Step 1: Establish a PT PMA to start villa rentals in Bali
Foreign-owned companies, known as Perseroan Terbatas Penanaman Modal Asing (PT PMA), are corporate entities allowing foreigners to engage in commercial activities in Bali and other parts of Indonesia.
To set up a PT PMA in Bali, you must acquire a business license from the Indonesia Investment Coordinating Board (BKPM). It necessitates submitting an investment plan, minimum paid-up capital of at least IDR 2.5 billion ($162,500), and electing a board of directors.
Step 2: Find a property
Once you’ve successfully established a PT PMA, finding the right property for your Bali villa rentals is the next crucial step. There are several ways to find a property, such as property listing websites, which have many listings with properties in Bali for sale.
When selecting a property, ensure it meets the needs of potential guests and is located in a desirable area, such as near the beaches and tourist attractions. A clear idea of the layout and style you want would be best, as it helps you determine the appropriate property size that would fit your desired villa.
Step 3: Acquire the necessary licenses to build or renovate the villa
There are a lot of nuances when it comes to land ownership laws in Bali. PT PMAs must acquire a Hak Guna Bangunan (HGB) if they own a property built on someone else’s land through leasehold. In addition to the Hak Guna Bangunan, you might acquire a Persetujuan Bangunan Gedung (PGB) or a Building Approval to start construction. This step may take months or years, depending on the size of your villa. To start villa rentals in Bali, you might also have to apply for Pondok Wisata, which allows you to rent your villa to guests.
These ownership certificates are essential, considering that laws are strict regarding foreigners owning land. Check out our guide if you want in-depth knowledge about these property rules.
Step 4: Find a maid/housekeeper to clean and improve the security
The success of a villa rental business in Bali depends mainly on the state of the villa. A clean and secure villa attracts more tourists and returning guests. Find a maid or housekeeper to clean the villa regularly, take care of the utilities, and help the guests with check-in and check-out.
Also, think about the security of the property. You can install security cameras to secure the property and give guests a safe feeling. Hiring a security guard to monitor the property at night is also possible.
Step 5: List your villa on booking websites
It is now time to market your villa. Letting people find your villa may be a challenge at the beginning since there are probably other well-established listings. However, there are several strategies that you can employ to increase the visibility of your villa rentals in Bali.
You can use many platforms like Booking.com and Airbnb. These platforms provide a broad reach and enable you to showcase your villa’s unique features and amenities to a global audience. Social media platforms like Instagram and Facebook create a strong brand presence and engage with potential guests.
Click here to list your villa on Airbnb to start villa rentals in Bali.
Step 6: Promote your villa
Promoting your villa in Bali is essential and can be done differently. You can get help with villa marketing from a property management company experienced in attracting more guests to your house.
Collaborating with local travel agencies and tour operators can also increase your reach and attract more guests. By building solid relationships with these businesses, you can tap into their existing customer base and expand your business’s reach in Bali. You can also promote by paying for targeted ads and posting in online marketplaces and word of mouth.
Step 7: Villa maintenance
Villa maintenance is critical to long-term success when you start villa rentals in Bali. Maintaining a villa rental property on your own is challenging, especially when it comes to keeping it in top condition and ensuring the satisfaction of your guests.
To achieve this, we recommend using the help of property management companies that can manage everything from daily operations to villa maintenance and repairs.
What are the taxes for renting out property in Bali?
Don’t forget to consider property taxes when starting villa rentals in Bali. Below are the most important taxes foreigners should consider.
Withholding Tax (PPh)
Non-residents pay a Withholding Tax in Bali. This tax is also known as the ‘rental income tax’ or ‘lease tax’ and taxes the gross rental income generated through villa rentals. The Withholding Tax has a flat rate of 20% on the gross income unless there is a Double Tax Agreement (DTA) between Indonesia and the non-resident’s home country. A DTA may reduce the Withholding Tax tax rate to 10%.
| Type of resident | Tax rate |
|---|---|
| Indonesian tax resident | 10% |
| Non-tax residents | 20% |
Corporate Income Tax (CIT)
Companies, such as PT PMAs, that own property pay Corporate Income Tax on the revenue generated through property rentals. This tax is also applied to capital gains earned on the property. The corporate income is taxed at a flat rate of 22%.
| Income | Tax rate |
|---|---|
| Income from villa rentals | 22% |
Personal Income Tax (PIT)
Indonesian or foreign residents in Bali who earn income through property rentals must pay Personal Income Tax. The Personal Income Tax rate varies between 5% and 35%, depending on their income. The table below outlines an overview of the Personal Income Tax rates applicable to tax residents in Indonesia.
| Income | Tax rate |
|---|---|
| Up to IDR 60 million ($3,900) | 5% |
| IDR 60 million ($3,900) – IDR 250 million ($16,250) | 15% |
| IDR 250 million ($16,250) – IDR 500 million ($32,500) | 25% |
| IDR 500 million ($32,500) – IDR 5 billion ($325,000) | 30% |
| Over IDR 5 billion ($325,000) | 35% |
Ready to start your villa rental business in Bali? Let us help!
Launching a villa rental business in Bali is a rewarding venture, but it involves understanding local regulations, setting up operations, and creating a marketing strategy to attract guests. Our team of experts can help you navigate every step, ensuring your business is compliant and positioned for success. Whether you’re just starting or need guidance with specific aspects, we provide tailored support to help you succeed. Leave your details below, and we’ll reach out to assist you, or email us directly at [email protected] for professional advice.
Frequently Asked Questions (FAQs)
Is it hard to start villa rentals in Bali?
It’s not hard to start villa rentals in Bali, but it requires understanding local regulations, market conditions, and effective property management. With the right approach and compliance, it can be a successful venture.
Do I need a PT PMA to start villa rentals in Bali?
Yes, a PT PMA (foreign-owned company) is required for foreigners to legally start villa rentals in Bali. This ensures compliance with Indonesian business and property laws.
How much are villas in Bali to rent?
On average, renting a villa in Bali costs between IDR 1 million ($65) and IDR 3 million ($195) per night. However, factors such as size, location, and amenities significantly affect the villa rental prices.
Is it worth buying a villa in Bali?
Buying a villa in Bali can be worth it due to its popularity as a tourist destination, potential rental income, and appealing lifestyle. However, it’s essential to consider local market trends, legalities, and long-term property management.
How long can you own a property in Bali?
Foreigners typically opt for leasehold properties, which can last up to 30 years and can be extended up to 80 years. Freehold ownership is only available to foreigners if the property is acquired through a PT PMA.
