What Happens If You Don’t Operate Your Inactive PT PMA? 7 Hidden Risks Foreigners Can’t Ignore in 2025

Introduction

Indonesia continues to attract foreign investors with its thriving tourism, digital economy, and infrastructure development—especially in regions like Bali, Lombok, and Sumbawa. Many foreigners choose to establish a PT PMA (foreign-owned company) to operate legally in Indonesia. However, what happens when that business is not yet running or temporarily halts operations?

An Inactive PT PMA refers to a legally registered foreign-owned company that is not currently conducting any business activity—no transactions, no revenue, and often no employees. While this might seem harmless, an inactive status does not exempt the company from its legal responsibilities.

There are many valid reasons why a company becomes inactive. Perhaps permits are still being processed, a project is paused due to market timing, or investors are restructuring internally. Some companies are intentionally kept dormant as holding entities or long-term strategic vehicles.

However, it’s crucial to understand that even without activity, your Inactive PT PMA must still comply with Indonesia’s tax, legal, and reporting obligations. Failing to do so can lead to penalties, audits, or even blacklisting by the OSS system or BKPM.

In this article, we’ll explore the real risks of keeping a company inactive, outline compliance requirements, and guide you through maintaining or reactivating your business—without unnecessary headaches or fines.

Why Companies Become Inactive in Indonesia

There are many legitimate reasons why a company might temporarily pause its operations in Indonesia. For foreign-owned businesses, especially those in the early stages of development or operating in project-based industries, periods of inactivity are often part of the natural business cycle.

One of the most common causes is permit-related delays. A PT PMA may be legally established and have obtained its NIB (Business Identification Number), but still be waiting on sector-specific licenses, location permits, or environmental approvals. In industries like construction, tourism, or real estate, this process can take months, leading to prolonged periods where no revenue is generated.

Similarly, delays in hiring key personnel, finalizing vendor contracts, or waiting for equipment or materials to arrive can slow down operations—especially in remote areas like Lombok or Sumbawa.

Some companies operate under seasonal or project-based models, where active work only happens during certain months of the year. Others experience internal delays due to shareholder disputes, restructuring, or investment shifts, which can put operations on hold.

However, it’s important to understand that a temporary business pause does not make your company legally dormant in the eyes of the Indonesian government. There is no automatic “freeze” or “suspension” status simply because your company isn’t generating income.

An Inactive PT PMA is still required to fulfill all ongoing compliance obligations—including tax reporting, LKPM submissions, and OSS system updates. Many foreign investors assume that inactivity equals exemption, but the legal framework doesn’t work that way in Indonesia.

In short, your Inactive PT PMA still exists on paper—and that means it must play by the rules unless properly closed or liquidated. In the next section, we’ll explore what can go wrong if you neglect those responsibilities.

Legal and Financial Consequences of Non-Reporting

It’s a common misconception among foreign investors that if a company isn’t operating, it doesn’t need to report or pay taxes. Unfortunately, this assumption can lead to costly consequences. In Indonesia, even an Inactive PT PMA is still considered a legal entity—and that comes with strict reporting and compliance responsibilities.

One of the first risks is financial penalties from the DJP (Indonesian Tax Office). Every registered company must submit annual corporate tax reports (SPT Tahunan Badan) and, in many cases, monthly zero-activity reports. Failure to submit on time—even if your Inactive PT PMA had no income—can result in late penalties or estimated tax assessments based on assumptions by the authorities.

Your company may also be flagged by the OSS system, which monitors active compliance through the Online Single Submission portal. Continued non-reporting can lead to BKPM blacklisting, making it impossible to renew business licenses, obtain new permits, or even sponsor work visas (KITAS). This can also create issues for shareholders or directors seeking to remain in Indonesia legally, as immigration checks often tie back to company compliance records.

Additionally, neglecting these requirements increases the risk of a tax audit—even if your company hasn’t earned a single rupiah. Tax authorities may interpret inactivity without documentation as suspicious and investigate past records.

From a reputation standpoint, non-compliance signals carelessness to banks, partners, and potential clients. An Inactive PT PMA with unresolved filings may face challenges reopening a business account or entering joint ventures in the future.

To stay compliant, your Inactive PT PMA must:

• Submit annual tax reports (SPT) accurately and on time.
• File Investment Activity Reports (LKPM) with BKPM every quarter or semester, depending on the business stage.
• Ensure corporate taxes (such as minimum tax or NPWP-related filings) are paid if applicable.

Staying ahead of these obligations is far easier—and cheaper—than dealing with legal clean-up later.

Annual Compliance Checklist for Inactive PT PMAs

Just because your company is inactive doesn’t mean it’s invisible to regulators. An Inactive PT PMA must still meet multiple compliance requirements annually (and in some cases, monthly or quarterly) to remain in good legal standing. Failing to fulfill even one obligation could lead to penalties or status revocation.

1. Tax Office (DJP – Direktorat Jenderal Pajak)

Even if your Inactive PT PMA has zero revenue or no operational activity, you must still:

• Submit Monthly Tax Reports (PPh 21, PPN, etc.) showing “Nihil” (zero) status where applicable.
• File the Annual Corporate Tax Report (SPT Tahunan Badan) by the end of April each year. This confirms your business status—even if dormant.
• Maintain an Active NPWP (Taxpayer Identification Number). The only way to stop this obligation is by formally closing your company through liquidation.

2. BKPM & OSS (Online Single Submission – RBA System)

The Inactive PT PMA is still required to:

• Submit LKPM (Investment Activity Reports) quarterly (for new businesses) or bi-annually (for established ones).
• In the LKPM, include a note clearly explaining the inactivity and status (e.g., “no operational activity during this period due to pending permits”).
• Failure to submit LKPM can result in blacklisting by BKPM, affecting future licensing, business renewals, and foreign directorship.

