What is a dormant company in Indonesia?
A dormant company in Indonesia is a legally registered entity that has ceased or suspended commercial activities but continues to exist under Indonesian law. Under Article 146 of Law No. 40/2007, a company is deemed unable to continue operations if it remains inactive for three or more years, typically evidenced by a tax office notification.
The district court can do a dissolution of a dormant company, if only there is a submission of dismissal from the shareholders, board of directors, or commissioner.
It is important to distinguish between a “dormant legal entity” and a “non-active taxpayer.” Tax authorities classify companies as non-active taxpayers if they fail to meet obligations for three consecutive years, cannot be located, or have clearly ceased business. Dormant entities, however, may still retain certain legal responsibilities despite halting operations.
Within Indonesia’s Risk-Based Approach (RBA) framework, dormancy carries further implications. A company’s Business Identification Number (NIB) and risk classification remain valid even when commercial activity is suspended, meaning the OSS system continues to recognize the entity. This creates a compliance environment where dormant companies must preserve their legal status and manage reporting obligations, even though their operational responsibilities are reduced.
Why do companies go dormant in Indonesia
Indonesian businesses pursue dormancy for several strategic and operational reasons, each reflecting different market conditions and business objectives that make temporary suspension preferable to immediate dissolution.
- Market exit without liquidation represents the most common dormancy driver, particularly for foreign investors testing market viability. Companies experiencing poor market response or declining demand often choose dormancy to minimize losses while preserving the option to resume operations when conditions improve.
- A temporary operational pause frequently occurs during strategic restructuring or business model evaluation. Companies may suspend activities while assessing long-term viability, exploring new market segments, or waiting for regulatory changes that could affect their business environment. Foreign investment companies particularly benefit from dormancy during project preparation phases, as they can maintain their legal standing while developing infrastructure or securing additional approvals.
- Strategic restructuring motivations include management transitions, ownership changes, or operational consolidation. Multinational companies often place Indonesian subsidiaries in dormancy while the headquarter assumes operational control or during corporate reorganizations. This approach maintains legal presence while reducing operational costs and compliance burden during transition periods.
- Failed investment or regulatory delays represent another significant category, where businesses face permit processing delays, environmental approval challenges, or sector-specific licensing obstacles. Rather than dissolving entities that required substantial setup investment, companies choose dormancy to preserve their legal framework while resolving regulatory impediments.
Dormant companies in the RBA licensing system
OSS NIB and dormancy
The Business Identification Number (NIB) treatment for dormant companies creates unique compliance considerations within the OSS-RBA framework. According to Government Regulation No. 28/2025 and BKPM Regulation No. 4/2021, NIB remains valid as long as business actors carry out its business activities. That said, in practice, the government will consider a business actor still carry out its business activities until there is any dissolution process or revocation of license.
Dormant companies continue appearing as "active" in OSS-RBA systems because their legal registration remains intact. The OSS platform distinguishes between legal existence and operational activity, meaning dormant entities maintain their system presence while reporting zero or minimal business activities. However, this status requires careful management to avoid triggering compliance violations or system penalties for non-activity.
NIB validity for dormant companies depends on maintaining legal compliance rather than operational activity. Companies must ensure their legal registration remains current and that any required notifications about operational status are properly communicated to relevant authorities. Failure to maintain these requirements can result in NIB revocation even for legally dormant entities.
Impact on risk classification
- Dormant companies retain their original risk classifications based on their registered business activities, even when those activities are suspended. A dormant mining company remains classified as high-risk, while a dormant consulting firm maintains low-risk status, regardless of operational suspension. This classification continuity affects ongoing compliance obligations and reactivation requirements.
- Low-risk dormant companies benefit from simplified compliance structures, requiring primarily NIL reporting for tax obligations and basic corporate governance maintenance. These entities face minimal regulatory burden during dormancy, making extended dormant periods more economically viable for businesses with simple operational structures.
- High-risk dormant industries, including mining, pharmaceutical, or energy companies face enhanced scrutiny even during dormancy. These entities may require ongoing technical certifications, environmental compliance monitoring, or sector-specific reporting despite suspended operations. The RBA system recognizes that high-risk activities can create ongoing liabilities even when temporarily inactive.
- OSS reporting requirements for dormant companies vary by risk classification and company size. Small dormant companies typically submit semi-annual NIL reports, while medium and large dormant entities must maintain quarterly reporting schedules even without operational activity. This ensures regulatory visibility into dormant entity status and prevents the use of dormancy to avoid legitimate compliance obligations.
Legal and compliance responsibilities of a dormant company
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Category |
Obligations of dormant companies |
Consequences of non-compliance |
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Corporate governance |
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Regulatory reporting |
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Tax obligations |
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Mandatory Manpower Report (WLKP) |
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Non-compliance can result in sanctions, including a fine of up to IDR 1 million and/or a maximum 3-month imprisonment. |
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Employment and social security (BPJS) |
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General non-compliance risks |
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Options for dormant companies in Indonesia
Keeping it dormant (ongoing reporting needed)
Maintaining dormant status requires consistent compliance with reduced but ongoing obligations. Companies choosing long-term dormancy must establish systematic compliance processes, including NIL tax reporting, basic corporate governance maintenance, and regulatory status updates. Professional service providers often manage these obligations more cost-effectively than internal management for truly dormant entities.
Ongoing reporting requirements include quarterly or semi-annual LKPM submissions, monthly tax filings, annual WLKP submission, and annual AGM conduct. While simplified compared to operational requirements, these obligations require consistent attention and professional expertise to avoid compliance violations that could trigger penalties or licensing revocation.
