Understanding KBLI Codes: A Crucial Step for Starting a Business in Indonesia
Starting a business in Indonesia requires a thorough understanding of various important steps, one of which is selecting the correct Indonesian Standard Industrial Classification (KBLI) code. Linda, a consultant at CPT Corporate, explained that KBLI codes are standardised classifications used by the Indonesian government to categorise and define various types of business activities.
"Understanding KBLI codes is crucial because they determine the legality of your business operations, as well as affecting licensing requirements, taxation, and access to government incentives," Linda said in a press release received on Sunday (20/4/2025).
KBLI codes consist of five digits assigned to specific business activities. The system was designed by the Central Statistics Agency (BPS) and is used by various government institutions, including the Ministry of Investment/BKPM and the Tax Office.
Linda explained that the code structure comprises: the first digit indicating the general economic sector; the second and third digits identifying the subsector; and the final two digits providing a detailed classification of the specific activity.
For example, code 62011 refers to Software Development Services, whilst 46311 refers to Wholesale Trade in Rice and Grains. "Understanding these differences is essential to ensure that your business registration is accurate and compliant with applicable regulations," Linda added.
**Why KBLI Codes Are So Important**
Linda outlined several reasons why selecting the correct KBLI code is vital:
Legal Compliance and Licensing: Various business activities require different permits or licences. Choosing the wrong KBLI code could result in your business being ineligible for certain permits or facing legal problems in the future.
Tax Implications: Your company's tax obligations depend on the type of business described through the KBLI code. For instance, trading companies and consulting firms receive different tax treatment.
Investment Opportunities and Incentives: Some KBLI codes are listed in the government's Positive Investment List, meaning they are open to foreign investment and may qualify for tax holidays or other incentives.
Business Operational Clarity: Your KBLI code defines the scope of your company's work. This clarity not only helps the government but also assists your clients and partners in understanding what your company can legally undertake.
**How to Choose the Right KBLI Code**
1. Define Your Core Business Activities: Begin by writing down your primary and secondary business activities. Be specific about the services you offer or the products you produce or distribute.
2. Search the KBLI Code Database: Use the official KBLI code list published by BPS or use the OSS portal, which typically has a search function to help match your business description with the appropriate code.
3. Match Codes with OSS Licensing: Not all KBLI codes are supported by the OSS system in the same way. Some can obtain licensing automatically, whilst others require manual verification or additional approval.
4. Seek Expert Assistance: Navigating the KBLI system can be complex, particularly for businesses with diverse or unusual activities. Consulting with company registration experts or legal advisers can help ensure the selected code aligns with your operational plans and regulatory requirements.
**Common Mistakes When Choosing KBLI Codes**
1. Choosing Codes That Are Too General or Inaccurate: Some businesses select codes that are too broad or do not accurately describe their core operations, leading to complications in future licensing or business audits.
2. Overlooking Additional Licensing Requirements: Some KBLI codes have specific licensing requirements. Failing to meet these due to mismatches can cause operational delays.
3. Not Updating KBLI Codes as the Business Grows: As your business expands and diversifies, your KBLI code may need updating. Many companies forget to update their KBLI codes when adding new services or entering new markets.
4. Using Unrecognised or Outdated Codes: Ensure you refer to the latest version of the KBLI code list. Old or invalid codes may no longer be accepted by the OSS system.
**Steps to Register a Company with the Correct KBLI Code**
Step 1: Prepare Your Business Plan. Clearly explain what your business will do. The more detailed the plan, the easier it is to match it with an accurate KBLI code.
Step 2: Choose Your Company Type. Determine whether your business will be structured as a PT (Limited Liability Company), PMA (Foreign Investment Company), or another structure. This can affect which KBLI codes are eligible.
Step 3: Search for Relevant KBLI Codes. Use tools provided by BPS, OSS, or experienced consultants to find codes matching your business activities.
Step 4: Register Through OSS. Once the appropriate KBLI code is selected, proceed to register your company through the OSS system, which will prompt you to enter the relevant code and automatically link it with the required licensing.
Step 5: Finalise Legal Documents and Licensing. After registration, complete the Deed of Establishment, tax registration, and sector-specific licences associated with your KBLI code.
