Renting Your Villa in Bali: A Guide to Legality

Thinking of renting out your Bali villa for some extra income? Here’s a breakdown of the legalities involved to ensure you’re operating smoothly and staying compliant.

Short-term rentals (daily/weekly) require a Pondok Wisata License. However, this license is only available to Indonesian citizens or entities. Foreigners and foreign-owned companies (PT PMA) cannot hold a Pondok Wisata license.

The Pondok Wisata license covers properties with up to 5 bedrooms. If your villa has more bedrooms, you’ll need to explore other options.

For foreigners, conducting business in Indonesia requires a PT PMA company setup. This company must have the proper classifications and permits to rent out villas for long terms (over a month). Setting up a PT PMA involves a significant investment, typically with a minimum paid-up capital requirement.

Important Note for PT PMA Directors and Investor Kitas Holders: While you can own a PT PMA and hold an Investor Kitas visa, you cannot directly market or advertise your villa. This marketing must be handled by your Indonesian staff. Be aware: there have been instances of deportation for foreign villa owners who actively marketed their properties while on Investor Kitas visas.

Operating without a permit or company is illegal. This applies whether you’re living in Bali or renting out your villa remotely. Immigration can take action, including villa closure and guest eviction. Even on a visit visa, handling bookings constitutes conducting business and violates visa terms.

Solution for Foreign Villa Owners: Consider partnering with a reputable villa management company. This company would handle agreements, control of the villa, taxes, marketing, and guest communication. You would also be responsible for paying taxes in your home country.

By understanding these regulations, you can ensure your Bali villa rental business operates legally and successfully.