Many business founders, including foreign investors setting foot in Indonesia for the first time, are drawn to virtual offices as their company’s registered address. The cost is far lower than renting physical space, particularly in the early stage when operations haven’t fully kicked off. The question that follows, and one often only realised once the incorporation process is already underway, is whether that address genuinely holds up legally, or whether it risks becoming a problem later on.
Every limited liability company is required to have a domicile in a city or regency within Indonesian territory, as stipulated in its articles of association, along with a full address matching that domicile, under Article 17 paragraph (1) and Article 5 paragraph (2) of Law Number 40 of 2007 on Limited Liability Companies (“Company Law”). Article 17 paragraph (2) further confirms that the domicile also serves as the company’s head office. In other words, whatever address is chosen automatically becomes the company’s head office in the eyes of the law, regardless of whether any actual workspace exists there. The Company Law itself neither prohibits nor permits virtual offices outright, which pushes the question down to more technical regulations and how the business licensing system verifies addresses in practice.
For DKI Jakarta, virtual offices were once formally recognised through Circular Letter of the Head of the One-Stop Integrated Service Agency of DKI Jakarta Province Number 06/SE/2016 (“SE 06/2016”). This circular drew a distinction between two groups of business operators: those already occupying an office or activity location that matched the zoning, and those operating out of a residence or non-permanent location such as a co-working space, the latter subject to additional criteria. The resulting domicile certificate had to list two addresses, the virtual office address and the address where actual business activity took place. That certificate service, however, was discontinued back in May 2019 under Decree of the Head of DKI Jakarta’s DPMPTSP Number 25 of 2019. Business location is now simply one of the data fields recorded under a company’s Business Identification Number (“NIB”). Under Article 207 of Government Regulation Number 28 of 2025 on the Organisation of Risk-Based Business Licensing (“GR 28/2025”), that location data is validated against the land and spatial planning system, while the company’s profile data is cross-checked against the legal affairs system. SE 06/2016 has, in effect, become a piece of policy history rather than something to rely on in practice, though the underlying requirement to pick a zoning-compliant address hasn’t gone anywhere.
Legality alone is not the whole story. Under GR 28/2025, which came into force on 5 June 2025 and replaced Government Regulation Number 5 of 2021, meeting the basic requirement known as Conformity of Spatial Utilisation Activities (“KKPR”) is now part of the process of starting a business. KKPR confirmation is issued based on whether the location matches the Detailed Spatial Plan (“RDTR”) already integrated into the Online Single Submission system, with approval or rejection handled automatically. What gets checked is whether the zoning at that location fits the business activity registered under the Indonesian Standard Industrial Classification (“KBLI”), not whether the address happens to be a virtual office.
That’s precisely why a virtual office in an office building generally poses no issue for businesses that don’t need a physical location, consulting services, software development, or a digital agency, for instance. For activities that genuinely require one, such as manufacturing, retail with a storefront, or restaurants, a virtual office address risks falling outside the zoning that’s needed, which can leave an application stuck or rejected outright. Either way, the outcome ultimately comes down to the RDTR at that location and the risk classification tied to the chosen KBLI.
Trouble can also surface after the licence has already been issued. Under Article 238 paragraph (3) in conjunction with Article 239 of GR 28/2025, routine supervision is carried out through examination of business operator reports and/or routine field inspections, including an assessment of compliance with basic requirements and business licensing obligations as set out in Article 240 paragraph (2) letter a of GR 28/2025. Discrepancies between the registered address, the business activity, and actual conditions on the ground tend to surface more readily at this stage, and in practice can also be raised when a company adds or changes its KBLI, or when a third party, a bank, say, asks for further clarification about the business location.
Nor is the address something that can simply be swapped out. A company’s full address sits within its legal entity data and is linked to the licensing system, so relocating means updating that record, and the new address still has to match the zoning required for the business activity. Meanwhile, SE 06/2016 continues to be cited in a fair amount of information circulating about virtual office legality, often without mentioning that the domicile certificate service was shut down back in 2019. Founders who rely on that kind of information alone risk discovering the mismatch only once the system has already rejected their application.
Plans to change or add a KBLI are worth thinking through well in advance, since new business activity can call for a different kind of location than the one already registered, and if that address doesn’t match the zoning, the change can stall out in the system entirely. It’s also worth flagging that this discussion centres on DKI Jakarta; other regions have their own RDTR and policies, so the same conclusions don’t automatically carry over elsewhere. Checking that business classification, zoning, and office type line up from the planning stage onward costs far less than fixing a domicile that’s already gone wrong, and what often gets dismissed as a minor detail at the outset of incorporation can end up determining how smoothly the company operates for years to come.
If you, a prospective client, have further inquiries about the topic discussed above, Schinder Law Firm is one of many corporate law firms in Indonesia that has handled numerous similar matters, with many experienced and professional corporate and civil lawyers in its arsenal, making it one of the top consulting firms in Indonesia. Feel free to contact us at info@schinderlawfirm.com for further consultation.
Author:
Dewi Susanti