When preparing for global expansion to Indonesia, you need to look at every aspect of the process — setting up payroll, hiring employees, implementing a compensation and benefits plan, and establishing a subsidiary.
G-P can help with each stage of growth. As a global EOR, you can focus on entering the new market as we handle complexities around compliance and streamline payroll setup and management.
Taxation rules in Indonesia
Indonesia has a universal social security system that covers all employees and residents under a single healthcare system and that will include a single employment benefits system by 2029.
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
There are multiple Indonesia payroll options, so employers can choose one that fits their goals and business structure:
- Internal: Companies that plan to operate in Indonesia long term may consider setting up internal Indonesia payroll. They will need to hire additional team members to handle their HR and payroll.
- Indonesia payroll processing company: Employers can also choose to work with an Indonesia payroll processing company to outsource payroll. Although this will remove the stress of setting up payroll, the employer will still be held responsible for ensuring compliance.
- G-P: By partnering with and Employer of Record like G-P, employers can expand their global footprint without worrying over the complexities of payroll setup and management. With us, companies can rest assured that their teams will be paid punctually and compliantly.
How to set up a payroll in Indonesia
Generally, before employers can set up an Indonesia payroll, they need to establish a subsidiary. The entire process can take months before they can begin hiring and setting up payroll.
Entitlement/termination terms
Termination is often a difficult process in Indonesia. Companies should outline entitlement and termination terms in an employment contract before hiring employees and adding them to payroll. Employers generally need to establish cause to terminate the employment contract, and are required to pay severance, long service pay, compensation pay, and/or separation pay, depending on the reasons for employment termination.
Streamline global payroll management with G-P.
G-P streamlines each step of the payroll management process with our market-leading Global Growth Platform™. Pay your team with confidence anywhere in the world in 150 currencies with our 99% on-time automated payroll system — all with just a few clicks. Our products also integrate with leading HCM solutions, syncing employee payroll data across platforms automatically to create one reliable, convenient source of truth for HR teams.
Contact us to learn more about how we can support you.