Managed Payroll Services in Indonesia

  • Payroll Processing Indonesia

  • Fund Management Indonesia

Our Indonesia-based payroll services provide a professional and expert partnership to both small and large businesses. We are a trusted partner providing personable and reliable services covering auditing of past payroll, through onboarding and parallel runs to computation and reporting of month and year end.

Our services in Indonesia include:

  • Full end to end payroll including adjustments, overtime, expenses etc
  • Range of payslips including both electronic and carbon based
  • Full statutory compliance including reporting and audit management
  • Monthly reports and government returns including BPJS Ketenagakerjaan (Jamsostek) and Pajak (SPT Masa, 1721-I, Withholding Tax Final/Non Final, SSP Art. 21/26)
  • Year-end tax support including SPT Masa and 1721-A1

Indonesia is fast becoming the power-house in SE Asia that it once was. Significant investment by foreign businesses has seen a surge in expatriates working in Jakarta and other surrounding States. LI’s long presence in Indonesia means we are well positioned to support your expatriates’ payroll.

Our services in Indonesia include:

  • Multi-currency payroll calculation (IDR, USD)
  • International payroll transfers (subject to banking regulations)
  • Management of monthly tax withholding for non-resident individuals (Art. 26)

Are you looking for someone to apply for your employee work permits? Take a look at our Work Permit Management services.

Social Security Scheme

Workers Social Security (BPJS Ketenagakerjaan or BPJS-TK) is mandatory for every employee in Indonesia. There is a mandatory work accident insurance and death/life insurance contributed by the employer. The old age and pension fund requires contribution from both employer and the employee, where the employee’s portion would be deducted from the employee’s salary. In addition, the BPJS Kesehatan or BPJS-KS covers the Health Insurance.

Indonesia Tax

Corporate Income Tax

If the domicile, place of incorporation or effective place of management is in Indonesia, the company is treated as a resident of Indonesia. A foreign company with business activities through a permanent establishment in Indonesia also has the same tax obligations as resident taxpayers.

Corporate income tax is at a flat rate of 25%. Public companies that satisfy and maintain all the following conditions for at least 183 days in a tax year can be granted with a 5% tax cut where the tax rate will be reduced to 20%. The conditions are:

  • To have at least 40% of company paid-in shares listed in the Indonesian Stock Exchange (IDX) for trading
  • The public has to consist of at least 300 individuals, each holding less than 5% of the paid-in shares
  • Small enterprises with an annual turnover of Rp 50 billion and below are entitled to a 50% discount of the standard tax rate which is imposed proportionally on taxable income on the gross revenue up to Rp 4.8 billion

Individual Income Tax

Individual resident taxpayers are individuals who reside in Indonesia, are present in Indonesia for 183 days and more in any 12-month period, or are in Indonesia during a tax year and intend to reside in Indonesia. Individual Tax Residents’ chargeable income is subjected to income tax at the following rates:

Individual Income Tax Rates

Taxable Income Rate (%) Tax Rp. ($)
Up to Rp 50,000,000 5% 2,500,000
Above Rp 50,000,000 and up to Rp 250,000,000 15% 30,000,000
Above Rp 250,000,000 and up to Rp 500,000,000 25% 62,500,000
Above Rp 500,000,000 30% 30% of the relevant amount

If the severance payment is paid within two years, the tax rates below will apply.

Severance Payment Tax Rates (If paid within two years)

Taxable Income Rate (%) Tax Rp. ($)
Up to Rp 50,000,000 0% $0
Above Rp 50,000,000 and up to Rp 100,000,000 5% 2,500,000
Above Rp 100,000,000 and up to Rp 500,000,000 15% 60,000,000
Above Rp 500,000,000 25% 25% of the relevant amount

If the lump-sum pension payments from a government-approved old age or pension fund are paid within two years, the tax rates below will apply.

Old age or Pension Fund (If paid within two years)

Taxable Income Rate (%) Tax Rp. ($)
Up to Rp 50,000,000 0% $0
Above Rp 50,000,000 5% 5% of the relevant amount

If the payment for the severance payment, old age and pension fund is made in the third year onwards, the above Individual Income Tax Rates will apply.

Non-resident individuals are subjected to withholding tax at a rate of 20% on Indonesia-sourced income, where the rates vary according to the relevant tax treaty provisions.

Other Taxes

  • Value Added Tax (VAT) is an indirect tax imposed on taxable goods and services at a general rate of 10%.
  • Customs duties are imposed on items imported into Indonesia, generally on an ad valorem basis. Customs value is calculated on Cost, Insurance and Freight level (CIF).
  • Excise duties are levied on specific products to control its distribution and consumption such as alcoholic beverages and tobacco products.
  • The Land and Building Tax is chargeable on all land and buildings, unless exempted.
  • Other miscellaneous regional and local taxes include entertainment, advertisement, motor vehicle, street lighting, hotel and restaurant tax, as well as tax on the use of underground and surface water.
Managed Payroll Services