Introduction:
Indonesia has specific statutory requirements that employers must adhere to, particularly concerning social security and income tax. This guide provides a concise overview of the key elements to ensure compliance and avoid potential issues.
Social Security Systems (BPJS):
Indonesia’s social security system is managed by BPJS (Badan Penyelenggara Jaminan Sosial) and comprises two main programs:
- BPJS Ketenagakerjaan (Employee Social Security): This program provides financial protection to employees in several circumstances:
- Jaminan Kecelakaan Kerja/ Work Accident Security (JKK): Covers medical treatment and compensation for work-related accidents. Contribution rates vary based on work risk.
- Jaminan Hari Tua/ Old Age Security (JHT): Provides benefits for retirement.
- Jaminan Kematian/ Death Security (JKM): Benefits are paid to the participant’s heirs upon death.
- Jaminan Pensiun/ Pension Security (JP): Offers a guaranteed income for retired participants (for citizens only).
- BPJS Kesehatan (Healthcare Insurance): This system ensures access to medical services for all Indonesians and expatriates working in Indonesia. It covers a range of services, from basic outpatient care to complex treatments.
Contribution Rates (BPJS):
- BPJS Ketenagakerjaan:
- Jaminan Kecelakaan Kerja (JKK): Employer contribution only (0.24%)
- Jaminan Kematian (JKM): Employer contribution only (0.30%)
- Jaminan Hari Tua (JHT): Employer (3.7%), Employee (2%)
- Jaminan Pensiun (JP): Employer (2%), Employee (1%)
- BPJS Kesehatan:
- Health Security: Employer (4%), Employee (1%)
Income Tax: Bukti Potong Pajak Penghasilan 21 (PPh 21):
- PPh 21: This refers to the monthly income tax deducted from employees’ gross income. It is similar to Malaysia’s income tax system.
- PPh 21 can also be categorized as Final or Tidak Final (Non-Final), applying to various scenarios.
- PPh21 Tidak Final is mainly for contract workers.
- PPh 21 Final is applied to leave encashment and severance pay for resigned worker.
Conclusion
Understanding and complying with Indonesia’s statutory requirements is crucial for businesses operating in the country. Ensuring proper contributions to BPJS and PPh 21 will help maintain a compliant and positive working environment.
