How to Start a Business in Bali as a Foreigner: A Step-by-Step Guide

Starting a business in Bali as a foreigner offers exciting opportunities, but navigating the legal and administrative processes can be challenging. With the right approach and guidance, you can establish your business successfully while complying with Indonesia’s regulations. Here’s a detailed guide on how to get started:

1. Choosing the Right Business Structure

Foreigners usually set up a PT PMA (Penanaman Modal Asing), which allows for foreign ownership in Indonesia. This is the most common business entity for international entrepreneurs. A PT PMA can engage in various business activities, but you must ensure that your business sector is open for foreign investment under Indonesia’s Negative Investment List.

2. Preparing the Required Documents

Before registering your business, it’s important to gather all necessary documentation. Key documents include:

• Valid passport
• A comprehensive business plan
• Financial proof to demonstrate that you can meet the capital requirements (for PT PMA, a minimum of IDR 10 billion is needed as paid-up capital)
• Tax Identification Number (NPWP)

Make sure you work with a legal consultant who understands the local requirements to avoid delays.

3. Obtaining Licenses and Permits

Once your PT PMA is registered, you need to secure several licenses:

• NIB (Nomor Induk Berusaha) – a Business Identification Number
• OSS (Online Single Submission) – to manage online registrations
• IMB (Izin Mendirikan Bangunan) – for physical business locations
• Other specific permits based on your business sector, such as a tourism license if you’re opening a hotel or travel agency.

Having the right permits is crucial to avoid fines or shutdowns, so double-check that you have all required documents before launching your business.

4. Engaging with Local Authorities

You’ll need to work closely with the Indonesia Investment Coordinating Board (BKPM), which handles foreign investment approvals. This step is essential for registering your PT PMA and obtaining the necessary legal recognition to operate in Indonesia. BKPM will guide you through the investment process, and it’s important to stay in touch with them for updates.

5. Opening a Local Bank Account

All businesses in Indonesia are required to operate through a local bank account. Choose a reputable Indonesian bank that offers services to foreign business owners. Having a local account will help with payroll, tax payments, and daily operations. Banks often require your business registration documents, tax number, and personal identification to open an account.

6. Hiring Local and Foreign Employees

Indonesia has strict regulations regarding hiring employees. While you can hire both local and foreign staff, there are limitations on the number of foreign workers you can employ. For foreign employees, you will need to apply for work permits, such as a KITAS visa, which is valid for six months to one year and can be extended. For local hires, you must comply with Indonesia’s labor laws, including minimum wage requirements and employee benefits.

7. Understanding Taxes and Financial Obligations

Indonesia has a corporate tax rate of 22%, and you are required to submit tax reports regularly. In addition to corporate tax, you must also pay VAT (Value Added Tax) if your business revenue exceeds IDR 4.8 billion annually. Make sure to hire a local accountant or work with a tax consultant to ensure your business complies with Indonesian tax laws.

For more detailed information on the visa process for foreigners starting a business, visit our page dedicated to visa types and requirements. You can also explore how Bali is perfect for digital nomads looking to establish remote businesses.

CTA: Are you ready to bring your business idea to life in Bali? Contact Eagle Travel Agency for expert advice on business setup, visas, and living arrangements in Bali. Let’s turn your vision into reality!