Business Activities for KP3A
KP3As can act as the parent company’s selling, manufacturing, and buying agent in Indonesia. The parent company may also delegate tasks related to establishing branch offices in Indonesian cities to its KP3A.
However, because representative offices cannot generate income in Indonesia or issue invoices, all transactions should be under the parent company’s name.
Opening a KP3A is a good choice for a company with plans to create a network of agents and distributors in Indonesia.
Requirements and Prerequisites to Open a KP3A
The parent company must exist outside of Indonesia
The main business activities of the parent company should involve trading
The parent company must be the principal of products, not a broker
There must be an appointed Chief Representative Officer (CRO)
The appointed CRO can be an Indonesian national or a foreigner but must be a resident of the country.
If the CRO is a foreigner, the KP3A can apply for his or her work permit after establishment.
Its office must be in a commercial office building
A KP3A can establish its office anywhere and does not need to be in a capital city.
The parent company should also prepare the following documents:
Letter of Appointment
Letter of Intent
Letter of Statement
Timeline to set up a KP3A in Indonesia
The process to open a representative office in Indonesia is quicker and simpler than opening a limited liability company. The table below shows how long it takes for VIVO ASIA to acquire the documents necessary to establish a KP3A.
Documents obtained | Timeline in working days |
KP3A license | 1 day |
Tax registry | 3 day |
Total | 4 working days |
Compliance for KP3A
KP3As cannot earn income but will still need to report withholding taxes on a monthly basis. The KP3A pays withholding tax on:
Employee salaries
Office rental fees
Other administrative expenses.
The representative office must submit an activity report once a year to the Investment Coordinating Board (BKPM) of Indonesia. The activity report will be the basis for a license extension.
KP3As with more than 10 employees must also have an Institution of Social Security for Manpower (BJPS) registration.
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