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Buying property in Bali through a company (PT PMA)

Buying property in Bali through a company
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Buying property in Bali through a company has become a popular option for foreigners interested in real estate investment in Bali. This is mainly due to the restrictions on foreign property ownership in Indonesia, which only allow Indonesian nationals to hold property or land under the highest form of property ownership, Hak Milik (HM). Fortunately, foreigners can use a PT PMA to buy property in Bali, enabling them to hold property, generate income, and stay in Bali for the long term.

Can a company own property in Indonesia?

In Indonesia, a company is allowed to own property on a leasehold or freehold basis. Foreigners can establish a company known as PT PMA (Penanaman Modal Asing) to legally own property in Indonesia. The PT PMA framework ensures compliance with Indonesian regulations and provides legal protection for foreign investors. This structure allows foreigners to have freehold property ownership, which is typically restricted to Indonesian nationals.

Buying property in Bali through a company requires strict regulatory adherence, including registration with the Investment Coordinating Board (BKPM), regular reporting, tax compliance, and adherence to Indonesian company law.

To buy freehold property under a PT PMA in Indonesia, the company must obtain a Hak Guna Bangunan (HGB) title for the land or property. The HGB title permits a legal entity, like a PT PMA, to own the land or property for a period of up to 30 years, with an option to extend to 80 years. This title is also crucial when a PT PMA intends to lease land and construct on it. In this scenario, the PT PMA needs to obtain an HGB title for the building on the land, establishing its legal ownership of the building while the landlord remains the legal owner of the land. Hak Milik titles can be converted to Hak Guna Bangunan if the owner is a legal entity, while HGB titles can be converted to Hak Milik if the owner is an Indonesian national.

Why would you buy property in Bali through a PT PMA?

Buying property in Bali through a PT PMA provides numerous benefits:

  • Freehold ownership: Foreigners can legally own freehold property in Bali through a PT PMA, which is otherwise only allowed for Indonesian nationals.
  • Assets ownership: Indonesian law allows PT PMAs to own multiple properties and other assets, making a company an ideal way for asset ownership management.
  • Investment opportunities: Companies have the option to rent out properties and generate rental income, providing foreigners with the opportunity to earn money from real estate in Bali.
  • Legal protection: Buying property through a PT PMA provides legal protection, as the PT PMA is a legal entity under Indonesian law, giving it more protection than foreigners without Indonesian passports.
  • Extended ownership periods: PT PMA permits long-term ownership without frequent renewals, based on land title and certificates, unlike leasehold agreements limited to 25 or 30 years.
  • Long-term stay: Shareholders of PT PMA are eligible to apply for a 2-year KITAS, a visa that permits a two-year stay in Bali, subject to renewal.

Buying property in Bali through a company in 6 steps

Buying property in Bali through a company is a straightforward process if you follow these six steps.

Step 1: Establishing a PT PMA

First, you need to establish a PT PMA. This involves registering your company with the BKPM, creating legal documents, and fulfilling the capital requirements. It’s important to work with a legal expert who can guide you through this process.

Step 2: Finding a property or land

One way to find property or land for building your own property is by searching on a real estate platform. Another option is to use the assistance of a local real estate agent who understands the market, has a broad network, and offers a wide selection of properties.

Step 3: Conducting due diligence and signing the sales agreement

The next step is to conduct due diligence on the property. This includes verifying land titles, checking for any encumbrances, and ensuring compliance with zoning laws. Once this is done, you can sign a sales agreement. This contract outlines the terms and conditions of the sale, including price, payment schedule, and other terms.

Step 4: Obtaining necessary licenses and permits

Depending on the type of property and ownership, you may need additional licenses and permits. Make sure to obtain all the necessary licenses and permits for the property ownership, such as Hak Guna Bangunan, building permits (PBG), environmental permits, and other local authorizations.

Step 5: Transferring the property title

Work with a notary to officially transfer the property to the PT PMA. The notary ensures all legal requirements are met and records the transfer with the relevant authorities.

Step 6: Compliance and reporting

Maintain compliance with Indonesian regulations by regularly reporting to the BKPM and other government bodies. This includes annual financial reports, tax filings, and other mandatory disclosures to ensure ongoing legal compliance.

Get help with buying property in Bali through a corporation

Are you interested in buying property in Bali through a company? Own Property Abroad is here to help you. Our expert team provides valuable assistance with establishing a PT PMA and buying real estate in Bali. To learn more about how we can assist you, please provide your details below or email us at hello@ownpropertyabroad.com.

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Leave your name and email below – Our property expert will reach out and help you with buying property in Bali through a PT PMA.

Frequently Asked Questions (FAQs)

What is a PT PMA and does it allow foreigners to buy property in Bali?

A PT PMA is a company type in Indonesia that allows foreigners to legally own freehold property. It provides a legal structure and framework that adheres to Indonesian regulations, ensuring property rights are protected.

What are the requirements to establish a PT PMA?

The requirements to establish a PT PMA include a minimum capital (IDR 10 billion ($610,000)), having at least two shareholders, having a legal office address, a business plan, getting foreign investment approval from BKPM, and compliance with Indonesian laws.

How long does it take to establish a PT PMA and buy property in Bali?

Establishing a PT PMA typically takes 3 to 7 weeks, depending on the complexity and compliance requirements. The property purchasing process, including due diligence and title transfer, can add an additional 1-2 months.

Are there any restrictions on the type of property a PT PMA can buy?

Yes, a PT PMA can buy commercial properties, land for business purposes, and residential properties intended for commercial use (e.g., rental properties). Purely residential property purchases are restricted and require specific compliance.

How much tax do I pay when buying property in Bali through a company?

When buying property in Bali through a company, you might be subject to acquisition tax (5%), Value Added Tax (10%), and Land and Building Tax (PBB).

Your guide to buying property in Bali
Written by Matt Timmermans

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Your guide to buying property in Bali
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