Start or Buy a Business in Bali? A Guide for Foreign Investors

Many foreigners in Bali eventually want a business of their own: a yoga studio, a café, a small hotel. The first decision is not the location or the concept. It is the route you take into a business in Bali, because that choice determines your tax exposure, your upfront cost, and how quickly you can start trading.

There are three routes, and all of them lead to the same vehicle: a PT PMA, or foreign-owned limited liability company. This guide compares them from a tax and due diligence perspective, as of October 2026.

The ground rules

Foreign individuals cannot run a commercial business in Indonesia in their own name. They need a PT PMA, licensed through OSS, the government’s online business licensing system, under a business classification code (KBLI) that is open to foreign investment. Most tourism and hospitality activities are open, but some lines of business are restricted or reserved for small local enterprises under Presidential Regulation 10 of 2021 as amended by Presidential Regulation 49 of 2021.

Capital requirements were eased in October 2025. Under Ministry of Investment and Downstreaming/BKPM Regulation 5 of 2025, the minimum paid-up capital for a PT PMA fell from IDR 10 billion to IDR 2.5 billion. The planned investment value must still exceed IDR 10 billion per KBLI per project location, excluding land and buildings, although certain sectors such as food and beverage have different rules.

Three routes into a business in Bali

Route 1: set up a new PT PMA

You start with a clean company: no tax history and no inherited liabilities. The trade-off is time, because licenses, premises, staff, and customers all start from zero.

Route 2: buy shares in an existing company

If the business already runs through a local PT, you can buy its shares. The company then becomes a PT PMA and must meet the PMA rules, including the capital requirement. Licenses, contracts, and staff stay in place, which keeps the business trading.

The catch is that the company’s history comes with it. Any unpaid tax, unfiled returns, or employee obligations remain the company’s problem, and therefore yours as the new owner. Indonesia’s tax authority, the DJP (Directorate General of Taxes), can generally issue assessments for up to five years after the end of a tax year (Article 13(1) of the General Tax Provisions Law, UU KUP). The seller is taxed on any gain on the shares, and if the seller is not an Indonesian tax resident, the buyer may have a withholding obligation.

Route 3: a new PT PMA buys the business assets

Here you set up a new PT PMA, which then buys the equipment, fit-out, brand, and other assets of the existing business. The old company, and its tax history, stays with the seller.

This route needs more paperwork:

• The new company must obtain its own licenses.
• The property lease must be renegotiated or assigned.
• Employees must be re-hired, with any accrued obligations settled by the seller.

If the seller is registered for VAT (PPN), the asset sale is generally subject to VAT at an effective rate of 11% (12% on a tax base of 11/12 of the price). A buyer registered for VAT can usually credit this, so it is mainly a cash flow cost.

Illustration: share deal or asset deal?

A foreign buyer (fictitious) wants to acquire a yoga and pilates studio in Canggu run by PT Contoh Sehat (fictitious), a local company. The seller is asking IDR 2 billion.

Tax due diligence finds that the company has not withheld income tax (PPh 21) on payments to freelance instructors for three years. The estimated underpayment is IDR 150 million, before interest penalties.

Route 2, share deal:

• The buyer pays IDR 2 billion for the shares and inherits the IDR 150 million exposure, plus any penalties.
• The company must also meet the PT PMA capital requirement, which may require a capital injection.
• Protection comes from the contract: a price reduction, an indemnity from the seller, or part of the price held in escrow until the exposure is resolved.

Route 3, asset deal:

• A new PT PMA pays IDR 2 billion for the assets. If the seller is VAT-registered, VAT of about IDR 220 million applies, which the new company can credit once it is VAT-registered.
• The IDR 150 million exposure stays with PT Contoh Sehat.
• The buyer needs time to obtain new licenses and sign a new lease before trading under the new company.

Neither route is automatically better. The share deal favors continuity, the asset deal a clean start. Due diligence figures make the choice clear.

Practical steps: what to check before you sign

1. Confirm that the KBLI for the business is open to foreign ownership.
2. Review the target’s tax returns, payments, and withholding records for at least the last five years.
3. Check that licenses, building permits, and zoning match the actual activity.
4. Review the property lease: remaining term, transfer clauses, and whether rent tax was withheld.
5. List employees, contracts, and accrued obligations such as severance.
6. Build tax findings into the price, an indemnity, or an escrow.

After the deal: monthly tax obligations of a PT PMA

The tax work does not end at closing. A PT PMA has recurring obligations, all administered through Coretax, the DJP’s tax administration system:

• Withholding taxes: withhold and report income tax on salaries (PPh 21), services (PPh 23), and rent of land or buildings (a final 10% under Government Regulation 34 of 2017).
• Installments: pay monthly corporate tax installments (PPh 25).
• VAT: register once annual revenue exceeds IDR 4.8 billion, or earlier on a voluntary basis, then issue tax invoices and file monthly VAT returns.
• Deadlines: pay taxes by the 15th and file monthly returns by the 20th of the following month (Minister of Finance Regulation 81 of 2024).
• Annual return: file the corporate tax return by the end of the fourth month after the financial year.
• Investment report: if the company is medium or large scale, submit the quarterly investment activity report (LKPM) through OSS by the 15th of the month after each quarter.

One point often surprises new owners. Since Government Regulation 20 of 2026, the 0.5% final tax on turnover for small businesses is no longer available to new limited liability companies such as a PT PMA. Profits are taxed at the standard 22% corporate rate, with a 50% rate reduction on part of the taxable income for companies with revenue up to IDR 50 billion (Article 31E of the Income Tax Law).

Owning a business in Bali is achievable for foreign investors, but the route you choose shapes your risk long after signing. Time spent on structure and due diligence upfront costs far less than fixing problems later.

AnB Consulting’s business advisory team can support you with due diligence, PT PMA set-up, and ongoing monthly tax compliance. Contact us to discuss your plans.

This article is for general information only and does not constitute tax or legal advice for any specific situation. For guidance on how it applies to your business, please contact the AnB Consulting team.