Establishing and running payroll in Indonesia
Indonesia’s economy is one of the fastest-growing in the world and is the largest in the Southeastern Asian region. With over 250 million people, several large cities, and a varied range of industries, Indonesia is undoubtedly an attractive place for foreign investment and expansion.
If your organization is interested in expanding into Indonesia, one of the first steps will be to hire staff and establish a system for Indonesia payroll outsourcing. This can be a long and difficult process in many cases, taking several months to complete and causing delays.
At New Horizons, we specialize in helping organizations of all kinds expand internationally, including into Indonesia. We can handle your payroll setup and management, even if you don’t have an entity registered in Indonesia.
Why choose the New Horizons payroll outsourcing solution?
If you have an entity
If your organization has already registered an official entity in Indonesia, then you can outsource your payroll setup and management to us.
This service is perfect for larger organizations that are looking to expand into Indonesia long term.
If you don’t have an entity
If you have not already officially registered an entity in Indonesia, then you can outsource your payroll setup and management to New Horizons, making use of our established Indonesia PEO to act as employer of record.
This option is well suited to organizations looking for a quick, low-risk, and flexible route into Indonesian hiring and expansion.
Simplifying your Indonesia Payroll processing
Indonesia payroll tax rate & laws
Taxation and withholdings requirements in Indonesia
Indonesia’s tax system is based on a progressive model, with employees paying a higher percentage in tax at higher income levels. This rate varies from 5% to 30% at the highest band. Additionally, Indonesia has a social security scheme to cover residents for healthcare.
Both employers and employees need to pay around 5% of salary to this fund. More social programs are pending, such as an upcoming benefit system, so it’s vital that you remain engaged and up-to-date with the regulations in order to stay compliant in the future.
The corporate tax rate in Indonesia is currently (2020) set at 22% of net taxable income, but a drop to 20% is due in 2022.
Entitlements and terminations in Indonesia
Any organization hiring employees in Indonesia should always provide a formal contract of employment with details of entitlements like maternity cover, vacation, and termination terms clearly stated.
For terminations, there is no mandatory notice period, but a severance payment is required. This payment can vary and is based on length of employment, the reason for termination, and other factors
How to establish Indonesia payroll outsourcing
In most cases, a foreign organization looking to establish Indonesia payroll will need to register an official entity within the country. This can take a long time and requires strict adherence to the complex regulations to ensure compliance.
New Horizons can simplify your entire employment and payroll process, helping you get up and running in days rather than months by setting up Indonesia payroll outsourcing so you can focus on building your presence in the country and bypass the red tape.