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Mercans offers complete payroll, PEO and HR services in Indonesia

Ranked fourth as a global investment destination after India, China and the US, Indonesia is the largest economy in Southeast Asia. It is attractive for its large workforce and growing domestic market. Politically stable with a roaring tourism sector, Indonesia has a sound economy with many natural resources such as oil, natural gas, coal, copper, gold, tin, nickel and more.

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Doing Business in Indonesia

Currently ranked 73 out of 190 countries, Indonesia has improved their ease of doing business. With a fast growing middle class, private consumption makes up a significant portion of GDP. Potential foreign investors can look to the BKPM (Indonesia Investment Coordinating Board) as a one-stop shop for the provision of business licenses and for setting up a local office.

Entity Registration and Incorporation Requirements

Setting up a new business or expanding an existing one in Indonesia is straightforward. Choose how your company operates from a range of entity types that suit your individual circumstance.


Banking Hours: Monday to Friday 8:00 am to 3:00 pm and Saturday 8:00 am to 1:00 pm

Working Week

The standard working week is from Monday to Friday from 8:00 am to 4:00 pm and Saturday from 8:00 am to 12:00 pm

Labor Law

The primary piece of legislation is Law No. 13 of 2003 on Employment (Employment Law). This is supported by other relevant laws, government regulations, ministerial regulations as well as presidential decrees. Employment law is generally considered to be in favor of the employee.

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Main Industries

Palm oil, coal, petroleum, petrochemicals, liquified natural gas, automobiles

GDP Growth


Dates & Numbers


Official State Name

The economy of Indonesia


270.20 million



Major Languages



Indonesian Rupiah (IDR)

Internet Domain


International Dialing Code


Jakarta, ID
2:29 pm, June 14, 2024
temperature icon 34°C
scattered clouds
Humidity 73 %
Wind Gust: 0 mph


The minimum salary may be stipulated by the authority in each province and this may vary by industry.

Payslips are not provided to employees


Payroll reports must be kept for five years


Employees receive paid annual leave of at least 12 days

Annual Leave

The number of days provided for paid sick leave to employees depends on the provision of medical confirmation of their ill-health

Sick Leave

There is provision for three months of paid maternity leave and two days of paid paternity leave

Maternity & Paternity Leave

Termination may be initiated by the employer through dismissal or by the employee through resignation

Employee Termination

A mandatory payment, the (THR) Tunjangan Hari Raya payment includes a base salary and a fixed monthly allowance only

13th month salary

IDR 4.60 million per month

Minimum Wage

Overtime payment is set at 1.5x the employee's regular rate of pay and includes 12 hours in any workday


This is set at the rate of 1 - 2 weeks pay for every year worked

Severance Pay


Tax and Social Security

Tax residents are taxed on their worldwide income. Foreign workers who become tax resident in Indonesia can be taxed only on Indonesia-sourced income. While there is no comprehensive social security system, there is a worker’s social security program which is maintained by a designated state-owned company, BPJS Ketenagakerjaan.


There are no local taxes on individual income in Indonesia.


Corporate Income Tax


Personal Income Tax


Sales Tax



Social Security

Employees who have been working for at least 30 days must be enrolled in the national social security program (BPJS) which covers workplace accidents, death, retirement, pension, healthcare and medical expenses


Social Security Rate


Social Security Rate for Employers


Social Security Rate for Employees


Employment Law

Employment law applies only to Indonesian citizen employees. Foreign workers who work in Indonesia are, however, regulated by the terms of their employment contract.

Employment Agreement

Employees may enter into either a fixed or indefinite term agreement. Where agreements are in writing, it must be in the Indonesian language but may include an English translation.

Working condition

The five day working week is common in the private sector since the government applied a five-day working week for civil servants and those working in state-owned businesses.


Indonesian labor law and regulations permit an employer to require an employee to take garden leave during the termination period. This is a suspension of employment for which the employer must pay full salary and benefits during the leave period.

Employment termination

Any termination of employment must be done with a reason provided and as specified in prevailing labor laws and regulations, the company regulations, any collective labor agreement or employment contract.


30 days

Minimum notice period for terminating an employee



Total number of public holidays



Working hours per week


2 days

Total number of days for Compassionate & Bereavement Leave



Entry into Indonesia requires a visa, for which there are multiple visa categories including single entry, multiple entry and temporary stay visa for work (C312). The C312 visa is granted to foreign nationals who are experts or specialists employed in Indonesia by their sponsors.


Residency permits

WIth the C312 visa, an individual is allowed to stay in Indonesia for six months or 180 days, one year or two years depending on the application submitted. The stay permit may also be extended.

Work Permit Validity

6 to 12 months

Required Documents

A copy of the passport, valid for a minimum of 18 months

Proof of health insurance

Passport photos in color

A copy of the employee’s highest educational qualification, which must be stamped and signed by the employer

A copy of the applicant’s CV, which should also be stamped and signed

A work certificate that shows the applicant has at least five years of relevant experience.

Compliant, reliable, error-free and touchless payroll in Indonesia

Build the best team and hire top talent compliantly in Indonesia. Get in touch with Indonesia payroll outsourcing & PEO specialists for a free consultation!

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This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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