For foreign investors holding shares in an Indonesian PT PMA, the ability to bring profits back to their home country is an important consideration. In principle, Indonesian law permits investors to transfer and repatriate investment-related funds, including capital, profits, dividends, interest, royalties, and proceeds from the sale or liquidation of an investment. However, the ability to repatriate funds in principle does not mean that the process is free from procedural, tax, or corporate requirements.
Indonesia is, in principle, fairly accommodating on this point. Article 8 of Law No. 25 of 2007 on Investment recognizes an investor’s right to transfer and repatriate funds in foreign currency, subject to applicable laws and regulations. This framework is complemented by Indonesia’s foreign exchange regime, under which foreign exchange transactions are generally permitted. The practical process, however, is typically handled through the company’s bank and may require supporting corporate, financial, tax, and transaction documents.
For dividend payments, the first consideration is whether the Indonesian company is legally able to distribute the dividend. Under Law No. 40 of 2007 on Limited Liability Companies, the use of the company’s net profit, including the allocation of statutory reserves and distribution of dividends, must be determined in accordance with the applicable corporate approval requirements. Dividends may only be distributed if the company has a positive retained earnings balance after taking into account accumulated losses. As a result, a company may generate profit in a particular financial year but still be unable to distribute dividends if previous accumulated losses have not been cleared.
Tax is another important part of the repatriation process. Dividends paid by an Indonesian company to a foreign taxpayer are generally subject to Article 26 of the Income Tax. However, an applicable tax treaty may provide a lower rate if the relevant requirements are satisfied, including the required tax residency documentation. The Directorate General of Taxes expressly provides that treaty rates may be applied where the foreign recipient qualifies and the required Certificate of Domicile or DGT form is available.
For investors in certain natural-resource sectors, additional foreign-exchange requirements may also apply. The regulations governing Devisa Hasil Ekspor from natural-resource activities impose requirements concerning the placement and retention of certain export proceeds within Indonesia’s financial system. These requirements have been amended since the issuance of Government Regulation No. 8 of 2025, including through Government Regulation No. 2 of 2026 and Government Regulation No. 21 of 2026, and therefore should be reviewed based on the relevant sector and the applicable rules at the time of the transaction.
Repatriation should therefore be considered as part of the investment structure rather than as a step taken only after a dividend has been declared. The company should ensure that its corporate approvals, financial statements, tax position, shareholder documentation, and banking records are properly maintained. For a planned divestment or liquidation, the same principle applies: the tax and corporate implications of transferring sale proceeds or liquidation proceeds should be assessed before the transaction is implemented.
For foreign investors, the key issue is therefore not whether Indonesian law generally permits repatriation, but whether the relevant corporate, tax, banking, reporting, and sector-specific requirements have been properly addressed. Proper planning can help reduce delays, avoid unnecessary tax costs, and ensure that dividends and other investment proceeds can be transferred in accordance with Indonesian law.
Schinder Law Firm advises Indonesian and international businesses on foreign investment, dividend distributions, tax-related matters, corporate structuring, and investment exits. For further information, please contact info@schinderlawfirm.com.
Author:
Dewi Susanti