Ready for your company registration in Bali Indonesia? Understand how to incorporate your company, including choosing a suitable entity and complying with local laws. This essential guide will lead you through each pivotal step without any fuss.

KEY TAKEAWAYS

  • Bali offers a diverse business environment with tourism as its economic backbone, presenting opportunities in various sectors like F&B, health, and tourism-related activities, and benefits from a relatively low cost of living.
  • Foreign investors can choose between a PT PMA, Local PT Company, or Representative Office in Bali, each with varying levels of foreign ownership, capital requirements, and operational scope.
  • The company registration process in Bali involves legal documentation, navigating the OSS system for business licensing, securing a business address, managing bank account setup, and complying with local tax regulations.

UNDERSTANDING THE BALI BUSINESS LANDSCAPE

Bali's business landscape with opportunities in tourism, food and beverages, and health and wellness sectors

Bali’s business landscape with opportunities in tourism, food and beverages, and health and wellness sectors

The business environment in Bali is as colorful and dynamic as its cultural scene, teeming with opportunities for foreign investors to explore. The island’s economy leans heavily on tourism, with a robust contribution from visitors that bolsters local businesses significantly. In 2019 alone, the inflow of international vacationers peaked at 6.3 million, showcasing an expanding market.

Other sectors like the food and beverage industry along with health and wellness offer considerable chances for investment beyond just tourism-centered activities. Entrepreneurs can benefit from the lower cost of living in Bali—on average only $1,060 monthly—which helps keep operational costs down. Due to enhanced internet connectivity services, fostering collaboration among location-independent businesses has become increasingly viable within Bali’s accommodating business sphere.

TYPES OF BUSINESS ENTITIES FOR FOREIGN INVESTORS IN BALI

Foreign investors choosing between PT PMA, Local PT Company, and Representative Office in Bali

Foreign investors choosing between PT PMA, Local PT Company, and Representative Office in Bali

Foreign investors seeking to establish a presence in Bali must first understand the various business entities available to them. The decision on whether to set up as a PT PMA, Local PT Company, or Representative Office should align with your specific business plans and requirements, each offering distinct advantages and constraints.

Delving into these legal entity options for conducting business is essential for understanding their individual characteristics and how they can serve different entrepreneurial needs.

PT PMA: FOREIGN-OWNED LIMITED LIABILITY COMPANY

To establish a Perseroan Terbatas Penanaman Modal Asing, or PT PMA, which is a type of Indonesian limited liability company for foreign investors, it is required to have at least two shareholders. These shareholders can be individuals or legal entities, and there is no restriction on their nationality, allowing for complete foreign ownership within the sectors permitted by Indonesian law.

The cost to establish a PT PMA includes a mandatory minimum capital investment that is set at IDR 10 billion, which is approximately USD 700,000, depending on the current exchange rate. This capital requirement is a demonstration of the investor’s commitment to their business venture in Indonesia. In addition to the capital investment, there are other costs associated with setting up a PT PMA, such as legal fees, notary fees, the cost of obtaining the necessary permits and licenses, and potential consultancy fees if the services of a local expert are engaged. The total cost of a PT PMA is usually around 20 000 000 IDR (around 1100 USD).

LOCAL PT COMPANY (PT PMDN): PARTNERING WITH INDONESIAN NATIONALS

Conversely, a Local PT Company allows for an expanded range of business activities, particularly in sectors that are off-limits to foreign investors. It also comes with reduced capital requirements, which makes it an appealing choice for small and medium-sized businesses. Specifically, the capital requirement for a Local PT Company is significantly lower than that of a PT PMA, with the minimum paid-up capital starting from IDR 50 million, depending on the size and scope of the business.

Any foreign investor looking to engage in industries restricted from foreign ownership can do so by forming a partnership with Indonesian citizens through a Local PT Company. Establishing such a company typically incurs lower costs compared to setting up a PT PMA, thereby offering an economical means for foreigners to invest and initiate their business ventures in Bali.

This type of company is especially advantageous for those who aim to closely collaborate with the local community and tap into the domestic market. By partnering with Indonesian nationals, foreign entrepreneurs gain valuable insights into the cultural nuances and consumer behavior that are essential for a business to thrive in Bali’s unique market landscape. Moreover, a Local PT Company can serve as a stepping stone for foreign investors to eventually transition into a PT PMA, should their business expand and the regulations allow for increased foreign investment in the future.