Reactivating the company
Reactivation processes under the RBA system require reviewing current risk classifications and ensuring compliance with any regulatory changes implemented during dormancy. Companies must update their OSS profiles, restore operational capabilities, and demonstrate readiness to fulfill obligations associated with their risk classification levels.
Steps to restart operations include updating business activity declarations, securing any additional permits required for current operations, and restoring tax and employment compliance systems. Reactivation typically proves faster and simpler than incorporating new companies, but requires careful assessment of regulatory changes affecting the business sector during dormancy.
Selling or transferring ownership
Ownership transfer options for dormant companies create shelf company opportunities while introducing significant risks. Buyers acquire established legal entities with NIB registration and potential operational history, but also inherit any compliance deficiencies or hidden liabilities accumulated during dormancy.
Shelf company risks include undisclosed tax obligations, regulatory violations, or administrative penalties that transfer with company ownership. Due diligence becomes crucial for dormant company transactions, as buyers may face unexpected liabilities that exceed the perceived benefits of acquiring established legal entities.
Voluntary dissolution and liquidation
Step-by-step closure process begins with Board of Directors resolution and shareholder approval for company dissolution. The process requires appointing a liquidator, publishing dissolution notices in national newspapers, settling all obligations, and completing formal deregistration with the Ministry of Law.
Estimated timeline and costs for dissolution range from 12-24 months, depending on complexity. Professional dissolution services typically cost between IDR 50-150 million, including legal fees, newspaper publications, tax clearances, and administrative processing. While substantial, these costs often prove lower than long-term dormancy maintenance for entities with no reactivation plans.
Liquidation procedures include asset valuation, creditor notification, debt settlement, and final asset distribution. Companies must obtain tax clearances, cancel business licenses, and complete formal deregistration to achieve legal closure. Proper dissolution protects directors from ongoing liability and ensures a clean business exit from Indonesia.
Step-by-step guide: How to report and manage a dormant company under RBA
- File NIL tax reports via DJP Online requires accessing the official tax system at pajak.go.id and submitting zero-activity returns for both monthly (SPT Masa) and annual (SPT Tahunan) obligations. Dormant companies must maintain consistent filing schedules to avoid automatic penalties, even when reporting zero transactions or revenue.
- Submit LKPM NIL reports through OSS involves accessing the go.id platform and completing investment activity reports reflecting dormant status. Small companies report semi-annually by July 10th and January 10th, while medium and large companies maintain quarterly schedules with reports due April 10th, July 10th, October 10th, and January 10th.
- Submit WLKP involves accessing the https://wajiblapor.kemnaker.go.id/ and completing the manpower report, which, consist of information related to the employment aspects of the company. Initially, WLKP shall be submitted within 30 days upon the establishment of the company and renewed annually year before the expiration date of the previous report.
- Update BPJS employment status requires notifying both BPJS Kesehatan and BPJS Ketenagakerjaan of employee terminations or status changes. Companies must properly close employee coverage or maintain minimal compliance as required by regulations. Documentation of proper BPJS handling protects against future liability claims or administrative penalties.
- Notify OSS/BKPM of dormant status involves updating company profiles to accurately reflect operational suspension while maintaining legal registration. Proper notification ensures regulatory authorities understand the company status and can adjust oversight requirements accordingly. This communication helps prevent unnecessary compliance enforcement actions against legitimately dormant entities.
- Appoint legal or tax proxy for ongoing compliance management proves cost-effective for maintaining dormant company obligations. Professional service providers can manage routine compliance requirements more efficiently than company principals, especially for entities with no operational income. This approach ensures consistent compliance while minimizing ongoing management burden.
FAQs on Dormant Companies in Indonesia
How long can a company stay dormant in Indonesia?
Indonesian law does not specify maximum dormancy periods, but companies remaining inactive for three or more years can be subject to court dissolution upon request from shareholders, directors, or commissioners. Practical dormancy typically ranges from one to five years depending on business objectives and compliance maintenance capabilities.
Can a dormant company keep a bank account?
Dormant companies can maintain bank accounts but face practical limitations including account inactivity fees, periodic compliance reviews, and potential account closure by banks for extended non-use. Banks may require regular minimum transactions or impose maintenance fees that affect dormancy cost calculations.
Do dormant companies still pay taxes?
Dormant companies must file tax returns but typically owe no income taxes due to lack of revenue. However, they remain responsible for administrative compliance, potential property taxes, and other non-income based obligations. NIL filing requirements continue regardless of operational status to maintain legal standing.
What's the difference between deactivation and dissolution?
Deactivation (dormancy) suspends operations while preserving legal existence, enabling future reactivation. Dissolution permanently terminates the legal entity through formal liquidation proceedings. Deactivation proves reversible and typically less expensive, while dissolution provides permanent closure with higher costs and longer timelines.
Can a dormant PT PMA be reactivated easily?
PT PMA reactivation requires compliance assessment and regulatory updates but generally proves faster than establishing new entities. Companies must verify current risk classifications, update permits as needed, and demonstrate ongoing compliance with foreign investment requirements. Reactivation typically takes 2-6 months depending on business complexity and regulatory changes during dormancy.
Understanding dormant company management within Indonesia's RBA system requires balancing legal compliance with strategic business objectives. While dormancy offers advantages over immediate dissolution, successful management demands consistent attention to regulatory obligations and professional expertise to navigate evolving compliance requirements. Decision makers must evaluate dormancy costs against potential reactivation benefits while ensuring full compliance with Indonesia's complex regulatory framework.
