Easily manage employment in Indonesia

Payroll services in Indonesia

Indonesia has a growing economy with key industries in manufacturing, tourism, and agriculture. With specific labor laws and tax regulations, employers in Indonesia must ensure compliance with local payroll requirements, including social security contributions, employment contracts, and tax obligations. Understanding these regulations is essential for smooth payroll operations and legal compliance.

Payroll breakdown in Indonesia

Employers in Indonesia must adhere to national payroll regulations regarding wages, taxes, and social contributions. Below is an overview of key payroll components:

Minimum wage and working hours

• Minimum wage: Indonesia’s minimum wage varies by region, with Jakarta’s minimum wage set at IDR 4,901,798 per month.
• Payroll frequency: Salaries are generally paid monthly.
• Standard working hours: The normal workweek in Indonesia is 40 hours, typically spread over five or six days.
• Overtime: Employees are entitled to additional pay for overtime work, calculated at 150% of the regular wage for extra hours and 200% for work on public holidays.

Taxation and social security contributions

• Personal income tax: Indonesia has a progressive income tax system with rates ranging from 5% to 35% depending on income levels.
• Employer contributions:
• Social Security (BPJS): 5.74% of the gross salary.
• Pension fund: 2% of the gross salary.
• Employee contributions:
• Social Security (BPJS): 4% of the gross salary.
• Pension fund: 1% of the gross salary.
• Corporate tax: The corporate income tax rate in Indonesia is 22%.
• Tax reporting: Employers must file payroll taxes and contributions with the Indonesian tax authorities regularly.

Payroll compliance in Indonesia

• Employment contracts must be provided in writing and specify terms such as salary, working hours, and job responsibilities.
• Payroll deductions: Employers must ensure accurate deductions for social security and income tax.
• Employers must stay updated on changes to Indonesia’s labor laws and tax regulations to avoid penalties.

Run payroll in Indonesia with Remote

Managing payroll in Indonesia requires careful attention to tax regulations, employment laws, and social security requirements. Employers must stay informed about tax rates, wage laws, and reporting deadlines to ensure smooth payroll processing and avoid penalties.

The good news is, you can pay anyone, anywhere — from your team in the office to your team abroad, all with Remote Payroll. To see just how easy global payroll can be with Remote, book a demo today.