REPRESENTATIVE OFFICE KP3A OR KPPA: MARKET RESEARCH AND LIAISON

A Bali-based Representative Office, also known as Kantor Perwakilan Perusahaan Asing (KPPA) in Indonesia, is a non-income generating extension of an overseas parent company. It is primarily established for the following purposes:

  • Conducting in-depth market research and analysis to understand the local market dynamics and consumer preferences.
  • Maintaining and fostering business relations with local and regional partners, clients, and distributors.
  • Facilitating and coordinating promotional activities, such as participating in trade exhibitions and hosting business seminars, to enhance the visibility and brand presence of the parent company in the Indonesian market.
  • Engaging in other non-commercial activities that support the interests of the parent company, such as overseeing product quality and standards, providing after-sales service, and gathering business intelligence.

Setting up a Representative Office in Bali offers several strategic benefits for international companies:

  • It allows for a low-risk entry point to explore the Indonesian market and assess business opportunities without the need for a large capital investment.
  • The establishment procedure is relatively straightforward and faster compared to incorporating a full-fledged foreign investment company (PT PMA).
  • Representative Offices are exempt from the requirement to submit an investment plan, which is typically mandatory for other types of business entities.
  • They enjoy certain tax advantages, such as being exempt from corporate income tax, since they do not engage in direct sales or revenue-generating activities.

However, it is crucial to note that Representative Offices are restricted in their scope and are not allowed to conduct direct sales or transactions that result in income. Their role is limited to preparatory and auxiliary activities that pave the way for the parent company’s future investment or business expansion in Indonesia.

THE COMPANY REGISTRATION PROCESS IN BALI

Registering a company in Bali involves several critical stages, such as:

  1. Verifying the appropriate business classification
  2. Gathering all required documentation
  3. Utilizing the OSS system to obtain the NIB (Business Identification Number)
  4. Securing various licenses

Executing this process requires thoughtful preparation and attention. We will delve into these steps with greater detail and precision.

LEGAL REQUIREMENTS AND DOCUMENTATION

Registering a company in Bali involves meeting key legal requirements. For a foreign-owned PT PMA, necessary details must be provided including the company’s name, scope of business activities, and the official business address. Founders are expected to submit scans of their passports along with specifying the organizational framework concerning directors and shareholders.

In contrast, domestic companies or Local PT Companies need to secure an approved Deed of Establishment from Indonesia’s Ministry of Law and Human Rights as part of their registration process.

Businesses that potentially affect the environment have to comply with certain regulations designed for environmental protection by acquiring appropriate environmental licenses. Depending on what your business entails specifically, you may also be required to apply for Permits like a Nuisance Act Permit (HO), which would involve engaging with various ministries or local authorities.

NAVIGATING THE BUSINESS LICENSES AND THE OSS SYSTEM

The process of registering a company in Bali involves engaging with the Online Single Submission (OSS) system, an essential and streamlined licensing service mandated for all businesses to comply with. The OSS framework is instrumental in furnishing companies with their Business Identification Number (NIB), which acts not only as the import identifier but also facilitates customs clearance.

Beyond securing the NIB, this platform plays a pivotal role by consolidating various business licenses — encompassing location permits, environmental approvals, and building consents — into one uniform procedure. Post-licensing responsibilities compel businesses to submit regular reports detailing their investment realizations through this integrated system.

SECURING A SUITABLE BUSINESS ADDRESS AND VIRTUAL OFFICE SOLUTIONS

Securing a suitable business address in Bali

Securing a suitable business address plays a crucial role in the process of registering a company in Bali. Having an established physical address not only boosts your company’s trustworthiness, but also fulfills legal requirements. Yet, committing to traditional office spaces can be financially burdensome for businesses.

To mitigate this challenge, many companies opt for virtual office solutions that offer essential services such as mail management, allocation of local phone numbers and receptionist support without the necessity for expensive long-term conventional office rental agreements. This approach is widely accepted across different sectors due to its proven efficiency and adaptability.

OPENING A BANK ACCOUNT IN BALI

In order to open a bank account for your company in Bali that is foreign owned, you must present several critical legal documents. These include the deed of establishment, the NPWP (company tax number), and the business license. Banks may also require that either the director of the company or an authorized delegate be physically present to complete this process, with specific requirements varying based on individual bank protocols.