Linda said that understanding and selecting the correct KBLI code is a fundamental step in registering a company in Indonesia. It affects everything from licensing, taxation, and foreign investment eligibility to operational clarity. By taking the time to conduct research and consult with experts, businesses can avoid costly mistakes and ensure their enterprise stands on a solid legal foundation.
"Understanding KBLI codes is crucial because they determine the legality of your business operations, as well as affecting licensing requirements, taxation, and access to government incentives," Linda said in a press release received on Sunday (20/4/2025).
KBLI codes consist of five digits assigned to specific business activities. The system was designed by the Central Statistics Agency (BPS) and is used by various government institutions, including the Ministry of Investment/BKPM and the Tax Office.
Linda explained that the code structure comprises: the first digit indicating the general economic sector; the second and third digits identifying the subsector; and the final two digits providing a detailed classification of the specific activity.
For example, code 62011 refers to Software Development Services, whilst 46311 refers to Wholesale Trade in Rice and Grains. "Understanding these differences is essential to ensure that your business registration is accurate and compliant with applicable regulations," Linda added.
**Why KBLI Codes Are So Important**
Linda outlined several reasons why selecting the correct KBLI code is vital:
Legal Compliance and Licensing: Various business activities require different permits or licences. Choosing the wrong KBLI code could result in your business being ineligible for certain permits or facing legal problems in the future.
Tax Implications: Your company's tax obligations depend on the type of business described through the KBLI code. For instance, trading companies and consulting firms receive different tax treatment.
Investment Opportunities and Incentives: Some KBLI codes are listed in the government's Positive Investment List, meaning they are open to foreign investment and may qualify for tax holidays or other incentives.
Business Operational Clarity: Your KBLI code defines the scope of your company's work. This clarity not only helps the government but also assists your clients and partners in understanding what your company can legally undertake.
**How to Choose the Right KBLI Code**
1. Define Your Core Business Activities: Begin by writing down your primary and secondary business activities. Be specific about the services you offer or the products you produce or distribute.
2. Search the KBLI Code Database: Use the official KBLI code list published by BPS or use the OSS portal, which typically has a search function to help match your business description with the appropriate code.
3. Match Codes with OSS Licensing: Not all KBLI codes are supported by the OSS system in the same way. Some can obtain licensing automatically, whilst others require manual verification or additional approval.
4. Seek Expert Assistance: Navigating the KBLI system can be complex, particularly for businesses with diverse or unusual activities. Consulting with company registration experts or legal advisers can help ensure the selected code aligns with your operational plans and regulatory requirements.
**Common Mistakes When Choosing KBLI Codes**
1. Choosing Codes That Are Too General or Inaccurate: Some businesses select codes that are too broad or do not accurately describe their core operations, leading to complications in future licensing or business audits.
2. Overlooking Additional Licensing Requirements: Some KBLI codes have specific licensing requirements. Failing to meet these due to mismatches can cause operational delays.
3. Not Updating KBLI Codes as the Business Grows: As your business expands and diversifies, your KBLI code may need updating. Many companies forget to update their KBLI codes when adding new services or entering new markets.
4. Using Unrecognised or Outdated Codes: Ensure you refer to the latest version of the KBLI code list. Old or invalid codes may no longer be accepted by the OSS system.
**Steps to Register a Company with the Correct KBLI Code**
Step 1: Prepare Your Business Plan. Clearly explain what your business will do. The more detailed the plan, the easier it is to match it with an accurate KBLI code.
Step 2: Choose Your Company Type. Determine whether your business will be structured as a PT (Limited Liability Company), PMA (Foreign Investment Company), or another structure. This can affect which KBLI codes are eligible.
Step 3: Search for Relevant KBLI Codes. Use tools provided by BPS, OSS, or experienced consultants to find codes matching your business activities.
Step 4: Register Through OSS. Once the appropriate KBLI code is selected, proceed to register your company through the OSS system, which will prompt you to enter the relevant code and automatically link it with the required licensing.
Step 5: Finalise Legal Documents and Licensing. After registration, complete the Deed of Establishment, tax registration, and sector-specific licences associated with your KBLI code.
Linda said that understanding and selecting the correct KBLI code is a fundamental step in registering a company in Indonesia. It affects everything from licensing, taxation, and foreign investment eligibility to operational clarity. By taking the time to conduct research and consult with experts, businesses can avoid costly mistakes and ensure their enterprise stands on a solid legal foundation.