational control of their day-to-day work.
The difference decides what the parent may do for its subsidiaries. The classification places managerial services, such as strategy, decision-making and head-office administration, under the head-office activity rather than the holding one.
Foreign status runs down the group
An Indonesian holding with even one foreign shareholder is a PT PMA, and it does not make the group local. The Investment Law treats capital owned by an Indonesian company that is partly or wholly foreign-owned as foreign capital, so a company the holding owns counts as foreign-invested too (Law 25/2007, Article 1, point 8; Investment Ministry regulation (Permeninves/BKPM) 5/2025, Article 23(9)).
When a local parent becomes a PT PMA, its subsidiaries must change status too, and each then meets the PT PMA rules (Permeninves/BKPM 5/2025, Article 227(2)(b), (4) and (6)).
A parent in Indonesia or abroad
Where the parent sits changes how money moves up the group. A foreign parent claims a treaty rate on the Directorate General of Taxes (DGT) form, the tax office’s treaty form, under Finance Minister Regulation (PMK) 112/2025. The form asks whether the parent has an active business beyond receiving dividends, and whether it is the beneficial owner (Article 8(2)(c)).
| In Indonesia | Abroad | |
|---|---|---|
| Dividends from Indonesian subsidiaries | Not taxed, and nothing is withheld | Withheld; a treaty rate needs the DGT form |
| Management fees | Withheld by the paying subsidiary | Withheld, with the same treaty route |
Sources: Income Tax Law, Articles 4(3)(f), 23(1)(c) and 26; PP 55/2022, Article 9(2)(l).
Each Indonesian company in the group files its own return on its own accounts (Tax Procedures Law, Article 4(4a)).
The steps for claiming a treaty rate explain how the form is certified and uploaded, and our guide to dividend tax gives the dividend rates.
In some cases, selling an offshore intermediary company can be treated as a sale of the Indonesian company’s shares (Income Tax Law, Article 18(3c)); our note on selling an intermediary company abroad explains how.
Charging subsidiaries a management fee
Match the registration to the plan
Management services sit under the head-office activity in the business classification, so the registered activity is best settled when the parent is set up — we advise on that.
The tax office tests a service fee between related companies. The service must really have been given, be needed by the subsidiary, and bring it an economic benefit. It must not duplicate work the subsidiary does itself (PMK 172/2023, Article 13(1)). Fees for the parent’s own shareholder activity, such as its shareholder meetings, consolidated reporting and group governance, do not pass (PMK 172/2023, Article 13(2)). Between related parties, the tax office may also re-determine income at what unrelated businesses would have agreed (Income Tax Law, Article 18(3)).
The subsidiary paying the fee withholds tax on it. What it may need to document is covered in transfer pricing documentation for a subsidiary.
Questions about a holding company in Indonesia
Can the holding company be a subsidiary’s only shareholder?
Can a subsidiary own shares in its parent?
Does a holding PT PMA need less capital?
What this means for you
Two choices shape a holding company in Indonesia: the registered activity and where the parent sits. We advise on how a group is structured, onshore and offshore, through our virtual CFO and business advisory work, and, where it suits, can help arrange an offshore company through our network partners. We also withhold and file the tax on management fees through our corporate tax service.