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How to Pay Contractors in Indonesia: Complete 2025 Guide

For businesses paying independent contractors in Indonesia

Quick Summary

Best payment methods for Indonesian contractors:

  1. Wise (lowest fees, best rates)
  2. Payoneer (very popular in Indonesia)
  3. PayPal (widely accepted)
  4. Bank transfer (traditional method)

Key requirements:

  • NPWP (Indonesian tax ID)
  • Written service agreement
  • Currency considerations (USD preferred over IDR)
  • Tax compliance (contractor's responsibility)
  • Foreign exchange regulations

Why This Guide Is Different

Indonesia has a rapidly growing tech sector and large freelance workforce. If you're hiring contractors in Indonesia, you need to understand:

  • Payment method preferences (Wise, Payoneer, and PayPal all work)
  • Currency considerations (USD preferred over IDR)
  • NPWP requirements (Indonesian tax identification)
  • Tax compliance and withholding rules
  • Foreign exchange regulations
  • Time zone considerations (WIB is UTC+7)

Payment Methods Compared

MethodCostSpeedBest For
Wise$3-$101-3 daysRegular payments, best exchange rates
Payoneer$5-$121-3 daysVery popular with Indonesian freelancers
PayPal$5-$15InstantWidely accepted, instant transfers
Bank Transfer$20-$403-7 daysLarge amounts, traditional method

Recommended: Wise or Payoneer

Why Wise and Payoneer work best for Indonesia:

  • Both widely accepted by Indonesian contractors
  • Lower fees than traditional bank transfers
  • Reliable and established in Indonesia
  • Can withdraw to local bank accounts
  • Better exchange rates than banks

Currency Considerations

Most Indonesian contractors prefer USD over IDR for stability and international purchasing power.

USD vs IDR

Pay in USD (recommended):

  • Most contractors prefer USD for stability
  • Better exchange rates through Wise/Payoneer
  • Easier for international transactions
  • Protects against IDR fluctuations

Pay in IDR only if:

  • Contractor specifically requests IDR
  • You have IDR operations in Indonesia

Pro tip: Most Indonesian tech contractors prefer USD. Always confirm currency preference before setting up payments.

Tax and Compliance Requirements

NPWP (Tax ID)

NPWP (Nomor Pokok Wajib Pajak) is Indonesia's tax identification number.

  • Required for: All contractors providing services
  • Your responsibility: Verify contractor has valid NPWP
  • Contractor's responsibility: Register with tax office and maintain NPWP

Your Responsibilities (as the client)

  • Verify NPWP: Ensure contractor has valid tax ID
  • Written agreement: Have clear service contract
  • Payment records: Keep documentation of all payments
  • No withholding: You don't withhold Indonesian taxes (contractor handles this)

Important: As a foreign company paying an Indonesian contractor, you typically don't have tax withholding obligations in Indonesia. The contractor handles their own tax compliance. Consult with a tax professional for your specific situation.

Common Mistakes (And How to Avoid Them)

Mistake 1: Paying in IDR

Problem: Most contractors prefer USD for stability and international purchasing power.

Solution: Always ask contractor's currency preference. Most will prefer USD.

Mistake 2: Using Expensive Bank Transfers

Problem: Traditional bank transfers cost $20-$40 per transaction.

Solution: Use Wise ($3-$10) or Payoneer ($5-$12) for much lower fees.

Mistake 3: Not Verifying NPWP

Problem: Contractor may not be properly registered with tax office.

Solution: Request NPWP certificate before first payment.

Tools for Managing Indonesian Contractors

Kontrable is built specifically for managing international contractors:

  • Track payments across Wise, Payoneer, PayPal, and other methods
  • Store contracts and invoices
  • Handle multiple currencies (USD, IDR, EUR, etc.)
  • Generate payment reports for accounting
  • No per-contractor fees (unlike Deel at $49/month per contractor)
Join Kontrable Waitlist

Frequently Asked Questions

Q: Should I pay Indonesian contractors in USD or IDR?

A: Most Indonesian contractors prefer USD for stability. Always confirm with your contractor.

Q: What's the best payment method for Indonesia?

A: Wise and Payoneer are both excellent choices. Wise typically has lower fees ($3-$10), while Payoneer is very popular among Indonesian freelancers.

Q: Do I need an EOR platform for Indonesian contractors?

A: No. EOR is for employees. Indonesian contractors handle their own tax compliance. You just need a good payment method (Wise/Payoneer) and contractor management tool (Kontrable).

Q: What is NPWP and why is it important?

A: NPWP is Indonesia's tax identification number. All contractors should have one to be properly registered with the tax office. Always verify your contractor has a valid NPWP before starting work.

Get Started

Managing Indonesian contractors?

  1. Verify contractor has valid NPWP
  2. Set up Wise or Payoneer business account
  3. Create written service agreement
  4. Confirm currency preference (usually USD)
  5. Get contractor's payment details
  6. Set up regular payment schedule

Want to automate this?

Kontrable launches January 2026 with contractor management tools built for international teams.

Join the Waitlist →

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