Do foreign directors and commissioners who do not live in Indonesia need a work permit?

There are still many questions about what if the Foreign Workers (TKA) who hold the positions of directors or commissioners in an Indonesian company are abroad? Is it necessary for the employer to have a permit to employ foreign workers, such as the ratification of the Plan for the Employment of Foreign Workers (RPTKA), Limited Stay Permit (ITAS)?

Based on Article 5 of the Minister of Manpower Regulation Number 10 of 2018 concerning Procedures for the Use of Foreign Workers (“Permenaker 10/2018”), the foreign workers who was hired by the employers must fulfill the following requirements:

1. Have an education in accordance with the qualifications of the position to be occupied by the TKA;
2. Having a competency certificate or having work experience of at least 5 (five) years in accordance with the qualifications of the position to be held by a foreign worker;
3. Transferring his expertise to Co- Workers;
4. Have a Taxpayer Identification Number for foreign workers who have worked for more than 6 (six) months; and
5. Have ITAS for work issued by the competent authority.

ITAS referred to in Article 1 paragraph 14 of Permenaker 10/2018 is a permit given to foreigners to stay and be in the Indonesian Territory for a certain period of time to work. This means that, foreign workers who are members of the Board of Directors but domiciled outside the territory of Indonesia and who are employed by the company (employer) are not foreign workers as referred to in Permenaker 10/2018, namely to must have ITAS, Therefore the employer is not obliged to have RPTKA approval. ratification of Notification and payment of Non-Tax State Income (PNBP) in the form of Compensation Fund for the Use of Foreign Workers (DKPTKA).

However, if the foreign Director or Commissioner becomes a shareholder in the company, then based on Article 10 paragraph 1 (a) of the Presidential Regulation Number 20 of 2018 concerning the Use of Foreign Workers (“Perpres 20/2018”), The Employers of the foreign workers is not required to have RPTKA to employ TKA who are shareholders who serve as members of the Board of Directors or members of the Board of Commissioners of the employers of foreign workers.

As for Article 48 paragraph 3 (a) of the BKPM Regulation Number 5 of 2019 concerning amendments to the Regulation of the Investment Coordinating Board Number 6 of 2018 concerning Guidelines and Procedures for Licensing and Investment Facilities, the minimum value of share ownership as a shareholder and serving as a director or commissioner in the company is at least Rp1,000,000,000.00 (one billion Rupiah) or its equivalent in United States dollar as stated in the deed.

Suria Nataadmadja & Associates Law Firm

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