A representative office in Indonesia (Kantor Perwakilan Perusahaan Asing, KPPA) is an office led by one or more people appointed by a foreign company to represent it locally. It may supervise, coordinate and prepare a PT PMA investment, but it may not earn income from Indonesian sources. Since October 2025 it is licensed under BKPM Regulation 5/2025 through OSS.
What is the legal basis for a representative office in 2026?
The framework is Government Regulation (PP) 28/2025 on risk-based business licensing and Minister of Investment and Downstreaming/BKPM Regulation 5/2025, plus sector rules for specialised offices.
PP 28/2025 took effect on 5 June 2025 and revoked PP 5/2021. Its implementing rule, BKPM Regulation 5/2025, was enacted on 1 October 2025 and revoked BKPM Regulations 3, 4 and 5 of 2021; the OSS system had to be aligned by 5 October 2025. Older guidance on paper licences or three-year terms is out of date.
Which types of representative office can a foreign company open?
BKPM Regulation 5/2025 (Article 24(3)) recognises five types of representative office of a foreign business entity, each with its own technical regulator.
| Type | Who uses it | Core licence | Technical regulator |
|---|---|---|---|
| KPPA (general representative office) | Foreign companies or groups in any sector | NIB as identity | Ministry of Investment and Downstreaming/BKPM |
| KP3A (foreign trading company representative office) | Foreign trading companies promoting their products | NIB and SIUP3A | Ministry of Trade |
| KP3A for e-commerce (PMSE) | Offshore e-commerce operators that meet set criteria | NIB and SIUP3A PMSE | Ministry of Trade |
| BUJKA representative office | Foreign construction services companies | NIB and construction licensing | Ministry responsible for construction |
| Foreign electricity support services office | Foreign electricity support services companies | NIB and electricity sector licensing | Ministry responsible for electricity |
For the wider menu of foreign-owned structures, see our overview of foreign companies in Indonesia.
What can a KPPA do, and what is prohibited?
A KPPA may only act as supervisor, liaison and coordinator for its parent or affiliates, look after their interests, and prepare the establishment and expansion of a PT PMA.
Article 270(3) of BKPM Regulation 5/2025 sets these limits:
- Permitted: market research, liaison with partners and government, coordinating group activity, preparing a PT PMA.
- Prohibited: seeking income from Indonesian sources, including entering into commercial sale or purchase transactions of goods or services between the parent and Indonesian parties.
- Prohibited: taking part in managing any company, subsidiary or branch in Indonesia.
- Required: an address in an office building in a provincial capital.
The head of a KPPA must live in Indonesia and may not also be a company director or head of another KPPA.
A KP3A's head must declare that the office does not trade or make sales; a KP3A for e-commerce may act only on consumer protection, local product competitiveness and dispute resolution (Minister of Trade Regulation 19/2026).
How do you set up a KPPA through OSS?
A KPPA must hold a business identification number (NIB), issued automatically through OSS once the minimum documents are uploaded, and valid for as long as the office operates.
Minimum documents under Article 270(2):
- The parent's articles and deed of establishment.
- A letter of appointment for the KPPA head, legalised by apostille or by the Indonesian mission abroad.
- A current office building lease.
- A letter from the Indonesian mission in the home country.
- Business activity data and a K3L (safety, health, environment) self-declaration.
For a KP3A, OSS forwards the NIB and SIUP3A application to the Ministry of Trade, which verifies it within 5 working days (Article 272). Deficiencies can be corrected at most twice, with 14 days for each round. BUJKA representative offices also apply through OSS; under Law 2/2017 on Construction Services (as amended by the Job Creation law), a BUJKA must have a qualification equivalent to the large category and carry out projects through a joint operation with a large-qualified Indonesian construction firm.
Next come NPWP tax registration, BPJS enrolment and, for foreign staff, work permits and KITAS. See also our guide to the company registration number in Indonesia.
What are a KPPA's tax and reporting obligations?
