We understand that business disputes are unavoidable, and navigating complex business disputes may be difficult and time-consuming, that is where our arbitration lawyers come in. We assist and represent companies like yours in resolving commercial disputes efficiently through every step of arbitration process.
Among the most common ways we provide the following services to our clients:
How Arbitration Works in Indonesia:
Arbitration in Indonesia is governed primarily by Law No. 30 of 1999 concerning Arbitration and Alternative Dispute Resolution. Here’s an overview of the key procedural mechanisms:
Employees are entitled to 12 days of paid annual leave after completing one year of continuous service with the same employer. This entitlement is separate from public holidays and must be provided in compliance with company regulations or employment contracts.
What is a Demand Letter?
A demand letter is a formal written notice sent to an individual or entity outlining a legal claim and demanding a specific action, such as payment of a debt or performance of an obligation. It serves as a first step to resolving disputes without resorting to litigation proceedings in court.
When should I use a Demand Letter in Indonesia?
A demand letter is typically used in situations where you have a legal claim against another party, such as unpaid debts, breach of contract, or property disputes. It’s an effective way to seek a resolution before considering legal action in court.
Is a Demand Letter legally required before filing a lawsuit before the Indonesian Court?
Yes, it is legally required according to Indonesian Supreme Court orders.
How long should I give the other party to respond to a Demand Letter?
Typically, a demand letter gives the other party 14 to 30 days to respond, depending on the nature of the claim and the urgency of the situation.
What happens if the other party ignores the Demand Letter?
As your lawyer, we will follow up, conducting communication and negotiation with the other party, before escalating the matter by pursuing legal action in court. The demand letter serves as evidence and legal ground before filing a lawsuit.
Can a Demand Letter be used for Debt Collection in Indonesia?
Yes, a demand letter is commonly used in debt collection to formally request payment of outstanding debts. It can help prompt the debtor to pay or negotiate a settlement before considering more serious legal actions.
Can a Demand Letter be used in International Disputes involving Indonesian law?
Yes. It sets out your claim under Indonesian law and seeks resolution before potentially involving foreign legal systems or arbitration.
What should I do if I receive a Demand Letter?
Read it carefully and understand the claims being made. Assess the validity of the claims and gather relevant documents. Consult with our lawyers to evaluate your legal options. Respond within the timeframe specified, either agreeing to the demands, negotiating, or denying the claims.
Can a Demand Letter be sent via email in Indonesia?
While traditional methods like registered mail are preferred for their formality and proof of delivery, a demand letter can also be sent via email, especially for preliminary negotiations. However, ensure you keep records of correspondence and delivery confirmation.
Can a Demand Letter include a demand for legal fees?
Yes, it can be included for reimbursement of legal fees incurred due to the dispute.
What are the next steps if a Demand Letter is failed?
If a demand letter is ignored or failed, the next steps may include initiating formal legal proceedings, such as filing a lawsuit or seeking arbitration. Consult with our lawyers to determine the best course of action based on the specifics of your case.
What is Contract Drafting?
Contract drafting involves creating legally binding agreements tailored to the needs of the parties involved, ensuring all essential terms and conditions are clearly defined.
Why is contract review important?
Contract review helps identify potential risks, clarify obligations, and ensure that the contract aligns with your legal and business interests, preventing future disputes.
What should be included in a contract?
Key elements include the parties’ identities, terms of the agreement, rights and obligations, payment details, dispute resolution mechanisms, and termination conditions.
Do contracts in Indonesia need to be in Bahasa Indonesia?
Yes, under Indonesian Law No. 24 of 2009, contracts involving Indonesian entities must be drafted in Bahasa Indonesia. However, bilingual contracts are also common for international dealings.
How long does it take to draft or review a contract?
The timeframe depends on the complexity of the contract. Simple agreements can be handled in days, while more complex contracts may take longer due to negotiations or specific legal considerations.
Can I modify a contract after signing it?
Yes, contracts can be modified post-signature, but amendments must be agreed upon by all parties and documented in writing to be enforceable.
What are common mistakes in contract drafting?
Common mistakes include ambiguous terms, missing key clauses, overlooking applicable laws, and failing to address dispute resolution.
Do I need a lawyer for every contract?
While not legally required, consulting a lawyer ensures the contract is legally sound, protects your interests, and avoids potential pitfalls.
What happens if a contract term is violated?
If a contract term is violated, it constitutes a breach. The non-breaching party may seek legal remedies such as damages, contract termination, or specific performance, depending on the contract’s terms.
What are the risks of using template contracts?
Templates may not account for the unique aspects of your transaction or relationship, which can lead to gaps in protection or unforeseen legal risks.
Is electronic signature valid in Indonesia?
Yes, electronic signatures are legally recognized in Indonesia under the Electronic Information and Transactions Law, provided they meet certain requirements.
Can international contracts be governed by foreign law?
Yes, parties can choose foreign law to govern their contract. However, the contract must still comply with Indonesian law when it involves Indonesian parties or is executed in Indonesia.
What should I look for in a contract review?
