Indonesia is a Southeast Asian country made up of thousands of islands. Each island is home to hundreds of different ethnic groups, and it’s a great place to expand your company. When preparing for an expansion, you need to look at every aspect of the process — setting up payroll, hiring employees, instituting a compensation and benefits plan, and establishing a subsidiary.
G-P can help with each facet of an expansion. As a global PEO, we use our existing subsidiaries to set up your payroll, hire employees, and more. With us, you don’t have to worry about analyzing your Indonesia payroll options or remaining compliant — we take care of everything.
Taxation Rules in Indonesia
Learning taxation rules in your native country is difficult enough, but you also need to learn Indonesia’s regulations before you expand. The country implemented a universal social security system in 2014 that covers all employees and residents under a single health care system starting this year and will include a single employment benefit system in 2029. Employers and employees each contribute about 5% of their earnings to the fund.
Indonesia uses a progressive personal income tax scale for all residents. The rates vary from 5% for employees making up to IDR 60 million to 35% for individuals making over IDR 500 billion.
Indonesia Payroll Options for Companies
You have multiple Indonesia payroll options, so you can choose one that fits your goals and business structure:
- Remote: If you have a large company in your country of origin, you can operate one payroll out of that location and add your employees in Indonesia to it. However, your two different sets of employees will have separate payroll regulations.
- Internal: Companies that plan to operate in Indonesia long-term may consider setting up an internal Indonesia payroll. You will need to hire additional staff to handle your HR and payroll.
- Indonesia payroll processing company: You can also choose to work with an Indonesia payroll processing company to outsource your payroll. Although this will take the stress of setting up your payroll off your shoulders, you will still be held compliant.
- G-P: Finally, you can work with G-P for Indonesia payroll outsourcing services. We manage your payroll and shoulder all compliance.
How to Set Up a Payroll in Indonesia
Generally, companies must incorporate in Indonesia before they can set up their payroll. However, G-P can help by using our Employer of Record solution. We will establish a locally-compliant payroll using our subsidiary, so you do not have to wait for weeks or months before starting to work in Indonesia.
Termination is often a difficult process in foreign countries. We recommend outlining entitlement and termination terms in an employment contract before you hire employees and add them to your payroll. Aside from providing a minimum notice period as per regulation, employers often need to pay standard severance, long service pay, compensation pay, and/or separation pay, depending on the reasons for employment termination.
Payroll Processing Company in Indonesia
G-P will ensure your Indonesia payroll is compliant, and help make your expansion easier. Contact us today to learn more.