Indonesia Real Estate - Foreign Ownership?
There are 3 main ways to own land real estate in Indonesia, listed below in order of lowest cost and simplicity and depend on whether your expected use of the land is private, business or major development.
LOCAL NOMINEE (USD$475.00)
This is the simplest and most cost effective way to hold real estate in Indonesia. The foreign purchaser has a local nominee as the title holder. The local nominee signs an irrevocable power of attorney over the land to the foreign buyer, ensuring they have no control over use, sale, subdivision or any material changes to the land use.
As a company we further strengthen the nominee agreement by using a qualified and registered land titles Notary (lawyer) as your local nominee. This ensures that their legal standing and profession are irreversibly tied to the nominee and power of attorney agreements with you. Finally, we draw a right of use agreement between the purchaser and the nominee stating, in summary, that you have a permanent right of use of the land with no end date.
PT COMPANY with Foreign Ownership (USD$2,300.00)
If you are going to undertake a business enterprise (renting out a few villas or buildings does not need to be classified as a business enterprise), we recommend establishing a local PT company with 100% foreign ownership. It gives you discretion on where you realize company profits (Indonesia, Singapore where tax rates are 15%, or elsewhere of your choosing).
A PT company is an Indonesian owned (by your nominee) company. This company, by way of local ownership, is subject to local tax rates and business law. This PT Company is 100% owned by your company outside of Indonesia, giving you absolute control over the operation, structure and distribution of any income or profits.
We further secure the above agreement with an irrevocable power of attorney from the local director to the foreign company and/or its directors, and we also lodge these documents with the government to further ensure compliance and adherence to the agreements.
PMA COMPANY (USD$8,500.00 and up)
If you are going to engage in developments or larger business (turnover above USD$1million), we recommend a PMA company. A PMA company can be owned 100% by foreigners, locals or a combination thereof and can own land directly for development. The PMA Company gets a "Right to Use" title over the land, called Hak Guna Bangunan (HGB). The company is granted a 30 year HGB title, with a first extension of 20 yrs. and subsequent extensions of 30 yrs.
The PMA Company has complete discretion over the distribution of income and profits, either locally or internationally. There is a general (but flexible) requirement that the PMA company is established with minimum assets of USD$100,000, but this amount can include any land purchased as an asset.
OTHER STRUCTURES (USD$POA)
There are other permutations of ownership such as joint ventures between foreign owned PMA companies and local PT companies, overseas ownership (through a PMA company) of local CV or PT companies and joint ventures between any of the 3 of them, and so forth. These options are more expensive to set up and normally completely unnecessary unless you want ownership structures simultaneously to involve several overseas companies in more than 1 country or have specific requirements for tax purposes that holding companies from tax free havens need to be involved in the structure.
We can provide complete assistance with all of the above methods of real estate ownership and can introduce you to legal professionals based in Indonesia and Singapore who are well experienced with this work.
Our team are very knowledgeable with supporting international investors and can answer any questions that you have, for more information please send us an email to: email@example.com
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