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.
Cekindo Scope of Work
Our professional experts can handle all aspects of payroll including:
- Monthly payroll computation
- Monthly tax computation
- Monthly tax reporting (SPT Masa 1721 and 1721-II)
- Social security reporting (Jamsostek)
- Fund transfer reporting
- Detailed payslips
- Annual tax reporting (SPT 1721A1 and 1721-I)
Payroll Services in Indonesia are a Critical Part of Business Set-up 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.