Bali Business Setup: Legal Steps for Foreign Entrepreneurs

Bali isn’t just an island for sunsets and yoga — it’s becoming one of Southeast Asia’s fastest-growing hubs for entrepreneurs, investors, and digital founders. Whether you’re opening a café, wellness retreat, villa management company, or tech startup, success here begins with legal structure and compliance.

This guide by DDA Real Estate explains step-by-step how to start a business on Bali legally in 2025 — from PT PMA registration to visas, bank accounts, and taxes.

Why Start a Business in Bali

• Fast-growing economy: Tourism, real estate, and wellness are driving consistent growth.
• International community: Expats and digital nomads create strong demand for quality services.
• Legal ownership options: Foreigners can operate through a PT PMA (foreign-owned company).
• Lifestyle advantage: A global business base in a tropical paradise.

Bali is where lifestyle meets opportunity — if you do it right from the start.

Step 1 — Choose the Right Business Structure

Foreigners can’t own local Indonesian entities (like CV or PT Lokal) directly. Instead, you must establish a PT PMA (Perseroan Terbatas Penanaman Modal Asing) — a foreign-owned limited company.

Structure	Who Can Own	Use Case	Ownership
PT PMA	Foreigners	Long-term business, property, rentals, services	Up to 100% (varies by sector)
Local PT	Indonesians	Domestic business	100% local
Representative Office	Foreign corporations	Market research only	No income generation

Why PT PMA

• Full legal recognition in Indonesia.
• Can hire local and foreign employees.
• Eligible for Investor KITAS.
• Can own land under HGB (Right to Build).
• Access to local banking, taxes, and OSS licensing.

A PT PMA is the only legitimate way for foreigners to operate a business in Indonesia.

Step 2 — Prepare Required Documents

You’ll need to prepare and submit the following:

• Passports and digital photos of all shareholders/directors.
• Proposed company name (3 options approved by the Ministry of Law).
• Company address — can be virtual for the first year, but must later match the operating location for licensing and tax audits.
• Defined business activities (using KBLI codes).
• Minimum paid-up capital: IDR 10 billion (~USD 650,000), with only 25% required as initial deposit.

Choosing the correct KBLI (Indonesian Business Classification Code) is essential to avoid future licensing or tax mismatches.

Step 3 — Register Your PT PMA

Company registration in Indonesia is now fully online via the OSS (Online Single Submission) system.

Process:

• Draft company deed (Akta Pendirian) with a licensed notary.
• Obtain approval from the Ministry of Law and Human Rights.
• Register your NIB (Business Identification Number).
• Apply for a Tax ID (NPWP).
• Request any sector-specific licenses (F&B, hospitality, consulting, etc.).

Timeline: 3–6 weeks. With professional guidance, your PT PMA can be active within two months — including tax and operational setup.

Step 3.1 — Open a Corporate Bank Account

Once your company is officially registered, the next step is to open a corporate bank account with one of Indonesia’s major banks — such as BCA, Mandiri, or DBS.

You’ll need:

• Company Deed (Akta Pendirian)
• NIB (Business Identification Number)
• NPWP (Tax ID)
• Director’s KITAS or passport

Most banks offer multi-currency accounts (IDR, USD, SGD) — perfect for international transfers and investment capital inflows.

Opening a business bank account in Bali is mandatory for all PT PMA companies and is often required before applying for an Investor KITAS.

Step 4 — Obtain an Investor KITAS

Your company’s directors or shareholders can live and work legally in Indonesia under an Investor KITAS.

KITAS Type	Duration	Key Benefit
Investor KITAS	1–2 years	No separate work permit required
Working KITAS	6–12 months	For hired foreign employees
Dependent KITAS	1–2 years	For family members

The Investor KITAS grants long-term stay, business management rights, and tax advantages for company owners.

Step 5 — Understand Taxes & Compliance

Running a PT PMA means following Indonesia’s corporate compliance framework.

Here’s what you’ll need to report:

Report / Tax	Frequency	Rate	Platform
Corporate Income Tax (CIT)	Annual	22%	DJP Online
VAT (PPN)	Monthly	11%	e-Faktur System
Payroll Tax (PPh 21)	Monthly	5–35%	DJP Online
LKPM Investment Report	Quarterly	—	OSS RBA
Zero Reports	Monthly	—	Required even with no income

Stay compliant from day one — missing reports can freeze your company’s NIB and delay KITAS renewals.

Costs & Timeline Summary

Sector	Trend	ROI Potential
Hospitality & F&B	Strong post-pandemic growth	10–15% annual
Real Estate & Villa Management	Consistent ROI	8–12% annual
Wellness & Fitness	Growing international demand	10–14% annual
Tech & Digital Services	Remote-friendly ecosystem	Variable
Education & Training	Stable expat + local market	8–10% annual

These figures represent average market rates for 2025. Costs vary by business sector and service provider.

Step 6 — Choose the Right Industry

Phase	Process	Duration	Approx. Cost (USD)
Company Registration	OSS setup + NIB	3–6 weeks	1,500–2,000
KITAS Application	Investor or Working	2–4 weeks	1,000–1,800
Monthly Accounting & Tax	Ongoing compliance	—	150–300 / month

The best opportunities in Bali combine lifestyle with recurring income — think hybrid wellness spaces, co-living villas, or eco-luxury retreats.

Step 7 — Hire and Operate Legally

Indonesia’s labor laws require PT PMA companies to employ locals alongside foreigners.

