A branch office is an official operational unit of a company that conducts business activities in a location different from the head office without forming a new legal entity. Under the Indonesian legal system, a branch office is considered a direct extension of the parent company. Therefore, all authority, responsibilities, and legal risks remain with the head office. A branch office is registered through the risk-based OSS system (OSS RBA), reported to the Ministry of Law and Human Rights, and linked to the company’s administrative and tax obligations in accordance with the Company Law. This branch office model is commonly used for regional expansion, operational efficiency, and lawful business representation without establishing a separate legal entity.
For business owners, consultants, and freelancers who are expanding their operations, understanding the concept of a branch office is essential to avoid mistakes in legal, tax, and operational aspects.
Legal Definition of a Branch Office
In general, a branch office is an official representation of a company in a specific region. It does not have a separate legal entity status. All of its activities are deemed activities of the parent company.
In Indonesian administrative practice, a branch office is registered through the OSS system, reported to the Ministry of Law and Human Rights, and connected to tax obligations with the Directorate General of Taxes.
Functions of a Branch Office in Business
A branch office serves as an operational point that brings the company closer to its market. Its functions include client services, marketing activities, project coordination, and formal representation of the company in a particular region.
For growing businesses, a branch office also helps enhance credibility and build trust with local partners without relocating the head office.
Read Also: Tips on How to Open a New Business Branch
Branch Office vs Head Office
The main difference lies in authority and decision-making power. The head office holds full authority over the company’s strategic policies.
Meanwhile, the branch office implements those policies operationally within a limited scope based on delegated responsibilities.
Requirements and Regulations for Establishing a Branch Office
To establish a branch office, a company must have a valid business address, be registered in the OSS system, and comply with local office zoning regulations.
In addition, the existence of a branch office must be administratively verifiable, although it does not always have to maintain a permanent physical office.
Also read: Opening a Branch Office in Indonesia: A Complete and Structured Guide
Does a Branch Office Have to Be a Physical Office?
This is a common question. The answer is not always. Current regulations allow a branch office to use a valid business address as long as it complies with zoning and administrative requirements.
This is where the concept of a virtual office becomes relevant as a modern solution for branch offices, especially for companies seeking cost efficiency and operational flexibility.
Virtual Office as a Branch Office Solution
A virtual office can be used as a branch office as long as the address is located in an officially designated office zone and is recognized by the government. This solution is ideal for companies that want a presence in multiple cities without the cost of conventional office leases.
For those expanding their business reach, this approach enables rapid expansion without compromising legal compliance.
Read Also: 6 Benefits of Virtual Offices for Companies and Employees
vOffice Virtual Office: The Right Choice for a Branch Office
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With experience since 2012 and tens of thousands of clients served, we believe vOffice is the right choice for those who want to establish a branch office that is legal, flexible, and credible.
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FAQ About Branch Offices
Is a branch office required to be registered?
Yes. A branch office must be registered through the OSS system and reported administratively as part of the parent company.
Does a branch office have its own Tax ID (NPWP)?
Generally, a branch office uses the head office’s Tax ID (NPWP), unless otherwise stipulated by regional tax regulations.
Can a branch office use only a business address?
Yes, as long as the address is valid, complies with zoning regulations, and can be verified administratively.
Who is responsible for a branch office?
Legal and operational responsibility remains with the directors or management of the head office.
