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Payroll Services in Indonesia are a critical part of business set-up

Posted 18.06. 2014 by Michal Wasserbauer / Last update on 20.12. 2017

Payroll Services in Indonesia are a critical part of business set-up Review by Michal Wasserbauer on 18. 6. 2014 Company Registration in Indonesia, Market Research in Indonesia, Work Permit in Indonesia, Product Registration in Indonesia, Local Partner Selection in Indonesia, Trade Mission in Indonesia, Company Formation in Indonesia, Company Establishment in Indonesia, Company Set Up in Indonesia, Payroll Outsourcing in Indonesia, Tax Reporting in Indonesia, Medical Product Registration in Indonesia, Medical Device Registration in Indonesia, Cosmetic Registration in Indonesia, Food Supplement Registration in Indonesia.
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Having a business partner on the ground is invaluable when you are setting up a company in Indonesia

Once established, that partner can be critically important when it comes to smooth payroll processing in Indonesia

Like many other aspects of doing business in Indonesia, regulations governing payroll and related taxes and deductions are complex. It is vital to make sure that they are calculated and remitted correctly, and all tax reports are filed.

The first thing that must be taken in to account is Jamsostek, which is the state-owned company that manages the social insurance fund for the private sector. Each company must register with Jamsostek and obtain a Jamsostek certificate and cards for all employees.

Jamsostek has four insurance offerings, the first three of which are part of a mandatory package for all private formal sector employees.

  • Occupational injury – This covers work-related injuries and occupational diseases, as well as travel accidents that may occur on the way to work. The company covers the cost of occupational accident insurance, which comprise 0.3% of a person´s wages.
  • Life insurance – Employers must pay the entire contribution for an employee´s life insurance, which is 0.24% – 1.74%.
  • Retirement benefits – Both parties make contributions, with the employer being responsible for 3.7% of wages and the employee for 2.0% of wages.
  • Health Insurance – This is an optional program that requires a married employee to pay 6% of wages, and a single person to pay 3%. Employers who have a better health insurance packages can opt not to participate.

In addition to the package calculations, the system requires employers report to Jamsostek a record of all new and resigned employees.

Proper payroll processing includes setting up a database to calculate all the deductions, preparing payroll slips – whether electronic or paper copy – and calculating take-home pay. Companies must also prepare and file required monthly and annual reports on Jamsostek, employee income taxes, retirement benefits and the annual income tax forms for each employee.

Payroll Services in Indonesia are a Critical Part of Business Set-upEstablishing and running a growing company is a time consuming effort. Focus on growth and profitability and let Cekindo manage the payroll processing. We understand the regulations related to tax and employment in Indonesia and can provide more efficient and cost effective service than establishing an in-house payroll processing system.

Our professional experts can handle all aspects of payroll including:

Call Cekindo for more information on how we can streamline your payroll processing in Indonesia.



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15 Responses to “Payroll Services in Indonesia are a critical part of business set-up”

  1. Mosca Trade Representative Office in Indoneisa says:

    We are a newly set-up representative office in Indonesia and would like to have your proposal for
    1)Monthly payroll computation (5 employees), Monthly tax computation, monthly reporting, BPJS, detailed payments and annual tax reporting. Thank you.

  2. Hi,

    thank you for your inquiry and sorry for our late respond. Our consultants will contact you still today and provide overview about our payroll outsourcing include quotation.

    Thank you very much for your interest

  3. Ms Jacki Lee says:

    Hi , Our Singapore based company is setting up a TRO with one representative and would like you to send us a quote for the outsoucing of the monthly payroll ( 1 to 2 person) including tax computation Jamsotek submission etc what ever is relevant and compulsory for the company to do under the law.
    Appreciate your advice and quote asap.
    Thank you.

  4. ivy says:

    Hi,
    For an Indonesian employee working in a Foreign Representative Office, please advise if the employer needs to contribute the BPJS and the 3 mandatory insurance (Occupational injury, Life & Retirement)?

    For Life insurance which is between 0.24% – 1.74%, what is the basis used to determine the rate?