A KPPA earns no income, but it must withhold and report tax on its payments and file investment activity reports (LKPM).
| Obligation | Rule | Source |
|---|---|---|
| Article 21 income tax | As an employer, the KPPA withholds tax from staff salaries | pajak.go.id |
| Article 26 income tax | Withhold 20% of the gross amount on payments to non-residents, unless a treaty rate applies | pajak.go.id |
| Article 23 income tax | "Representatives of foreign companies" are Article 23 withholding agents on services, rent and certain other income | pajak.go.id |
| LKPM | Every six months through OSS: first half by 15 July, second half by 15 January | BKPM Regulation 5/2025, Article 295 |
If a KPPA signs contracts, invoices customers or earns commissions, the tax authority may treat it as a permanent establishment and assess corporate income tax. For foreign trading representative offices, Article 15 income tax deems net income at 1% of gross export value, taxed at a final 0.44% (special rules for treaty partners). Our explainer on the Directorate General of Taxes covers how audits and objections work.
How does a KPPA compare with a PT PMA?
A KPPA is an extension of the parent with no commercial activity; a PT PMA is an Indonesian legal entity that can sell, invoice and book profit.
| Aspect | KPPA | PT PMA |
|---|---|---|
| Legal status | Not an Indonesian legal entity | Indonesian limited liability company |
| Commercial activity | Prohibited | Permitted within its KBLI codes and licences |
| Capital | No minimum capital rule | Minimum issued/paid-up capital of IDR 2.5 billion and investment above IDR 10 billion per KBLI per location (excluding land and buildings) |
| Location | Office building in a provincial capital | Subject to zoning and location licensing |
| Corporate income tax | In principle no income | Corporate income tax on profit |
| Ownership | 100% foreign company | Per the Positive Investment List for each business line |
| BKPM reporting | LKPM every six months | LKPM quarterly for medium and large businesses |
The PT PMA figures come from Article 26 of BKPM Regulation 5/2025; Article 27 requires paid-up capital to stay in the company account for 12 months except for assets, construction or operations.
When should a KPPA become a PT PMA?
Move to a PT PMA once the business needs to sign local contracts, issue invoices, import in its own name or employ a sales team.
There is no automatic conversion: the investor incorporates a new PT PMA through OSS, moves staff and the lease across, then closes the KPPA. A typical trigger is customers asking to contract locally. JCSS Indonesia supports this restructuring through its PT PMA setup service.
Frequently asked questions
Can a representative office in Indonesia receive payments from local customers?
No. Article 270(3) of BKPM Regulation 5/2025 prohibits a KPPA from seeking income from Indonesian sources, including commercial sales or purchases between the parent and Indonesian parties. Head office funds all costs. To invoice Indonesian customers, the right vehicle is a PT PMA.
How long is a KPPA licence valid?
Under BKPM Regulation 5/2025 a KPPA holds an NIB as its identity, valid for as long as the office carries on its activities. Earlier rules on fixed-term KPPA licences that had to be renewed have been revoked. The office must still keep its OSS data current and file its six-monthly LKPM.
What is the difference between a KPPA and a KP3A?
A KPPA is a general representative office for any sector and needs only an NIB. A KP3A is for foreign trading companies and needs an NIB plus a SIUP3A verified by the Ministry of Trade. Neither may make sales; both are limited to promotion, liaison and market information.
Does a KPPA need a tax number and pay tax?
In practice yes: a KPPA registers for an NPWP because it is an employer and a withholding agent. It withholds Article 21 tax on salaries, Article 23 tax on certain services and rent, and 20% Article 26 tax on payments to non-residents unless a treaty rate applies. A KPPA that carries on commercial activity risks being treated as a permanent establishment.
Can a foreign national head a KPPA?
Yes. The head may be Indonesian or foreign, but must live in Indonesia and may not also serve as a company director or head of another KPPA. A foreign head needs a work permit and KITAS. A KPPA led by, or employing, foreign nationals must also employ Indonesian workers in line with manpower regulations.
Can a KPPA be converted directly into a PT PMA?
There is no direct conversion procedure. The investor sets up a new PT PMA through OSS, meeting the IDR 2.5 billion minimum capital rule, then transfers staff and the office lease in stages before closing the KPPA. Closure should include final tax filings and the last LKPM.
General information only, not legal or tax advice for your specific facts. Regulations change; confirm the current position with JCSS Indonesia before acting.