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How to Stop Paying Tax After the Dissolution of Your Company

Firstly, you need to understand that dissolving your company doesn’t mean that it has lost its legal entity status. To end a company’s legal entity status a liquidation process needs to be conducted. Liquidation according to the Indonesian Dictionary is “the dissolution of the company as a legal entity that includes the payment of liabilities to creditors and distribute the remaining assets to shareholders.”


The following conditions may be the reason to dissolve a company:[1]
  1. Based on the resolution of the General Meeting of Shareholders (here-in-after referred to as “GMS”);
  2. Expiration of the company’s establishment period as stipulated in its articles of association;
  3. Based on court order;
  4. Upon termination of a bankruptcy by a final and binding decision of the commercial court, the company’s bankrupt estate is not sufficient to cover the cost of bankruptcy;
  5. Because the company’s bankruptcy estate having been declared;
  6. Bankrupt is in the state of insolvency as governed by Law concerning Bankruptcy and Suspension of Obligations for Payment of Debt; or because the company’s business permit has been revoked, thus requiring the company to conduct liquidation under the laws and regulations.
The general reason to dissolve a company that occurred will be through the willingness of the shareholders. Thus, the dissolution shall be conducted through the resolution of GMS. Please note that in order to hold the resolution of GMS for company dissolution, ¾ (three-fourth) of the total shares issued with voting rights need to be present or represented. What to do if not all the shareholders are in Indonesia? A Circular Resolution can be an alternative, but for this to be executed, all of the company’s shareholders must agree to dissolve the company and sign the Circular Resolution.


After the company dissolution has been done, the liquidation process can be started by appointing a Liquidator. The liquidator can be appointed from a third party or can be represented by the Board of Directors (act as Liquidator). Important things to be done by the Liquidator are as follows:
  1. Placing an announcement in a daily newspaper with national circulation and State Gazette;
  2. Notify Ministry of Law and Human Right (MOLHR) concerning the dissolution of the company to be recorded in the company registry specifying that the Company is under liquidation;
  3. Announcement to all employees on dissolution plan;
  4. Obtaining a letter of Acknowledgement from MOLHR;
  5. Revocation of Company’s licenses and company registries, such as NPWP and business license. This is important, especially the revocation of NPWP for requesting tax clearance!
  6. Settlement process (calculating assets, settlement of liability, etc.);
  7. Liquidation report.
That having been said, a lot of paperwork needs to be done, but not to worry. We as a leading full-service legal firm for foreign investors to Indonesia, we represent to help establish companies. We also represent for dissolution of companies. If you choose to seek legal assistance, feel free to write to us at-info@schinderlawfirm.com

[1] Article 142 paragraph (1) Law No. 40 of 2007 on Company Law