Overview of Bookkeeping Obligations under Indonesian Law
Every company operating in Indonesia — including Foreign Investment Companies (PMA companies) — must maintain proper bookkeeping in accordance with tax and accounting regulations.
These obligations come from the Taxation Law, the Ministry of Finance Regulations, and the Indonesian Financial Accounting Standards (PSAK).
Because of this framework, financial records must be prepared in Indonesian Rupiah (IDR) and in the Indonesian language to ensure clarity and transparency.
Mandatory Use of Rupiah for Bookkeeping
PMA companies must follow several core requirements.
First, they must keep their books of accounts in Indonesian Rupiah.
Second, they must prepare financial statements using PSAK.
Third, they must store and archive all bookkeeping documents inside Indonesia.
These rules make it easier for tax officers to review financial information and verify compliance.
Moreover, they help ensure consistency across different businesses and sectors.
Exceptions: USD and English Bookkeeping
Although Rupiah is the default currency, some companies may apply for approval to use U.S. Dollars (USD) and English.
To receive this approval, a company must:
- Submit a formal request to the Ministry of Finance (MoF) or Directorate General of Taxes (DGT);
- File the request at least three months before the next fiscal year begins; and
- Demonstrate that its business operations justify the use of USD or English (for example, frequent foreign currency transactions or multinational reporting needs).
Once the request is approved, the company may prepare all accounting records in USD and English.
In addition, the company may continue using this system as long as the approval remains valid.
Language Requirements for Accounting and Reporting
By default, companies must prepare their accounting books in the Indonesian language.
However, the Ministry of Finance may permit the use of another language if the company meets specific criteria.
For example, permission is often granted to:
- Export-oriented companies;
- Subsidiaries of multinational groups; and
- Joint venture companies that require bilingual reporting.
Even so, regulators may request Indonesian translations of accounting documents.
Therefore, companies must ensure that translated versions are ready when needed.
Document Storage and Compliance Requirements
PMA companies must keep financial documents and accounting data within Indonesia.
In practice, they must:
- Maintain physical or digital archives securely;
- Store records for at least ten years to meet tax requirements; and
- Ensure that documents are always available when requested by authorities.
If a company does not meet the storage or reporting rules, it may face administrative sanctions or tax adjustments.
Because of this risk, strong record management systems are essential.
Practical Implications for PMA Companies
For most PMA companies, using Rupiah-based and Indonesian-language bookkeeping is the simplest approach.
However, multinational or export-focused companies often benefit from bookkeeping in USD and English because it improves alignment with global reporting.
Furthermore, this system helps streamline consolidation with parent companies overseas.
To avoid compliance issues, companies should work with professional accountants or tax consultants.
These experts can help maintain accurate reporting systems and guide companies through approval procedures.
Conclusion
In summary, PMA companies must maintain bookkeeping in Rupiah and Indonesian language, and store their records within Indonesia.
However, they may apply for permission to use USD and English if they meet the necessary requirements.
Timely applications and accurate documentation are essential for compliance.
This flexible system supports multinational investors while maintaining Indonesia’s commitment to financial transparency and regulatory oversight.