Payroll and Tax Compliance for Expat Employees in Indonesia: Step-by-Step HR Guide

Why Payroll and Tax Compliance Matters

For foreign companies operating in , managing payroll and tax compliance is more than routine HR work it’s a legal obligation.

Any company sponsoring foreign employees under a work visa (KITAS) must register for tax (NPWP) and social security (BPJS) to stay compliant.

integrates payroll, tax, and visa processing under one system saving companies time and reducing risk.

Understanding the Legal Framework for Expat Employees

Several laws regulate how foreign employees are paid and taxed in Indonesia:

• Income Tax Law (UU No. 36/2008)
• Manpower Law (UU No. 13/2003)
• Government Regulation No. 68/2021 on BPJS Employment
• Tax Residency Rules (183-day rule)

Failure to comply can lead to penalties up to 100% of unpaid taxes or administrative sanctions.

Step 1 – Register Employee NPWP (Tax ID)

All expatriate employees working under KITAS must have a Nomor Pokok Wajib Pajak (NPWP).

Process overview:

1. Prepare copy of KITAS and passport.
2. Submit application through the company’s registered tax office.
3. Receive NPWP within 3–5 working days.

Why it matters:
Without NPWP, income tax is charged at 20% higher rate.

Step 2 – Enroll in BPJS Ketenagakerjaan and BPJS Kesehatan

Both local and foreign employees must be registered under Indonesia’s Social Security System (BPJS).

Key requirements:

• Companies must register employees within 30 days of starting employment.
• BPJS Ketenagakerjaan covers work accident, old-age, and pension benefits.
• BPJS Kesehatan covers national healthcare.

Swift Visa Indo assists companies by linking visa issuance, BPJS registration, and payroll setup to ensure compliance.

Step 3 – Process Monthly Payroll and Tax Deductions

Each month, employers must calculate and withhold PPh 21 (Employee Income Tax).

Common mistakes companies make:

• Forgetting to update exchange rates for foreign salaries
• Not adjusting for taxable allowances (housing, car, schooling)
• Failing to issue payslips that reflect correct deductions

Swift Visa Indo offers a managed payroll service that aligns with Indonesian tax codes.

(Related: Reliable Tax and Accounting Services)

Step 4 – File and Report Taxes Accurately

All tax deductions must be reported and paid by the 10th of the following month.

Reporting includes:

• Monthly employee tax (PPh 21)
• BPJS contributions
• Annual income summary for expatriate staff

Swift Visa Indo helps companies submit reports electronically and manage annual filings for both corporate and individual expatriates.

Step 5 – Stay Compliant with Expat Tax Residency Rules

Foreign employees are considered tax residents in Indonesia if:

• They stay in Indonesia for more than 183 days in a 12-month period, or
• They reside and intend to stay permanently.

Once tax resident status is met, global income may be taxable. Swift Visa Indo provides tax residency guidance and double-taxation consultation for companies with cross-border teams.

How Swift Visa Indo Simplifies Corporate Payroll Compliance

Swift Visa Indo offers a one-stop solution combining:

• Visa & KITAS sponsorship
• Payroll calculation and payslip issuance
• Tax registration and monthly reporting
• BPJS and compliance management

This integrated approach allows companies to manage expatriate employees with confidence and transparency.

Key Takeaways

• Payroll and tax compliance in Indonesia is mandatory for both local and foreign staff.
• Expat employees must have NPWP and BPJS registration.
• Timely tax filing and reporting prevent financial penalties.
• Swift Visa Indo provides a unified service for visa, payroll, and compliance needs.

Need help managing payroll and tax for your expat staff?
Contact Swift Visa Indo and let our specialists handle the process from setup to monthly compliance.