- Overview: Indonesia
- Global HR Compliance
- Global PEO and payroll
- Work permit for hiring expats via PEO
- Expand without a company set up
- Contractor vs. employee: which is better?
Global PEO and Payroll in Indonesia
Getting your business up-and-running in Indonesia can be challenging, especially if you do not speak the native language. Establishing your own business entity in Indonesia is an option to be considered as you expand abroad. But before you invest valuable resources in setting up business in Indonesia, you should be fully aware of the risks involved.
Acumen’s Global PEO and Payroll solution was designed especially for companies like yours, to smooth the way for quick, easy and risk-free business operations in Indonesia, without having to establish a legal business entity.
Acumen International – Your Professional Employer Organization in Indonesia
Navigating the Indonesian legal system and adhering to regulations governing employment and taxation can be challenging for businesses, especially if you are not a native Indonesian speaker. Partnering with Acumen International as a global Professional Employer organization (PEO) provides you with the local knowledge and support you need to conduct business in Indonesia without concern for legal and compliance risks.
Whether you represent international client companies or you are taking your own business operations abroad, Acumen International’s Global PEO and payroll service allows you to hire and payroll local and expat employees in Indonesia. With Acumen in your corner, you can quickly and easily onboard and compensate your employees without risk of legal repercussions.
International Global Payroll and Taxation in Indonesia
Employment related taxes
Personal Income Tax (PIT). Personal income tax in Indonesia is a tax collected from individuals and imposed on various sources of income such as salaries, pensions, interest, and dividends. Personal income tax revenues are a significant source of income for the Indonesian government. Every taxpayer’s employer is responsible for calculating any taxes that must be withheld from salaries, paying these taxes to tax authorities on a monthly basis, and providing the employee with annual tax figures.
The prior personal income tax system in Indonesia only permitted individuals with just a single source of income to have their income tax processed by their employer. Employers were to pay tax on all their staff under one tax registration number (NPWP), assuming that only this single source of revenue was available to staff. Currently, it is the legal responsibility of the individual taxpayer to ensure registration with the tax office, compliance with the laws, and payment of taxes due.
Indonesia uses a global income tax system for the imposition of personal income tax. This means that individuals who are tax residents in Indonesia are to pay tax to the Indonesian government not only on the revenue they have earned from their work in Indonesia, but also on the revenue they have earned from their work abroad.
Corporate Income Tax (CIT)
Corporate – Taxes on corporate income. Resident corporations are taxed based on worldwide income. A foreign company carrying out business activities through a permanent establishment in Indonesia will generally be required to assume the same tax obligations as a resident taxpayer.
Taxable business profits are calculated on the basis of normal accounting principles as modified by certain tax adjustments. Generally, a deduction is allowed for all expenditures incurred to obtain, collect, and maintain taxable business profits. A timing difference may arise if an expenditure recorded as an expense for accounting cannot be immediately claimed as a deduction for tax.
Resident taxpayers and Indonesian permanent establishments of foreign companies have to settle their tax liabilities either by direct payments, third party withholdings, or a combination of both. Foreign companies without a permanent establishment in Indonesia have to settle their tax liabilities for their Indonesian-sourced income through withholding of the tax by the Indonesian party paying the income.
Payroll Cycle in Indonesia
Wages may be paid on a weekly or fortnightly basis, provided that the calculation is based on the monthly wages. Wages may also be set and paid on piece rate basis.
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How Acumen’s International PEO and Payroll Service can Benefit Your Business in Indonesia
Compensating your local and expat workforce in Indonesia and closely adhering to Indonesian taxation requirements can divert your attention and resources from activities that help your business grow. A reliable global employment solution like Acumen’s Global PEO and Payroll service can take a substantial burden off your shoulders so you can focus on running your company.
Outsourcing the administrative and compliance tasks involved in employee payroll is one approach, but we have a better solution. Acumen International offers a global PEO and payroll solution that goes beyond outsourcing. We hire and compensate your global workforce on your behalf, and take care of all the details of payroll while ensuring full compliance with Indonesian labor and taxation laws.
It is important to note that Acumen does not provide international global payroll services as a standalone solution, but only as a part of our global PEO and Payroll solution.
Our comprehensive global PEO and payroll services are just some of the benefits of partnering with Acumen International. We make it easy for you to achieve your business goals in Indonesia by officially employing and compensating your best selected global talent – both locals and expats – without concerns for legal and compliance risks faced by global employers.
Disclaimer: Any of the above information is subject to changes imposed by Indonesian laws. To get the latest updates on taxation in Indonesia and in 190 countries worldwide, contact Acumen’s team of global employment experts.