In this GMS Flash Alert, we highlight key changes to the Indonesia Ministry of Manpower Regulation (Manpower Regulation No 16 Year 2015), concerning the procedures and requirements for domestic companies employing foreign employees, including nonresident Directors and Commissioners.
In this GMS Flash Alert, we highlight key changes to the Indonesia Ministry of Manpower Regulation (Manpower Regulation No 16 Year 2015), concerning the procedures and requirements for domestic companies employing foreign employees, including nonresident Directors and Commissioners.1 Some of the significant changes are:
Global mobility professionals, immigration advisers, and cross-border workers should make sure they understand the new rules and are in compliance.
Indonesian-based employers may face greater difficulties hiring foreign workers in light of the new policies. Moreover, short-term business visitors engaging in certain activities may face some more administrative hurdles and fees in light of the need to obtain a temporary work permit when engaging in such activities. In addition, foreign nationals serving on Indonesian Boards will similarly face more administrative hurdles and fees.
Employers should be aware that the Ministry of Manpower will be more closely scrutinizing their hiring policies and practices for purposes of hiring employees for particular positions and moving short-term business visitors into Indonesia for business.
In order to employ one expatriate employee, an employer or a sponsoring company must employ 10 Indonesian counterparts, unless the expatriate employee is:
a. A member of the Board of Directors or Board of Commissioners, a mentor, a manager, or a supervisor;
b. Employed for a job which is for an emergency and/or an urgent circumstance;
c. Temporarily employed;
d. Employed for temporary entertainment/athletic services in the arts or sports.
A foreign member of the Board of Directors and Commissioners, a mentor, a manager, or a supervisor domiciled overseas is required to obtain an IMTA.
One of the documents required to be attached to the IMTA application for Directors and/or Commissioners is a copy of the Deed of Establishment.
The regulation states that IMTAs for Directors and /or Commissioners are valid for a maximum of two years and can be extended. However, in practice, it is likely that IMTAs have to be extended annually. A tax identification number (NPWP) and proof of participation in the local social security programs (BPJS) are now required for an IMTA extension.
A temporary work permit is required for the following activities:
a. Providing guidance, counseling, and/or training in the application and innovation of industrial technology to improve the quality and design of industrial products, as well as cooperation with overseas marketing for Indonesia;
b. Producing commercial films that have acquired permission from the competent authority;
c. Providing lectures;
d. Attending meetings with the Head Office or a representative office in Indonesia;
e. Conducting audit, production quality control and/or inspection at a company branch in Indonesia;
f. Undergoing work ability testing;
g. A one-time job;
h. Work in relation to the installation of machinery, electrical systems, after sales service, and/or products on business trials.
A temporary work permit may be provided for a maximum period of one month, except for activities mentioned in items b, g, and h, which can be for a maximum of six months and are non-extendable.
In the past, obtaining a business visit visa was sufficient for expatriates providing lectures, training, and/or attending business meetings in Indonesia. With this new regulation, care must be taken with regards to the individual’s activities. Typically, if the individual attends a meeting solely for promotional or sales purposes, a simple business visa should still be allowed.
The KPMG International member firm in Indonesia is expecting further implementing regulations to be issued clarifying the procedures.
1 Manpower Regulation No. 16 Year 2015.
This article is excerpted with permission from “Global Mobility Services Bulletin” (August 2015 – Vol. 2), a publication of the KPMG International member firm in Indonesia
For further information or assistance, contact your local GMS or People Services professional or a tax professional with PT KPMG Advisory, the KPMG International member firm in Indonesia:
tel. +62 21 570 4888
The information contained in this newsletter was submitted by the KPMG International member firm in Indonesia.
© 2017 PT KPMG Advisory Indonesia, an Indonesian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
Flash Alert is an Global Mobility Services publication of KPMG LLPs Washington National Tax practice. The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.