Work as Secondment in Indonesia

[Alexr828]

Hi everyone,

I'm trying to find an easy way to make income and living here in Indonesia without the work permit dilemma and long process.

If I'm a director/shareholder in PT-PMA (lets call it X1) and have my own kitas/kitap, is it possible to work in another organization (lets call it X2) through a written secondment agreement? the work in X2 is not going to be as a director but consultant or project manager , so X2 pays X1 and X1 pays me a salary.

My questions are:
-Is this a common thing in Indonesia ? I did this overseas (UK, Australia ) where I used to work as a PM contractor for big organizations. so company X1 is always a small establishment, just to make me registered for business activities
-What else do I need? I believe tax number NPWP, and maybe insurance?
-Which companies in Indonesia that can accept this kind of agreement?
-Any recommendation for "noncomplicated" consultant or lawyer who can form agreements between X1 and X2?

I'll be grateful for all input and assistance on this matter , much appreciated.

Thank you and kind regards

Alex

 

[Will_M]

Seems more complicated than just getting a work permit and doing things “properly” ... A few years ago, my work permit was a long, time consuming affair. Our latest recruit, from UK, only needed 6-7 weeks for the process.

 

[Alexr828]

Seems more complicated than just getting a work permit and doing things “properly” ... A few years ago, my work permit was a long, time consuming affair. Our latest recruit, from UK, only needed 6-7 weeks for the process.

If everything in X1 is well established , then it is way quicker and easier than work permit. Many companies don't have all the documents and sponsorship requirements to apply for it

 

[Will_M]

Not here.

 

[snpark]

"No".

 

[centurion]

Y

Hi everyone,

I'm trying to find an easy way to make income and living here in Indonesia without the work permit dilemma and long process.

If I'm a director/shareholder in PT-PMA (lets call it X1) and have my own kitas/kitap, is it possible to work in another organization (lets call it X2) through a written secondment agreement? the work in X2 is not going to be as a director but consultant or project manager , so X2 pays X1 and X1 pays me a salary.

My questions are:
-Is this a common thing in Indonesia ? I did this overseas (UK, Australia ) where I used to work as a PM contractor for big organizations. so company X1 is always a small establishment, just to make me registered for business activities
-What else do I need? I believe tax number NPWP, and maybe insurance?
-Which companies in Indonesia that can accept this kind of agreement?
-Any recommendation for "noncomplicated" consultant or lawyer who can form agreements between X1 and X2?

I'll be grateful for all input and assistance on this matter , much appreciated.

Thank you and kind regards

Alex

Your company X1 can make a consulting agreement with company X2 to do the job on the project. X2 pays X1 for the services. You work for X1. This is not uncommon in Indonesia, and if set properly, it is legal.

X1 pays the regular corporate taxes and pays your salary or dividends.

Cross work permits are not allowed except for director/commissioner positions in multiple companies and for some exotic work positions.

 

[R Cameron]

The director/shareholder visa, which does not have RPTKA and IMTA, is not allowed to "work", only "direct". Acting as a consultant or project manager in your own PT PMA is already pushing the boundary of what is allowed by law, and being hired out to be a consultant or project manager in a different company is quite clearly outside the bounds of directing your own company. I am not a lawyer, but that is my interpretation. Perhaps someone else recalls the law that defines the law the role of director.

 

[centurion]

The director/shareholder visa, which does not have RPTKA and IMTA, is not allowed to "work", only "direct". Acting as a consultant or project manager in your own PT PMA is already pushing the boundary of what is allowed by law, and being hired out to be a consultant or project manager in a different company is quite clearly outside the bounds of directing your own company. I am not a lawyer, but that is my interpretation. Perhaps someone else recalls the law that defines the law the role of director.

Yes, they are allowed to work, according to the Labor Law, without RPTKA. Directing is also working. In Indonesian regulations, only the total absence of work is considered "not working".

Director can be also a managing/operational director, not a president director. I mentioned in the answer "if set properly". The company - PMA would bear the contract, not the directors.

 

[HappyMan]

The director/shareholder visa, which does not have RPTKA and IMTA, is not allowed to "work", only "direct". Acting as a consultant or project manager in your own PT PMA is already pushing the boundary of what is allowed by law, and being hired out to be a consultant or project manager in a different company is quite clearly outside the bounds of directing your own company. I am not a lawyer, but that is my interpretation. Perhaps someone else recalls the law that defines the law the role of director.

I'd be inclined to agree with you, if the matter is documented clearly. But, there is probably a hell of a lot of stretch room in "kerja bersama", acting as a liaison between your clients and "consulting department", and generally being a director who cares about "customer service". I wouldn't want to live with that ambiguity hanging over my head after investing 1.5 billion (?), but some people are used to grey.

The opposite side of this argument is that it is impossible to " direct" a company well while doing no "work". One must needs read and request reports, perhaps generate a few one's self while searching for " direction". One may have occasion to provide good and accurate examples of... any number of tasks to one's employees while establishing standards and providing training/guidance... Really this is going to come down to someone reporting you to KanIm and then being willing to be a witness to it, isn't it?

We've all heard one of those many, many, stories about a CEO who washes the office windows or something, right?

 

[centurion]

T

I'd be inclined to agree with you, if the matter is documented clearly. But, there is probably a hell of a lot of stretch room in "kerja bersama", acting as a liaison between your clients and "consulting department", and generally being a director who cares about "customer service". I wouldn't want to live with that ambiguity hanging over my head after investing 1.5 billion (?), but some people are used to grey.

The opposite side of this argument is that it is impossible to " direct" a company well while doing no "work". One must needs read and request reports, perhaps generate a few one's self while searching for " direction". One may have occasion to provide good and accurate examples of... any number of tasks to one's employees while establishing standards and providing training/guidance... Really this is going to come down to someone reporting you to KanIm and then being willing to be a witness to it, isn't it?

We've all heard one of those many, many, stories about a CEO who washes the office windows or something, right?

To be clear, "work" here is general managerial (i.e. president director) / managerial expert/specialized work (operational/finance/technical, etc director), not washing windows or working as a cook. If the work could fit in this category, there should be no problem.

For example, if a director(that is at the same time shareholder) of a restaurant works as a cook or director of a hotel works as a receptionist, that would be an unacceptable way of work. If an operational/research/technical etc director (that is at the same time shareholder) of a consulting company signs a research/work done for another company or has been on the field with his/her associates, it should constitute an acceptable work.

I think people are so afraid of Immigration/Manpower, that they simply do not believe the Government that they do not need a work permit (Omnibus Law incorporated this into the Labor Law with recent changes.)

 

[Dave70]

X1 pays the regular corporate taxes and pays your salary or dividends.

Aside from corporate taxes filed annually, there are other taxes to be paid every month (assuming X2 settles the bill from X1 once a month), X2 has to pay 'PPN' tax and withhold 'PPH Pasal 23' tax from X1.

X1 is obliged to give ‘Faktur Pajak’ to X2 while X2 is obliged to give ‘Bukti Pemotonggan Pajak’ to X1.

Indonesian taxation is complicated, it is impossible to follow the ever-changing laws and regulation without hiring a highly-qualified Tax Accountant and/or a certified Tax Consultant. Even the smallest PT (limited liability) company need to have one or the other (or both), especially if the company is PMA (as they are all PT).