Doing Business in Bali: Your Complete Legal and Business Setup Guide with The Bali Lawyer
Bali, the “Island of the Gods,” has become one of the most popular destinations not only for tourism but also for business and investment. Entrepreneurs from around the world are drawn to Bali’s unique combination of natural beauty, vibrant culture, and growing economy. Whether you are planning to start a villa business, open a restaurant, establish a company, or invest in real estate, understanding how to legally and successfully do business in Bali is essential.
At The Bali Lawyer, we specialize in helping local and foreign investors navigate the complex legal and administrative landscape of doing business in Bali. Our team provides end-to-end legal assistance to ensure your venture operates within Indonesian law, giving you confidence and peace of mind.
Understanding the Business Environment in Bali
Bali’s economy thrives on tourism, hospitality, real estate, and creative industries. In recent years, the island has seen a steady increase in foreign entrepreneurs investing in boutique hotels, restaurants, coworking spaces, wellness centers, and digital startups. The Indonesian government actively supports foreign investment through regulations that allow foreigners to establish companies under specific business structures.
However, doing business in Bali requires an understanding of Indonesian laws, permits, tax systems, and ownership restrictions. It’s important to follow all the necessary legal steps to avoid complications later.
Choosing the Right Business Structure
When planning to start a business in Bali, selecting the appropriate legal entity is the first and most important step. The main types of business entities available to investors include:
1. PT PMA (Foreign-Owned Company)
A PT PMA (Perseroan Terbatas Penanaman Modal Asing) is the most common and secure business structure for foreign investors. It allows partial or full foreign ownership, depending on the industry sector. This type of company gives you the legal right to operate, hire employees, and conduct commercial activities in Indonesia.
2. Local PT Company
A PT (Perseroan Terbatas) is a locally owned company that can be set up by Indonesian citizens. Foreigners may not own shares directly in a local PT, but local partnerships are often used when foreign participation is limited in certain industries.
3. CV (Commanditaire Vennootschap)
A CV is a partnership structure often used for smaller, local businesses. However, it is not recommended for foreign investors as it does not provide limited liability protection or legal ownership rights for foreigners.
4. Representative Office
If you’re not ready to launch a full-scale business but want to explore opportunities or represent your foreign company in Indonesia, a representative office might be the right choice. It cannot generate revenue in Indonesia but can conduct market research, networking, and business development activities.
The Bali Lawyer assists clients in identifying the best structure for their business goals and ensures all legal requirements are met for registration and operation.
Legal Requirements for Setting Up a Business in Bali
Before starting operations, several legal steps must be completed to comply with Indonesian law. These include:
Business Name Reservation – Choosing a unique and compliant company name approved by the Ministry of Law and Human Rights.
Deed of Establishment – Drafting and notarizing the company’s articles of association.
Legalization by the Ministry – Your company must be legalized and registered with the Ministry of Law and Human Rights.
Business Identification Number (NIB) – The NIB acts as your company’s registration number and import/export license.
Operational Licenses and Permits – Depending on your business type (e.g., tourism, restaurant, property, etc.), additional sector-specific permits may be required.
Tax Registration – Every company must obtain a tax identification number (NPWP) and comply with Indonesian tax regulations.
At The Bali Lawyer, we handle each of these steps efficiently, ensuring full compliance with all legal requirements.
Land Ownership and Business Location
Foreigners cannot directly own land in Indonesia, including in Bali. However, several legal arrangements make it possible for foreign investors to secure land use rights for their businesses:
Hak Pakai (Right to Use) – Allows foreign individuals or companies to use the land for specific purposes for an agreed period.
Hak Guna Bangunan (Right to Build) – Grants the right to construct and own buildings on leased land for a certain duration.
Leasehold Agreements – A common method for foreigners to legally lease property or land for business use.
It’s crucial to ensure that the land you use for business is properly zoned and legally registered. The Bali Lawyer provides land due diligence, verification, and contract drafting services to safeguard your interests.
Taxation and Financial Regulations
All businesses operating in Bali are subject to Indonesian tax laws. This includes:
Corporate Income Tax – Based on your company’s profits.
Value Added Tax (VAT) – Applies to most goods and services.
Employee Taxes – Includes payroll and social security contributions.
The Bali Lawyer offers comprehensive legal guidance on taxation compliance, helping your company stay fully aligned with Indonesian financial regulations.
Hiring Employees and Work Permits
If you plan to employ both local and foreign staff, it’s essential to comply with Indonesia’s labor laws.
For Local Employees:
Employers must provide fair contracts, social security, and health insurance as required by law.
For Foreign Employees:
Foreigners require a KITAS (Limited Stay Permit) and IMTA (Work Permit) to work legally in Indonesia. Companies must meet certain criteria and follow strict documentation procedures.
The Bali Lawyer assists businesses with obtaining work permits, employee contracts, and compliance with labor laws to ensure a smooth hiring process.
Common Business Sectors in Bali
Many sectors thrive in Bali’s growing economy. The most popular industries for local and foreign investment include:
Tourism and Hospitality – Hotels, resorts, villas, restaurants, and travel agencies.
Real Estate Development – Property leasing, villa construction, and investment.
Wellness and Health – Yoga studios, spas, and wellness retreats.
Creative Industries – Event management, photography, film production, and digital marketing.
Technology and Startups – Coworking spaces, app development, and IT services.
Each sector may have unique licensing and operational requirements, which our team at The Bali Lawyer can help you understand and fulfill.
Importance of Legal Due Diligence
Before making any investment or signing business contracts in Bali, legal due diligence is essential. This process helps identify potential legal risks, hidden obligations, or issues with ownership rights.
Our law service ensures you are fully informed about your partners, property, and business agreements before committing. With The Bali Lawyer, your business is protected through thorough documentation and legal transparency.
Compliance and Ongoing Legal Support
Once your business is established, maintaining compliance is just as important as setting it up. Ongoing legal obligations include tax filings, license renewals, employment regulations, and annual company reports.
The Bali Lawyer offers continuous legal support to ensure your company remains compliant with all local and national laws. We also provide updates on any regulatory changes that may affect your business.
Why Choose The Bali Lawyer
Local Expertise – Our lawyers have in-depth knowledge of Indonesian business law and years of experience assisting investors in Bali.
End-to-End Service – From company registration to ongoing compliance, we manage every legal aspect of your business.
Foreign Investor Support – We specialize in guiding foreigners through the legal complexities of starting and managing a business in Indonesia.
Transparent and Reliable – We prioritize clear communication and legal accuracy in every service we provide.
Start Your Business in Bali with Confidence
Doing business in Bali can be incredibly rewarding when managed legally and strategically. With proper legal guidance, your business can thrive in one of the most dynamic and beautiful locations in the world.
The Bali Lawyer is your trusted partner for business setup, legal compliance, and ongoing support. We handle the legal complexities so you can focus on growing your enterprise with confidence.
Whether you’re launching a new venture or expanding an existing business, contact The Bali Lawyer today to get professional assistance with your legal and business needs in Bali.
The Bali Lawyer – Your Legal Partner for Business Success in Bali.