    Thank you.
    Ivy

  5. Dear Ms. Jacki,

    thank you for your comment. Our team will contact you still today and provide you our quotation include detail explanation.

    Best Regards

  6. Dear Ivy,

    thank you for your comment. Please find our respond below and don´t hesitate to contact us in case your employer interested more detail about our payroll outsourcing services.

    The employer and employee contribution is as follow:

    Employer contribution:
    Occupational injury insurance: 0.24% – 1.74% (based on basic salary)
    Life insurance : 0.3% (based on basic salary)
    Retirement insurance : 3.7% (based on basic salary)
    Health Program : 4% (based total basic salary + fixed allowance, at range 2,400,000 to 4,750,000)

    Employee Contribution:
    Retirement Insurance : 2%(based on basic salary)
    Health Program : 0,5% (based total basic salary + fixed allowance, at range 2,400,000 to 4,750,000)

    Regarding to your life insurance question, actually it is not life insurance, but occupational injury insurance. The basis used to the rate is the kind of jobs which are classified into 5 groups.
    -1st group 0.24%, such as office work, banking, garment etc.
    -2nd group 0.54%, such as agriculture, plantation etc.
    -3rd group 0.89%, such as irrigation, fisheries, forestry etc.
    -4th group 1.27%, such as manufacturer of kerosene and coal, motor vehicle, etc.
    -5th group 1.74%, such as logging and sawmill, sea fishing, mining etc.

  7. James says:

    What is the difference between Payroll Processing and Payroll Outsourcing? What is structure of your fee for payroll service in Indonesia?

  8. Cekindo says:

    Hi James,

    Payroll processing is service where we only calculate your payroll includes monthly payroll, detail payslips, payroll summary and some deductions e.g. for taxes, social-health insurance. While in payroll outsourcing, Cekindo does not only do calculation but as well we do the transfer of salary directly to each of your employee and pay the tax, health-social insurance to the related institution. In this service, there will be implementation fee (one time payment only in the beginning for the preparation and adjusted all your payroll data to our payroll system) and then there would be monthly fee which the amount will depend on number of your employees.

  9. […] Payroll Services in Indonesia are a critical part of business set-up […]

  10. Kamal Luthra says:

    I want to open a company in jakarta , what are the documents and amount required , and i want a flat near jakarta please help me in this

  11. Siti Junima Faradella says:

    Hi Kamal,

    Thank you for contacting Cekindo.

    Regarding your questions, it would be great if you could provide detail information about your company and inquiries, thus we may be able to identify the general and particular requirements for your inquiries. Afterwards, we would like to provide the business proposal related.
    Moreover, please advise your contactable number thus we may be able to discuss more detail regarding your inquiry.

    Looking forward to hear from you.

    Thank you,
    Della

  12. Zul says:

    Hi
    I have been working in Indonesia between Mar 2015 and Aug 2016. Between Jan 2016 and Aug 2016, my employer had made deductions on my salary to pay for the various insurance schemes. I’m not of Indonesian nationality, i was told by another colleague, I can claim from my former employer for the insurance deductions. Is that true? Appreciate if you can outline what employees are entitled to claim from the employer after they leave employment. Thanks.

  13. Siti Junima Faradella says:

    Hi Mr. Zul,

    Thank you for contacting Cekindo.

    Following your questions regarding to claim the insurance which have been deducted monthly from you former company. It is correct you can claim the insurance. Further, please advise the type of the insurance whether it is National insurance or Private insurance.

    Generally, you can claim the insurance through the insurance institution/company or your need to report first to the Former Company HR to arrange the claim. However, please note it will depends on your former company regulations.

    Should you have any questions, please do not hesitate to contact us.

    Thank you,
    Della

  14. Sufi says:

    Hi, we are a company based in Singapore and I’m looking to recruit Indonesian employees without opening any business entity in Indonesia. Can Cekindo facilitate with the payment of our representatives? What does the process include? What are the fees payable to Cekindo?

  15. deborahutajulu says:

    Thank you for your comments.
    Should you need further information regarding our services, do not hesitate to contact us at +6221 806 60999 or send us email through info@cekindo.com

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