Acumen International stands with Ukraine and the country's people. Join us

Employ Candidates Compliantly in Indonesia

Get Express Quote
  1. Overview: Indonesia
  2. Global PEO and payroll
  3. Global HR Compliance
  4. Work permit for hiring expats via PEO
  5. Expand without a company set up
  6. Contractor vs. employee: which is better?
  7. Global Payroll Calculator
Other counrtries

Employer of Record in Indonesia

Navigating Global Workforce Challenges: The Role of a Global Employer of Record

As organizations embrace the opportunities of a globalized world, managing a diverse and geographically dispersed workforce presents unique challenges. Companies require innovative solutions to optimise their global operations, from navigating complex employment regulations to ensuring compliance across borders. This is where a Global Employer of Record (Global EOR) comes into play. Let’s delve into the strategic significance of Global EORs and how they empower businesses to overcome complexities, and streamline operations, enabling organizations to efficiently and compliantly manage their international workforce.

Scenario Description
Unhappiness with the Current Provider You have hired an employee but are unhappy with your current service provider and looking for better options.
Rapid International Expansion Your company is rapidly expanding its operations internationally and must quickly establish a presence in multiple countries. Engaging a Global Employer of Record allows you to hire employees in various jurisdictions without setting up legal entities in each country, ensuring a faster and more efficient expansion process.
Navigating Complex Employment Laws You are entering a new market with unfamiliar employment laws and regulations. Partnering with a Global Employer of Record in Indonesia provides access to experts knowledgeable about local labour laws, ensuring compliance and minimizing the risk of penalties or legal issues.
Efficient Workforce Management Managing a global workforce can be challenging and time-consuming. A Global Employer of Record in Indonesia can handle administrative tasks such as payroll, benefits administration, and tax compliance, freeing up your internal team to focus on strategic initiatives and core business activities.
Mitigating Employee Classification Risks Classifying workers correctly is crucial to avoid misclassification risks. Engaging a Global Employer of Record ensures proper classification based on local laws and regulations, reducing the risk of legal and financial consequences associated with employee misclassification.
Managing Immigration and Work Permits Hiring foreign talent and managing immigration processes can be complex. A Global Employer of Record in Indonesia can guide you through the visa application and work permit processes, ensuring compliance with immigration laws and reducing the administrative burden on your in-house team.
Expertise in Local Employment Practices Each country has its own unique employment practices and cultural nuances. A Global Employer of Record in Indonesia provides access to a team of experts with local knowledge and expertise, helping you navigate local practices, customs, and regulations effectively.
Flexibility in Workforce Scaling Your business needs fluctuate, requiring the ability to scale up or down your workforce quickly. Partnering with a Global Employer of Record in Indonesia allows for agility in workforce management, enabling you to ramp up or reduce operations in different countries as needed.
Market Testing and Pilot Programs Before committing to establishing a permanent presence in a new market, you may want to conduct market testing or pilot programs. Using a Global Employer of Record provides a lightweight solution, allowing you to test the market in Indonesia without the need for complex close-down procedures if the venture is unsuccessful.
Ease of Exit Strategy Disengaging from local employment contracts and legal obligations can be challenging if you decide to exit a specific market or wind down operations. A Global Employer of Record in Indonesia simplifies the exit process, ensuring a smooth transition and minimizing legal and administrative complexities.

Get Express Quote

Global Employment Services in Indonesia

1. Recruitment

2. Global Mobility

3. Checks

4. Onboarding

5. Payroll Administration

6. Working Time & PTO Processing

7. Benefits Administration

8. Tax Administration & Reporting

Offboarding

Talent skilled in highly-specialized areas Employee Work Visa and Work Permit sponsorship Health checks Employment Agreement drafting In-country registration with statutory bodies Working hours Mandatory Benefits Tax Reporting frequency and requirements; Employment agreement termination:
Executive search Dependent Visa Criminal record checks Compliant worker onboarding on your behalf Day-to-day payroll management Overtime Health insurance Employer taxes & contributions Dismissal – by the employer
Contingency workforce Visa extension Background checks Account setup in the payroll and HR system​ Monthly pay slips or other pay frequency Public holidays Workers’ compensation Employee taxes & contributions Resignation – by the employee
Application for a sponsor license for a foreign national Education checks Employee data entry and records maintenance Accruals Annual leave Unemployment insurance Withholding tax Termination by mutual agreement
Relocation assistance Managing probation periods Allowances Parental leave Voluntary Benefits Local tax payments and reporting to local authorities Notice period handling
13th and 14th salary Sick leave Share plans for executives End of financial year reporting Final settlement & severance payments
Additional leave Bonuses & Equipment provision De-registration with statutory bodies
Expenses reimbursement & business trip processing
Health insurance, dental treatment

Get Express Quote

A Global Employer of Record Is a Better Alternative for Entity Set Up in Indonesia

Expanding your business into international territories such as Indonesia brings many challenges, including establishing a local legal entity. This task can be a daunting labyrinth of legal formalities, understanding diverse tax regimes, handling foreign currency transactions, engaging with local bureaucracies, and potential language barriers. All of these intricacies demand considerable financial and time investment.

