Obtaining a domicile letter is extremely important because it is the prerequisite document that you have to submit to start your company registration in Indonesia, especially when your company is a PMA (a foreign direct investment). Without this letter, you will never eligible to register your company.
To obtain a domicile letter is actually not a difficult process. However, without prior knowledge of Indonesian law and its bureaucracy, you will be trapped in an endless process that is not only time consuming, but also costly. In this article, we will provide you with a step-by-step instruction to get a domicile letter plus several free samples of documents that will show you exactly what you need to legalize your business in Indonesia.
WHAT TO PREPARE
The first and most important document to file when you wish to get a domicile letter is a rental agreement. Therefore, it is crucial to decide where you wish to run your business—whether in an office building, a virtual office, or a residential area.
Please be aware that certain cities in Indonesia do not allow a residential address to be used as a business address. However, some other regions permit the use of a residential address as a business address when the nearby community members certify through a written permit letter that they do not mind if a business or a commercial activity takes place in their neighborhood.
In addition, many companies want to cut their budget for an office space by having a virtual office. A virtual office is often viewed as an efficient and profitable solution, not only because the company will save some amount of cash to actually rent a physical office building, but also because it can focus more on its market entry strategy and its market characteristics before it actually expands. However, you have to carefully check the regional policy regarding to the use of virtual offices because there may be some special rules to regulate it.
TO SUM UP, HERE ARE THE STEPS TO GET A DOMICILE LETTER:
1. FIRST STEP
Prepare these documents:
- A copy of investment agreement license for the PMA.
- A copy of Deed of Establishment and its amendment.
- A copy of corporate’s director ID Card.
- A copy of passport.
- A copy of rental agreement or lease of the business site/office.
- A real reference letter from the neighborhood head (RT) and the ward head (RW) if your office is in the residential area (please carefully check whether or not the city where your business is located permit you to run businesses in the residential area).
- A real reference letter from the building owner/landlord.
- A copy of the latest proof of the property tax from the landlord.
- A photograph of Director or the responsible person of the company in red background
- Photo which shows the workstation and the company name in front of the enter door
- The Ratification Letter from the Ministry of Law and Human Right
Kindly note that normally, first the village officer issue the domicile letter, it is only valid for 1 month just to continue further process. Once all the process is done (until TDP – company registration certificate), we need to change again the domicile letter to the village office and this letter will be valid for 1 year.
2. SECOND STEP
Give those documents to the urban village office (kantor kelurahan). The officers will do some administrative check to make sure that all the documents are acceptable. Then, you will receive a signature from the urban village head (lurah).
3. THIRD STEP
Bring the letter to the sub-district office and you will receive a letter of domicile signed by the sub-district head.
THE PERIOD OF VALIDITY
The domicile letter for PMA is valid for 1 (one) year after it is issued by the sub-district office.
SAMPLE OF DOMICILE LETTER
(Domicile Letter – pdf version)
CHANGING YOUR BUSINESS LOCATION
Before we discuss further about changing your business location, we underline that it is important to think about your business location carefully before you get your first domicile letter.
It is because changing your business address can be a cost and time ineffective process. Because the domicile letter is the initial document needed for further legal process, you may need to complete all the bureaucracy procedures once you change your business address. In the case that you move across cities, you are likely to do all the legal process, which means that you need to re-register your company in the new location.
THERE ARE SOME LEGAL CONSEQUENCES IF YOU CHANGE YOUR BUSINESS ADDRESS, INCLUDING:
1. Changing your SIUP (Trading Business Permit) document
2. Changing your Domicile Letter.
If you move to a different urban village (kelurahan) or sub-district (kecamatan) of the same city, you need to also change your:
Principal License (Ijin Prinsip)
Tax data (NPWP)
Business Registry (TDP)
If you move to a different city, you should change the following documents:
The 3 documents above, plus:
Your Article of Association, and
The Ratification Letter from the Ministry of Law and Human Right
It means that you almost re-do all of the company registration process.
Because the bureaucracy is quite complicated, especially if are not familiar with Indonesian law system, it is highly advisable to always consult to someone with expertise in legal issues and PMA establishment. If you have further questions – contact us, we can help you.
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