It’s advised for companies foreign owned to consider major Indonesian banks such as BRI, Mandiri, or BCA when setting up their business accounts because these institutions offer a more streamlined process and extensive banking services. Keep in mind though that establishing a bank account for your business can span across multiple weeks. Hence it’s crucial to integrate this time frame into your overall schedule for organizing your company’s setup activities.

OBTAINING BUSINESS LICENSES AND PERMITS

Prior to commencing operations, it is essential that your company secures the appropriate business licenses and permits. These are compulsory for all businesses within Bali. For industries such as healthcare, production of medical devices, and hospitality, additional certifications and licenses may be necessary before you can commence business activities.

It should also be noted that in Bali, business operations are categorized into three distinct risk categories: low, medium, and high. As stipulated by Government Regulation 5/2021, each category determines the specific operational licenses a business must obtain.

VISA AND WORK PERMIT OPTIONS FOR FOREIGNERS IN BALI

If you’re a foreign national living and working in Bali, understanding the various visa and work permit options is crucial for ensuring your stay is both legal and hassle-free. The choices range from the single entry visa, ideal for one-time visits, to multiple entry visas, which are best for those who travel frequently. Additionally, there are two types of KITAS (Kartu Izin Tinggal Terbatas) that are particularly relevant for expatriates:

  1. The Working KITAS is a limited stay permit designed for foreign individuals who are employed in Indonesia. To obtain this, you must have a sponsoring company in Indonesia that applies on your behalf. The Working KITAS is usually valid for one year and can be extended. It also requires a work permit (IMTA) from the Ministry of Manpower, which the sponsoring company must secure. The Working KITAS allows you to receive a salary and other formal employment benefits.
  2. The Investor KITAS is tailored for foreign investors who hold a certain amount of shares in an Indonesian company. This type of KITAS is beneficial as it exempts the holder from the requirement of having a work permit, simplifying the process and reducing the paperwork involved. The Investor KITAS can be valid for one or two years, depending on the investment amount, and is extendable as long as the investment is maintained.

For both types of KITAS, applicants are required to provide:

  • A passport with a minimum validity of 18 months
  • Recent color photographs
  • Proof of financial capability, such as a bank statement
  • Documentation from the sponsor company in Indonesia, including the company’s business license and the sponsor’s identity card

Foreigners aiming to secure legal employment status in Indonesia will need to navigate through these options and adhere to the stipulations set forth by the Indonesian government.

TAXATION AND REPORTING REQUIREMENTS FOR COMPANIES IN BALI

Running a business in Bali involves not only establishment and management processes, but also adherence to the region’s tax regulations, including timely reporting requirements. Businesses with an annual gross income no greater than IDR 4.8 billion benefit from a lower corporate income tax rate of just 0.5%. It is mandatory for all businesses within Bali to file their tax reports monthly as part of adhering to these regulations.

The imposition of corporate taxes in Bali is unbiased towards ownership types. Foreign-owned enterprises are subject to the same rates as local companies—these assessments hinge on revenue and profit figures exclusively. Certain sectors may receive tax incentives that can simplify their fiscal responsibilities through Indonesia’s Online Single Submission (OSS) system designed for this purpose.

TIPS FOR A SUCCESSFUL BUSINESS SETUP IN BALI

Tips for a successful business setup in Bali

Equipped with the understanding of how to establish a business in Bali, it’s time to focus on some tips for achieving a thriving business setup. Participate in networking functions aimed at businesses and expatriates to build valuable contacts, and make use of online resources to remain informed about prospects pertinent to your sector.

Adopting the laid-back attitude towards timekeeping and scheduling that is typical in Bali can promote balance between work and personal life. Take advantage of the lower costs associated with running operations on the island, which are conducive for bootstrapping your business. Consider utilizing shared working environments as they provide excellent opportunities for cooperation among startups and fellow entrepreneurs, thereby enhancing productivity as well as offering mutual support.

UTILIZING LEGAL SERVICES FOR COMPANY SETUP IN BALI

Navigating the legal intricacies of establishing a business in Bali can be a complex and daunting task, especially for foreign investors unfamiliar with Indonesian laws and regulations. It is therefore highly recommended to engage with professional legal services that specialize in Indonesian corporate law to ensure all procedures are correctly followed. These legal experts can provide invaluable assistance throughout the company setup process, offering guidance on the legal framework, handling necessary documentation, and advising on compliance with local laws.

