What are the statutory contributions for employees and employers in Indonesia?
Employee Income Tax
The Indonesian tax system applies a progressive tax structure, with rates as follows:
| Taxable Income | Tax Rate |
|---|---|
| IDR 60,000,000 | 5% |
| IDR 60,000,000 – IDR 250,000,000 | 15% |
| IDR 250,000,000 – IDR 500,000,000 | 25% |
| IDR 500,000,000 – IDR 5,000,000,000 | 30% |
| over IDR 5,000,000,000 | 35% |
Employer Payroll Contributions
Employers are required to contribute to their employees’ social insurance accounts under BPJS (Badan Penyelenggara Jaminan Sosial), an Indonesian social security agency, which includes the Work Accident Insurance, Old Age Insurance, Death Insurance, pension, and Health Insurance. The contribution rates vary, but the total generally ranges up from 10.24% to 11.74%.
Employee Payroll Contributions
Employees are required to contribute to their own social insurance accounts, including the Old Age Insurance, pension, and Health Insurance. The contribution rates vary, but the total generally ranges up to 4%.
| Contribution | Employer Rate | Employee Rate |
| Jaminan Kesehatan/Health Security (BPJS KS) | 4% x 12000000 (max base) | 1% x 12000000 (max base) |
| Jaminan Kematian/Death Protection (JKM) | 0,3% x monthly basic salary | Not applicable |
| Jaminan Hari Tua/Old Age Protection (JHT) | 3,7% x monthly basic salary | 2% x monthly basic salary |
| Jaminan Pensiun/Pension Protection (JP) | 2% x 9077654 (max base) | 1% x 9077654 (max base) |
| Jaminan Kecelakaan Kerja/Working Accident Protection (JKK) | 0,24% x monthly basic salary | Not applicable |
To find out more about BPJS rates, download the breakdown here.
What is the minimum wage in Indonesia?
Indonesia sets a rate of minimum wage which applies to employees working in their respective provinces:
- Aceh, Rp3.413.666 (7,81%)
- Sumatera Utara, Rp2.710.493,93 (7,45%)
- Sumatera Barat, Rp2.742.476,00 (9,15%)
- Riau, Rp3.191.662,53 (8,61%)
- Jambi, Rp2.943.033,08 (9,04%)
- Sumatera Selatan, Rp3.404.177,24 (8,26%)
- Bengkulu, Rp2.418.280,00 (8,05%)
- Lampung, Rp2.633.284,59 (7,90%)
- Bangka Belitung, Rp3.498.479,00 (7,15%)
- Kepulauan Riau, Rp3.279.194,00 (7,51%)
- DKI Jakarta, Rp4.901.798,00 (5,60%)
- Jawa Barat, Rp1.986.670,17 (7,88%)
- Jawa Tengah, Rp1.958.169,69 (8,01%)
- Daerah Istimewa Yogyakarta, Rp1.981.782,39 (7,65%)
- Jawa Timur, Rp2.040.244,30 (7,86%)
- Banten, Rp2.661.280,11 (6,40%)
- Bali, Rp2.713.672,28 (7,81%)
- Nusa Tenggara Barat, Rp2.371.407,00 (7.44%)
- Nusa Tenggara Timur Rp2.123.994,00 (7,54%)
- Kalimantan Barat, Rp2.608.601,75 (7,16%)
- Kalimantan Tengah, Rp3.181.013,00 (8,85%)
- Kalimantan Selatan, Rp3.149.977,65 (8,38%)
- Kalimantan Timur, Rp3.201.396,04 (6,20%)
- Kalimantan Utara, Rp3.251.702,67 (7,79%)
- Sulawesi Utara, Rp3.485.000,00 (5,26%)
- Sulawesi Tengah, Rp2.599.456,00 (8,73%)
- Sulawesi Selatan, Rp3.385.145,00 (6,93%)
- Sulawesi Tenggara, Rp2.758.984,54 (7,10%)
- Gorontalo, Rp2.989.350,00 (6,74%)
- Sulawesi Barat, Rp2.871.794,82 (7,20%)
- Maluku, Rp2.812.827,66 (7,39%)
- Maluku Utara, Rp2.976.720,00 (4,00%)
- Papua, Rp3.864.696,00 (8,50%)
- Papua Barat, Rp3.282.000 (2,56%)
What is the payroll cycle in Indonesia?
The standard payroll cycle in Indonesia is monthly, with pay dates falling on the last day of the month as agreed within the employment contract.
In Indonesia, it is mandatory for employers to provide employees with a Tunjangan Hari Raya (THR) as a means to celebrate religious holidays such as Eid al-Fitr and Christmas. The payment varies depending on the employee’s religious beliefs, meaning that employees of different religions may receive different amounts of THR.
Since THR is also based on the duration of service, employees who have worked for less than 12 months will receive the payments on a pro-rated basis based on the number of months they have worked.
For further details, refer to the Permenaker No 06 Year 2016.
