Opening a Business in Bali

Before diving into the intricate process of starting a business in Bali, it’s crucial to comprehend the local business landscape. Familiarise yourself with Indonesian regulations, particularly those related to foreign investment.

Consulting with a local business advisor can provide invaluable insights into legal requirements, permits, and licensing, helping you establish a solid foundation for your venture.

In order to establish a company in Indonesia, you must meet certain requirements and capital investment. Selecting the appropriate business structure is a pivotal decision that can impact your operations and liabilities.

All foreign companies in Indonesia are PT PMAs (Perseroan Terbatas Penanaman Modal Asing), a limited liability company with foreign direct investment. A company is classified as a PT PMA as long as it has any shares held by a foreign national or a foreign company, regardless of the percentage—whether it’s 100%, 51%, or even 1%. The presence of foreign shareholders classifies the company as foreign-owned.

However, if the intention is solely to act as a representative of an overseas company in Indonesia without generating income from local activities, an alternative option is to establish a representative office.

Each structure comes with its own set of regulations and tax implications, so it’s essential to choose wisely. Engaging legal counsel with experience in Indonesian business law can help you navigate these complexities and ensure compliance.

In order to establish the PT PMA (foreign-owned company), the following must be in place before the registration process can begin:

Shareholders – Minimum two people or legal entities (100% owned subsidiary is not possible). If the shareholders can also be legal entities, then the director and commissioner must be physical persons.

Director – Have at least one resident director: this must be a foreigner who applies for a KITAS, or an Indonesian physical person.

Commissioner – does not have to be resident and have a KITAS. It can be a foreigner not living in Indonesia.

There is a lot to cover and understand when you set up a business, so it is best that you go through one of our trusted business and legal experts. 

Establishing a PT PMA in Bali typically costs around IDR 40 million. 

The setup and registration typically only take a few weeks at the most and the steps below are required.

1. Company Name Approval: Select a unique company name that complies with regulatory requirements.
2. Deed of Incorporation: Prepare this official document, including the Article of Association, and obtain approval from a public notary (like the company’s birth certificate).
3. Legal Entity Approval: The Ministry of Law and Human Rights must endorse your business as a legitimate entity, a process that follows notarisation and is comparable to obtaining an official stamp. 
4. Tax Formalities: Register for a Tax ID (NPWP) and secure a Taxable Entrepreneur Confirmation (PKP) from the tax office. These serve as your business’s equivalent of a Social Security Number and are crucial for tasks such as opening a bank account, managing taxes, and obtaining a business licences. 
5. Domicile Letter Acquisition: Obtain a letter from the local district indicating your business location, akin to a proof of business address. 
6. Company Registration Certificate (TDP): This certificate acts as official confirmation of your company’s establishment, comparable to a medal of recognition. 
7. NIB Application: Following registration, your company will be issued the NIB (Business Identification Number), along with a Business License and Location Permit.
8. Additional Business Licences: Depending on your business activities, you may need to apply for additional Indonesian business licences to ensure full operational compliance.
9. Open a local business account.

The general corporate tax rate is 22%

For companies with a turnover of less than IDR 4.8 billion, a reduced Corporate Income Tax rate of 0.5% on turnover applies for the first three years of operation.

After this period, these companies are subject to an 11% tax rate on profit if their turnover remains below IDR 4.8 billion, or the standard 22% rate if their turnover exceeds this threshold.

The specific compliance costs for your business in Indonesia will vary depending on its structure, size, and operations. Below are some common ongoing expenses to be aware of:

1. Office Address Requirements

If your business does not require a physical commercial space, you may need to rent a virtual office to meet legal address requirements. Prices typically range up to IDR 8 million per year.

2. Document Translation

After your company is officially registered, you may choose to have your documents professionally translated into English for internal use or international stakeholders.

3. Tax Reporting Obligations

Tax reporting is mandatory—even if your business has no income or activity. Reporting can be required on a monthly, quarterly, or annual basis. Engaging a tax consultant or an in-house accountant ensures timely submissions and full compliance with local tax regulations.

4. Payroll and Legal Support

If you employ staff, you may need monthly payroll services and legal compliance support, which vary depending on your employee count and industry requirements.

5. Mandatory Reports

• LKPM (Investment Activity Report)
  Must be submitted quarterly via the OSS (Online Single Submission) system by foreign-owned companies (PT PMAs).

• Tax Reports (SPT)
  Both monthly and annual tax reports are required, regardless of business activity. A qualified tax consultant can help manage this process.

• Sector-Specific Licensing
  Depending on your industry, additional licenses or permits may be required. These must be kept up to date to avoid penalties or disruption of operations.

A PMA Company must apply for an Expatriate Manpower Utilization Plan and follow procedures to obtain work and stay permits (IMTA) to employ expats.

Not all positions are open to foreigners.

The minimum monthly wage in Bali is 3.3million (full-time) per month for Indonesian workers, depending on the regency, and IDR 8 million for foreign workers.

Investing in property through a PT PMA in Bali is the most popular option for investment in Indonesia, as the PT PMA offers the opportunity to invest foreign capital and own not only leasehold property but also freehold.

Only a PTM PMA can purchase a Hak Milik land title (right to own), also known as the freehold title, which is the most powerful land title in Bali. It gives complete control over land or property, and the owner can utilise the land according to his will. This title can be purchased from Indonesian nationals.

Has opening a restaurant, cafe or bar in Bali been a dream of yours?

If opening a café or restaurant has been a dream of yours but the upfront investment and commitment seems too expensive back in your home country – high rent charges, payroll and competing with global restaurant and coffee chains – Bali could be the place to bring your independent restaurant vision to life.

It may surprise you, but a lot of people who open a restaurant in Bali do not come from a food and beverage (F&B) background. Instead, they are investors and see the potential for a high return on investment (ROI) that a restaurant business in Bali can produce.

Opening a business in a new country can be a minefield, so it is strongly advised to team up a local based hospitality advisor experienced in Bali’s hospitality climate, who can guide you with Bali specific market trends, legal and due diligence procedures, suppliers and recruitment and contracts in Bali. Indonesia regularly changes laws and operating a new business or industry, as a foreigner with a completely different culture and language can be very difficult, without the right experience and guidance.

Click here for our step-by-step guide on what you need to know about opening a restaurant in Bali safely.

Bali Capital Connect, powered by United Founders—the island’s largest network of business leaders—is a curated, read-only WhatsApp group that connects Bali-based entrepreneurs with aligned investors.

Designed to simplify access to capital and strategic partnerships, the platform supports smarter investments, stronger businesses, and a more resilient local economy.

Whether the goal is to invest in an existing business, finance a new venture, franchise a proven concept, or explore strategic opportunities, Bali Capital Connect offers a transparent, low-barrier way to stay informed—all in one place.

How it works:

• Members join a read-only WhatsApp group

• Listings are shared by trusted business leaders

• Opportunities span industries such as hospitality, wellness, tech, and retail

• Interested parties connect with founders or brokers directly outside the group

We work with a network of highly trusted business, tax, and legal advisors to guide you every step of the way — whether you’re setting up offshore or in Bali. Most setups can be completed in as little as two weeks.

Our advisors can help with:

• Company setup, structuring, and licensing

• Accounting and tax packages, plus consultations

• Compliance management

• Legal and immigration services, including working visas