• Minimum ratio: 4 local employees per 1 foreigner.
• All contracts must be in Bahasa Indonesia.
• Employers must register for BPJS (Social Security).

Following these guidelines keeps your business compliant and builds community trust.

Step 8 — Keep Reporting & Renewals Up to Date

Once your business is running:

• File monthly tax reports via DJP Online.
• Submit quarterly LKPM through OSS RBA.
• Renew KITAS and business licenses before expiry.
• Update OSS data after any company changes (address, ownership, capital).

Compliance isn’t just paperwork — it’s what keeps your PT PMA legally active and investor-ready.

Disclaimer

This article provides general legal information based on 2025 Indonesian regulations. Always confirm details with a licensed notary (PPAT) or consult DDA Real Estate’s legal team before incorporating or purchasing land.

Common Mistakes

Even the most well-intentioned entrepreneurs can make mistakes when navigating Indonesia’s legal landscape. Regulations are clear — but different from Western systems — so misunderstanding the process can quickly turn an exciting venture into a bureaucratic problem.

Here are the five most common (and costly) mistakes foreigners make when starting a business in Bali — and how to avoid them.

• 1. Starting Operations Before Registering Your PT PMA
  Many investors rush to rent an office, hire staff, or even start selling before their PT PMA (foreign-owned company) is officially approved. This is illegal under Indonesian business law.
  
  Why it’s risky:
  Until your NIB (Business Identification Number) is issued via OSS, your company technically doesn’t exist — meaning you cannot sign contracts, issue invoices, or employ anyone legally. Immigration can also interpret premature operations as “work without permit”, resulting in fines or deportation.
  
  Wait until your PT PMA and NPWP are active before starting commercial activities. It’s not delay — it’s protection.
• 2. Using Nominee Ownership Instead of HGB (PT PMA Structure)
  Some agents or “consultants” still recommend registering assets under a local nominee’s name, claiming it’s “faster and cheaper” than forming a PT PMA. This shortcut is the most dangerous decision you can make.
  
  What actually happens:
  The property or business legally belongs to the Indonesian nominee, not you. Your “private agreement” has no legal standing — the nominee can sell, transfer, or cancel it anytime.
  
  The legal alternative:
  A PT PMA can own land under HGB (Hak Guna Bangunan) for up to 80 years (30 + 20 + 30) and operate 100% legally. This structure is recognized by BPN and protects your rights as a foreign investor.
  
  Nominee ownership is not a “loophole” — it’s a trap. Always use a PT PMA structure for full compliance.
• 3. Forgetting to File “Zero Reports”
  Even if your PT PMA hasn’t started generating income, you must still file monthly and quarterly tax reports via DJP Online and OSS RBA.
  
  Why it matters:
  Indonesia’s system automatically flags inactive companies as “non-compliant.” After several missed reports, your NIB can be frozen, blocking your bank account and visa renewals.
  
  How to stay compliant:
  Submit monthly “zero tax” filings (no revenue, no VAT). File quarterly LKPM (Investment Reports) even if operations haven’t started. Hire an accountant to handle DJP filings. Zero reporting keeps your company “alive” — missing reports kills your legal status faster than tax debt.
• 4. Choosing Incorrect KBLI Codes
  Every PT PMA must define its KBLI (Klasifikasi Baku Lapangan Usaha Indonesia) — the business classification code — during registration. Choosing the wrong code may seem minor, but it has major consequences.
  
  Why it’s a problem:
  Your company might lack the correct license to operate. The tax office may apply incorrect rates or reject filings. OSS may block your NIB renewal due to code mismatch.
  
  Example:
  You plan to run a café but register under a “consulting services” KBLI. When you apply for a restaurant permit or alcohol license, it’s denied because your registered business field doesn’t match.
  
  Consult professionals who understand both your business model and KBLI system before registration — fixing codes later costs time and money.
• 5. Hiring Foreigners Without Valid KITAS
  Indonesia’s immigration and labor regulations are strict. Foreigners working without the proper visa (KITAS or KITAP) face fines, deportation, and even company sanctions.
  
  Common mistake:
  Owners think that once their PT PMA is registered, they can immediately hire expat staff. In reality, each foreign employee needs a Working KITAS, and the company must comply with the 4:1 ratio — four local employees for every foreigner.
  
  For company owners:
  Directors and shareholders can operate under Investor KITAS, which doubles as a residence and work permit.
  
  Never “test run” staff on tourist visas — it’s one of the fastest ways to attract legal trouble.

The Bottom Line

Each of these mistakes comes from one thing — trying to move too fast. Indonesia rewards compliance: a properly structured company can operate for decades without issue.

With expert setup, you gain:

• Legal protection for your assets
• Tax and visa stability
• Freedom to scale your business globally from Bali

At DDA Real Estate, we handle every step — from PT PMA formation to tax setup — so your focus stays on growth, not bureaucracy.

Read also: “Reports for companies on Bali”, “Opening a business on Bali: tips, requirements and legal steps”, “Company Formation on Bali | KITAS”.

DDA Real Estate — Your Partner for Legal Business Setup

DDA Real Estate provides end-to-end business setup and legal support for foreign entrepreneurs in Bali.

Our services include:

• PT PMA registration (OSS, NIB, NPWP)
• Investor & Working KITAS
• Accounting and tax reporting
• Lease & land verification for offices or villas
• Corporate compliance and renewals

Start your business with confidence — DDA handles the legal foundation while you build the brand.