3. Other Legal & Operational Requirements

• NIB & Business License Renewal: Your NIB must be updated in the OSS system if there are changes in address, business activities, or structure.
• Minimum Capital Maintenance: While not always enforced, many business lines require minimum capital to remain deposited during the active lifespan of the PT PMA.
• Notarial Resolutions: Any shareholder, director, or structure change must be documented via a notary and reported to the Ministry of Law and Human Rights.

In short, an Inactive PT PMA must be treated like a real business on paper. It’s not enough to “pause” activity—you must actively report your inactivity to remain compliant.

How to Legally Maintain an Inactive PT PMA

Keeping your Inactive PT PMA compliant doesn’t have to be complicated—but it does require consistency and knowledge of local regulations. The goal is to ensure your dormant company is still legally recognized, financially traceable, and ready to reactivate at any time.

1. Work With a Compliance Partner or Outsourcing Agency

Partnering with a trusted local agency like Synergy Pro can save you time and money. These firms handle tax filings, LKPM reporting, OSS updates, and can act as a liaison with local authorities. For an Inactive PT PMA, this ensures nothing falls through the cracks while you’re not operational.

2. Assign a Local Representative or Nominee Director

If your foreign directors are abroad or not available to sign reports, appointing a local nominee or trusted representative is useful. They can help manage ongoing reporting tasks and maintain legal standing for your Inactive PT PMA.

3. Declare “No Activity” Properly Through OSS

Within the OSS-RBA system, there is space in your LKPM (Investment Activity Report) to note your operational status. Be transparent—declare that your company has no transactions during the reporting period. This protects you from audits while still fulfilling legal obligations.

4. Continue Basic Bookkeeping

Even without revenue or expenses, it’s important to maintain minimal accounting records—especially for tax and audit readiness. A clean audit trail makes reactivation smoother and avoids suspicion from authorities.

5. Update Employee or Immigration Records

If your Inactive PT PMA holds KITAS or sponsors foreign workers, ensure BPJS (health/social security) and immigration statuses remain updated. Dormancy doesn’t suspend employer responsibilities unless formally declared.

With these measures, your Inactive PT PMA stays legally “alive” while paused—and avoids costly penalties or operational setbacks.

Reactivating an Inactive PT PMA: Step-by-Step

If you’re ready to bring your Inactive PT PMA back to life, the process is very manageable—provided you’ve maintained compliance during the dormant period. Reactivation involves both administrative updates and strategic restarts. Here’s how to do it properly:

1. Update NIB and Business Status in OSS

Begin by logging into the OSS-RBA system and updating your company’s business status. Ensure that your NIB (Business Identification Number) and other permits are still valid. If there have been changes in business activities, address, or ownership, those must be amended immediately.

2. Resume LKPM Reporting with Forecasted Activities

Submit your next LKPM report with updated projections and planned activities. This shows BKPM that your Inactive PT PMA is now operational and planning to contribute to Indonesia’s economy again. Be specific about business sectors, hiring plans, and estimated investment.

3. Rehire or Reactivate Employee Structure

Update your company’s workforce—either by rehiring previous staff, recruiting new employees, or activating BPJS Ketenagakerjaan and Kesehatan for ongoing contracts. If your company sponsors KITAS, notify immigration authorities accordingly.

4. Restart Business Operations and Notify Stakeholders

Announce your return to clients, vendors, banks, and relevant partners. Reopening a business line or resuming contracts is also a key indicator to regulators that your Inactive PT PMA is back in business.

5. Legalize Structural Changes If Needed

If your shareholding, board of directors, or capital structure has changed during dormancy, these must be legalized via a notary and reported to the Ministry of Law and Human Rights.

By following these steps, you’ll ensure a smooth and compliant return for your Inactive PT PMA—ready to operate and grow again.

Should You Close Your Inactive PT PMA?

Not every business plan goes as expected. If restarting operations is no longer feasible—due to market changes, financial limitations, or a shift in strategy—then closing your Inactive PT PMA might be the wiser option.

Shutting down a foreign-owned company in Indonesia must be done formally. This involves several legal steps, including a final tax audit, shareholder resolution notarized by a public notary, and official deregistration with BKPM and OSS. It’s not as simple as abandoning the business—it must be officially liquidated to avoid future liabilities.

The cost of maintaining an Inactive PT PMA—with mandatory reporting, accounting, and licensing renewals—can quickly add up. If there's no intent to reactivate in the near future, the long-term expense and risk of non-compliance may outweigh the effort of a proper closure.

More importantly, improper exit can lead to blacklisting by Indonesian authorities, making it difficult to open another company, re-enter the market, or even secure a future visa under your name.

A clean, documented exit allows you to preserve your reputation and remain legally clear for any future business endeavors in Indonesia.

Conclusion: Inactivity Is Not Exemption

Having an Inactive PT PMA doesn’t mean your responsibilities disappear. Even when your business isn’t generating revenue or operating actively, it is still recognized as a legal entity under Indonesian law. This means taxes must be reported, licenses maintained, and regulatory filings submitted on time.

Failing to comply with these obligations can lead to serious consequences—financial penalties, blacklisting, or even difficulties when attempting to reactivate your company in the future. The good news? With the right support, staying compliant is manageable.

Whether you plan to keep your Inactive PT PMA dormant for strategic reasons or are preparing for reactivation, it’s best to work with a trusted local advisor who understands the legal and regulatory landscape. Taking proactive steps today ensures that your company remains in good standing—and ready to operate again whenever the time is right.

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