Utilizing legal services can significantly streamline the process of setting up a company in Bali. Legal professionals can help with drafting the company’s articles of association, preparing the necessary incorporation documents, and liaising with government officials to secure all required licenses and permits. They can also provide insights into the best corporate structure for your business based on your long-term goals and the nature of your business activities.

Moreover, legal advisors can assist in navigating the intricacies of Indonesian corporate law, including understanding foreign ownership regulations, investment restrictions, and the nuances of labor laws. Their expertise can be critical in avoiding common pitfalls that new businesses may encounter and in ensuring that your business operations are fully compliant with Indonesian legal standards.

In summary, utilizing legal services for company setup in Bali is not just about fulfilling legal requirements; it’s about laying a solid foundation for your business’s future success. With the right legal support, you can confidently navigate the complexities of the business landscape in Bali, allowing you to focus on growing your business in this vibrant and dynamic market.

BUSINESS VISA AND PRE-INVESTMENT CONSIDERATIONS IN BALI

Before fully committing to setting up a company in Bali, it’s advisable for potential investors to visit the island and conduct thorough on-the-ground research. This is where a business visa or a pre-investment visa becomes essential. These types of visas allow for a short-term stay in Indonesia and are specifically designed for individuals who are exploring business opportunities or considering making an investment in the country.

A business visa is suitable for attending meetings, seminars, and other business-related activities, but it does not permit the holder to take up employment or engage in any form of income-generating activities. On the other hand, a pre-investment visa is tailored for entrepreneurs who need to spend time in Bali to study the local market, establish business connections, and evaluate the feasibility of their project before making the decision to invest.

ILA can assist with the application process for both types of visas, providing guidance on the required documentation and ensuring that all procedures are followed according to Indonesian immigration policies. This service is particularly beneficial for those unfamiliar with the local regulations or who may face language barriers. By securing the appropriate visa, investors can lay the groundwork for a successful business venture in Bali with ILA’s support every step of the way.

SUMMARY

In this comprehensive guide, we have thoroughly examined the process of establishing a business in Bali. The exploration has covered recognizing the commercial terrain, choosing an appropriate corporate structure, company registration and acquiring essential licenses and permits. It addressed how to open a bank account for your venture, secure a proper business address, as well as understanding visa and work permit protocols. Considered were adherence to tax laws and compliance with reporting obligations plus the importance of expert assistance throughout this endeavor.

FREQUENTLY ASKED QUESTIONS

HOW MUCH DOES IT COST TO SET UP A COMPANY IN BALI?

In Bali, establishing a PT PMA incurs an expense between IDR 20 million and IDR 35 million. The process of registering such an entity usually spans over a period of two to four weeks.

CAN AN FOREIGNER RUN A BUSINESS IN BALI?

Certainly, an foreigner has the capability to operate a business within Bali by establishing it as either a foreign-owned entity (PT PMA) or opting for a company owned locally (PT).

CAN FOREIGNER DO BUSINESS IN BALI?

Certainly, individuals from abroad are capable of establishing a business in Bali by forming a PMA (Penanaman Modal Asing) company. This permits foreign entrepreneurs to own up to the full extent of their company’s shares, making it the predominant form of enterprise for non-locals on the island.

HOW TO REGISTER COMPANY IN BALI?

In compliance with Indonesian regulations, registering a company in Bali necessitates an initial investment of at least 50 million IDR for a PT PMDN (local company) and 10 billion IDR for a PMA (foreign-owned company), together with the required number of shareholders.

WHAT ARE THE DIFFERENT TYPES OF BUSINESS ENTITIES FOR FOREIGN INVESTORS IN BALI?

Before deciding on an investment vehicle in Bali, foreign investors should evaluate the distinct types of business entities available to them—such as a PT PMA, Local PT Company PT PMDN, or Representative Office—based on their company’s specific requirements.

HOW LONG DOES IT TAKE TO REGISTER A COMPANY IN BALI?

The full registration of a company in Bali takes 3 days to 1.5 week for a PT PMA. A local company is faster can take 1 to 3 days.

Contact us if you need more information on how to set up a company in Bali.