Look for clarity in obligations, fairness in terms, compliance with Indonesian laws, potential risks, and whether your rights and interests are adequately protected.
In Indonesia, divorce can be filed through the Religious Court (for couples of the same Muslim religion), or the District Court (for Non-Muslim religion and mixed-religion marriages). You must meet certain grounds for divorce as stipulated in Indonesian law.
Employment contracts must be in writing and should clearly outline both employer’s and employee’s rights and obligations, including job responsibilities, working hours, salary, benefits, and the duration of employment. The contract should comply with Indonesian Manpower Law No. 13 of 2003, as amended by the Job Creation Law.
What taxes must businesses pay monthly in Indonesia?
Businesses in Indonesia typically pay withholding taxes (PPh 21, 23, 26), VAT (PPN), and final taxes (PPh 4(2)) on a monthly basis. These taxes are due by the 10th or 15th of the following month, depending on the tax type, with filings due by the 20th.
What is the deadline for filing my company’s annual corporate tax return?
The annual corporate tax return (SPT Tahunan PPh Badan) is due by the 30th of the 4th month after your fiscal year ends. For most companies, this means April 30th.
What happens if I miss a tax payment deadline?
Late tax payments are subject to interest penalties under Indonesian tax law. We help clients ensure timely payments to avoid such penalties.
Do individuals need to file an annual tax return?
Yes, individuals earning income in Indonesia must file their personal income tax return (SPT Tahunan PPh Orang Pribadi) by March 31st each year.
How can I ensure my company is VAT-compliant?
To remain VAT-compliant, businesses must calculate and pay VAT on all taxable goods and services monthly, filing the necessary returns by the 20th of the following month. We can assist with accurate calculations and on-time filing.
What are the penalties for incorrect or late tax filings?
The penalties for incorrect or late tax filings can include fines, interest penalties, and in some cases, further investigations by the tax authority. We prioritize accuracy and timeliness to help you avoid these penalties.
What is the role of withholding tax (PPh 21, 23, 26) in my business?
Withholding tax obligations apply to salaries, services, dividends, royalties, and payments to non-residents. It is your responsibility to withhold these taxes and report them monthly to the tax authorities.
How do I calculate my corporate income tax?
Corporate income tax is calculated by reconciling your financial statements according to tax regulations, determining your taxable income, and applying the corporate tax rate. We provide guidance on accurate calculations and filing.
Is there any audit risk if I follow the tax compliance procedures?
While following the tax compliance procedures lowers your audit risk, the Indonesian tax authority may still select your company for an audit. We support you during the audit process to ensure smooth handling.
What records do I need to maintain for tax compliance?
You need to maintain accurate records of all financial transactions, including sales, purchases, payroll, and expenses. Proper documentation is essential for monthly and annual tax filings and audits.
Are there any tax incentives for businesses in Indonesia?
Yes, certain industries and regions qualify for tax incentives, such as reduced corporate income tax rates or tax holidays. We can help identify any applicable incentives for your business.
What should I do if I discover an error in my tax return after submission?
If you find an error in your tax return, you can submit an amendment to correct it. We assist in preparing amended returns and communicating with the tax authorities to minimize any penalties.
What should I do if I cannot meet the tax payment deadline?
If you anticipate a delay in tax payment, it’s crucial to notify the tax authority and explore possible payment extensions. However, penalties may still apply. We advise on how to manage such situations effectively.
How can I stay updated on changes in tax regulations?
Tax regulations in Indonesia can change frequently. We keep our clients informed of any changes that may affect their tax obligations and ensure compliance with the latest rules.
Can foreign companies operating in Indonesia also file tax returns?
Yes, foreign companies with a Permanent Establishment (PE) in Indonesia are subject to local tax regulations and must file monthly and annual tax returns. We specialize in helping foreign companies comply with Indonesian tax laws.
What are the key regulations governing labor & employment in Indonesia?
Law No. 13 of 2003 on Manpower, as amended by Government Regulation in Lieu of Law No. 2 of 2022 on Job Creation, Law No. 2 of 2004 on Industrial relations Dispute Settlement, Government Regulation No. 35 of 2021, etc.,
What are the legal grounds for terminating an employee in Indonesia?
It will be varied, including company’s merger & acquisition or company’s liquidation, company is under bankrupt, company’s financial condition, completion of employment contract, violation of employment contract, gross misconduct, employee resigns voluntarily, etc.,
What is the minimum notice period to terminate employment?
At least 14 business days, or 7 business days is termination is during probationary period. For employee resignation, written notice must be submitted by the employee at least 30 days before the last day.
What is the company’s obligation (financial compensation) to its terminated employee?
For a Permanent employee, the company is obliged to pay a severance package, which comprises: severance pay, service appreciation pay, and compensation of entitlements.
For a Fixed-Term employee, the company must compensate the employee in an amount equivalent to the remaining salary of the employee until expiry of the employment contract.
Postnuptial Agreement, known as “Perjanjian Setelah Nikah” in Indonesian, is similar to a Prenuptial Agreement but is entered into after marriage.