How long is the working hours in Indonesia?
Indonesia sets a maximum working hours of 40 hours per week. If employees are required to work outside of these hours, they are entitled to overtime pay. Overtime is set on a higher pay rate and differs depending on its duration or whether it occurs during a standard work day.
How many leaves are employees entitled to?
- Standard paid time off — employees in Indonesia are entitled to at least 12 days of paid annual leave after completing a full year of employment.
- Compulsory annual public holidays — there are 16 national public holidays in Indonesia.
- Minimum paid sick leave — employees in Indonesia are entitled to paid sick leave provided that they submit a medical confirmation, with rates as as follows:100% in the first four months
75% in the second four months
50% the third four months
25% of wages until termination
What are the public holidays in Indonesia?
Indonesian public holidays fall under different date each year. Customarily, the government will announce the following year’s prior to the end of the current year. Here is the list of Indonesia’s public holidays for 2023:
| Date | Name |
| 1 Jan | New Year’s Day |
| 22 Jan | Lunar New Year’s Day |
| 23 Jan | Lunar New Year Joint Holiday |
| 18 Feb | Isra Miraj Tentative Date) |
| 22 Mar | Hari Raya Nyepi |
| 23 Mar | Hari Raya Nyepi Holiday |
| 7 Apr | Good Friday |
| 21-25 Apr | Idul Fitri Joint Holiday |
| 1 May | Labor Day |
| 18 May | Ascension Day of Jesus Christ |
| 1 Jun | Pancasila Day |
| 2 Jun | Waisak Day Holiday |
| 4 Jun | Waisak Day |
| 28 Jun | Idul Adha Holiday |
| 29 Jun | Idul Adha |
| 30 Jun | Idul Adha Holiday |
| 19 Jul | Islamic New Year 1445 Hijri |
| 17 Aug | Independence Day |
| 28 Sep | Birthday of Prophet Muhammad |
| 25 Dec | Christmas Day |
| 26 Dec | Christmas Holiday |
How long is the maternity and paternity leave in Indonesia?
- Statutory maternity leave — female employees in Indonesia are entitled to up to three months of paid maternity leave prior to the estimated due date as well as an additional one and a half month following the birth of the child.
- Statutory paternity leave — male employees in Indonesia are entitled to two days of leave for birth or miscarriage.
- Statutory parental leave — employees are entitled to paid child leave in the following circumstances:2 days of paid leave for the circumcision of their child
2 days of paid leave for the baptism of their child.
2 days of paid leave for the marriage of their child.
2 days of paid leave for the death of their child. - Other leaves — employees in Indonesia are entitled to up to 2 days of paid leave due to the death of their spouse, one day of paid leave for the death of their parents or parent-in-law, or the death of their children or children-in-law. If a member of the employee’s household dies, they shall be entitled to 1 day of paid leave.
What rights do employees have upon leaving employment due to certain conditions?
Employers can terminate employees for valid reasons such as poor performance or misconduct, but this must be done via a fair process. When an employee’s service with a company is terminated for certain reasons, they are entitled to certain rights and benefits, including:
- Notice period — employees are entitled to 30 days of notice period, although employers can specify longer notice periods within the employment contract.
- Severance pay — employees are entitled to mandatory severance pay, which varies based on the length of service. The severance pay ranges from a minimum 2 month of pay for employees employed more than 3 years and to 9 months of pay for employees employed more than 8 years.
- Probation period — fixed term employees are not entitled to probation period.
For more details, refer to the Indonesian Manpower Act (UU No. 13 of 2003) as well as the Presidential Regulation No. 35 of 2021 on the Termination of Employment Relationship.
What is the type of visa for employees in Indonesia?
The government of Indonesia provides visa exemptions to nationals of 169 countries, including the United States, Canada, Australia, and Singapore.
Previously, for a foreign employee to enter Indonesia for work, they would need an individual work permit (IMTA), which is now replaced with Notification from the Ministry of Manpower. Once an employee or business has obtained it, they can apply for an Indonesian visa and be issued a Visa Telex (visa index 312), which allows them to work and travel to Indonesia.
Indonesia offers a variety of work visa for foreigners:
- Izin Tinggal Terbatas or Electronic ITAS (e-ITAS) — the ITAS grants employees the right to stay in Indonesia as well as to open a bank account. They can also stay in the country and, after three years, apply for a permanent residency.
- The Kartu Izin Tinggal Tetap (KITAP) — a type of visa employees can also apply for, which grants the employee a permanent residence permit (KITAP), but is only available to people who is under the possession of an ITAS for three or more years.
Standard VAT Rate
The standard VAT rate in Indonesia is 10%.
Is there a maximum length of contract for employees?
Employees in Indonesia are allowed to sign a employment contracts with a maximum duration of five years.
What is the retirement age in Indonesia?
The retirement age in Indonesia is currently 58 years old. However, due to the 2019 Indonesian government policy of gradually increasing the retirement age, the retirement age will increase by one year for every three years from now.