Update with Payroll, BPJS, and Tax Regulations in Indonesia

Navigating Payroll and Regulatory Updates

In the previous editions of our newsletter, we talked about the HR practices role in terms of the ESG score, and we discussed the advantages of HR Shared Services. This newsletter tackles another critical aspect of HR: meeting standards of Indonesian ever changing regulations about payroll, BPJS and taxes. As a Human Resources Shared services provider, we know the dust and time complexity of going through the regulations. This can be sometimes a burden for businesses and it may lead to decreased productivity and resources diversion from strategic goals. Here’s a quick preview of what you need to be on the lookout for in the year 2024.

  • Minimum Wage Adjustments: The minimum wage rates in Indonesia are revised on the basis of annual increases. We are always on alert for these provincial changes to ensure our clients maintain compliance with these changes in order to protect the interests of your workers and guarantee a fair compensation.
  • Social Security and Healthcare: The regulation on social security and healthcare contributions dynamically changes in Indonesia, Edukarir offers up-to-date solutions to meet client’s unique needs, making sure that each clients’ BPJS contributions is accurate and is being filed well.
  • Tax Regulation Changes: The Directorate General of Taxes in Indonesia has just delegated the implementation of the Average Effective Rate (TER) to determine Article 21 Income Tax (PPh) from 1st January 2024. Our tax team experts work closely with us and together we adjust our systems whenever necessary thus ensuring that you are always updated on new tax changes.
  • Electronic Reporting: The governments of Indonesia that are implementing paperless reporting and documentation for services such as payroll tax for example amidst the transitioning from physical files. Our services support this as well, allowing you to deal with necessary ever-increasing compliance requirements in a timely manner.
  • Employment Law Updates: Labor regulations such as overtime, holiday entitlements, and working hours dynamically changes from year to year. Edukarir proposes solutions that are tailored to different employment environments. This ensures you can walk through the transition process.

For example this is the latest BPJS update that pension fund (BPJS TK) upper limit is increase from IDR 95,596 to 100,423
BPJS TK Update 1 Maret 2024


 

And here’s how we ensure our clients stays on the cutting edge in terms of compliance:

  • Integration of Payroll, Tax, and BPJS Contributions: Our HR Shared Services can complement the payroll processing; at the same time it will accommodate tax computation and contributions that are related to BPJS. It adopts a holistic approach to accurately make the corresponding deductions and remittances as to the employee health insurance (JKM & BPJS Kesehatan), workplace accident insurance (JKK) and retirement insurance & benefits (JHT & JP) and also ensure that we follow the most up to date taxation regulations like the most recent TER (Tarif Efektif Rata-Rata). Our systems and processes are continuously adapted to reflect these changes while ensuring accuracy at all the times in calculations and deductions for employee salaries and reporting.
  • Proactive Communication: We continually engage our customers through proactively informing them about any regulatory changes. As such, it enables them to grasp the impacts and thus come up with the right decisions.
  • Compliance Expertise: Our team has a comprehensive understanding on the payroll and law in Indonesia. It is our habit to observe the regulatory changes and take part in the industry seminars to remain on the cutting edge.

 

Benefits of Staying Compliant

Maintaining compliance offers several benefits for both businesses and employees:

  • Reduced Risk of Penalties: With evading the hefty fines and penalties that come with non-compliance.
  • Improved Employee Relations: Employees are well pleased when the company takes them seriously by making accurate social security contributions and tax obligations a priority.
  • Enhanced Brand Reputation: Showcases concern for strong business ethics, hence making a positive contribution to your ESG rating.