Here is where a Global Employer of Record (EOR) steps in as a game-changing ally. The Global EOR shoulders the responsibility of employing and administrating your international workforce. This service empowers your business to launch its operations promptly, circumventing the drawn-out procedures linked to creating a legal entity.

A Global EOR is a repository of knowledge regarding countries’ international labour laws, tax structures, and statutory benefits. They provide your business with a shield of compliance against complex and frequently updated local regulations, drastically mitigating legal disputes or penalty risks.

A Global EOR’s services also give your business the agility to adapt to ever-evolving needs. Whether you’re onboarding a single employee or planning large-scale hiring, a Global EOR can adjust operations to align with your business strategy seamlessly.

Over the long term, the cost-effectiveness of partnering with a Global EOR becomes evident. It can be substantially less expensive than the cumulative costs of setting up and operating legal entities in multiple countries, particularly when considering potential oversights or non-compliance issues.

By selecting a partnership with a Global EOR, businesses can catalyze their international expansion strategy into countries like Indonesia, all while diminishing risks and overheads. This approach streamlines operational efficiency and imparts a sense of security, knowing that your company fully complies with local laws and regulations as you scale across borders.

Get Express Quote

Mitigating Permanent Establishment Risk with a Global EOR

Permanent Establishment Risk refers to the potential tax liability and legal obligations that arise when a company unintentionally establishes a taxable presence in a foreign country due to certain business activities. This risk arises from activities such as having a physical office, a dependent agent, or exceeding specific business thresholds in the foreign jurisdiction, triggering tax obligations and potential legal implications.

Key Factors Description
Hiring and Managing Employees A Global EOR takes on the responsibility of hiring and managing employees, including senior sales or corporate management roles, on behalf of the client, mitigating PE risk.
Compliance with Local Laws Global EORs ensure compliance with local tax and employment laws, including those related to senior sales or corporate management roles, minimizing the risk of creating a PE.
Structuring Business Activities Global EORs guide structuring business activities, such as sales operations, to optimise revenue generation while minimizing PE risk and ensuring compliance.
Local Compliance Management Global EORs handle payroll, tax reporting, and benefits administration, ensuring strict compliance with local laws and minimizing the risk of triggering a PE.

Get Express Quote

Real-Life Example: Avoiding Permanent Establishment Risk in Indonesia with Global EOR

A multinational technology company based in the United Kingdom plans to expand its sales operations to Indonesia. As part of their expansion strategy, they anticipate needing a physical office and employing local senior sales and corporate management professionals to drive business growth. However, establishing a legal entity in Indonesia can be complex and time-consuming, while hiring sales representatives in Indonesia may inadvertently create Permanent Establishment Risk, leading to tax liabilities and compliance obligations.

To mitigate this risk, the company decides to engage the services of a Global Employer of Record (EOR) specializing in Indonesia. The Global EOR assists the company by hiring and managing senior sales and corporate management roles on their behalf. The Global EOR handles compliance with local tax and employment laws, ensuring strict adherence to Indonesian regulations. They handle payroll, tax reporting, and benefits administration, minimizing the risk of triggering Permanent Establishment in Indonesia.

By leveraging the services of a Global EOR, the company successfully mitigates Permanent Establishment Risk while establishing a dedicated and compliant team in Indonesia. This approach allows the company to expand its sales operations, drive revenue growth, and oversee corporate management activities without the administrative complexities and potential tax liabilities associated with setting up a legal entity.

Get Express Quote

Spotlight on Indonesia

Indonesia is located between the Indian Ocean and the Pacific Ocean along the equator between Asia and Australia. Indonesia consists of 17,508 islands and is the world’s fourth-most-populous country. It is also the world’s third-largest democracy and the world’s largest archipelagic state.

  • Capital: Jakarta.
  • Population: 277,749,853
  • Industries: The industrial sector includes the manufacturing of textiles, cement, chemical fertilisers, electronic products, rubber tyres, clothing and shoes (most of these are for the American market). Wood processing is also a major activity as the country is one of the world’s largest timber producers.
  • Local currency: The rupiah (Rp).

Get Express Quote

.

Ready to Get Started?
Get Express Quote