Bali Tax Office to Crack Down on Unlicensed Foreign-Owned Villas, Warns Against Nominee Schemes

At a meeting in Denpasar on August 10, 2026, Bali Tax Office (DJP Bali) chief Darmawan told members of the local business association MAI Bali that authorities will step up scrutiny of foreign-run villa businesses across the island.

Unlicensed villa operators will be required to register based on local government databases and pay taxes in accordance with Indonesian law. DJP Bali has already signed memoranda of understanding with three regencies—Jembrana, Klungkung, and Karangasem—and is preparing similar agreements with Gianyar and Tabanan.

The office is also monitoring compliance with foreign investment (PMA) rules, which require a minimum investment of over Rp10 billion per 5-digit business classification (KBLI) code per project site, excluding land and buildings, per Investment Ministry/BKPM regulations. DJP is developing systems to trace the origin of funds used in these ventures.

Darmawan said the office will investigate foreign entrepreneurs operating through incorporated companies (PT), noting that some notaries have facilitated villa ownership through nominee arrangements—a practice that violates Indonesian investment law. New regulations are being drafted requiring notaries to issue legally accountable documentation.

MAI Bali chairman Alit Wiraputra said local businesses in property, agribusiness, construction, and hospitality struggle to compete with well-capitalized foreign investors who often operate without loan interest, unlike local operators who rely on bank financing. He also noted that foreign operators sometimes pay lower effective taxes than local businesses. In Pemogan, South Denpasar, foreign nationals have reportedly begun operating boarding houses (kos), squeezing out local competitors.

Darmawan acknowledged that any discrepancies in tax treatment stem from gaps in the office's information-gathering, and said all investors—foreign, national, and local—should be held to the same standard. He welcomed continued input from industry groups.