Minimalist 3BR Villa w/ Private Pool, Rooftop Patio, and Home Office
Pererenan · 3 bedrooms
Rp 36.000.000/ mo
Legal
Rental income tax in Bali: what actually applies
Renting out a Bali property is taxed as business activity, and the rate depends entirely on the structure you hold it through.
Updated 19 October 2026 · 8 min read
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Why the structure comes first
The order most people take is: buy the villa, live in it, then decide to rent it out while away. That sequence creates the problem, because the structure that suited a home is not the structure that suits a business, and changing it afterwards means unwinding a title and tax arrangement rather than choosing one from the start.
If there is any prospect the property will earn money, decide the structure before you buy. It is the cheapest moment to get it right, and the only moment every option is still open.
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See all 156 →- 47% below the median price of 14 similar 3-bd rentals in Pererenan (±50% size): Rp 68.500.000.
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Who may let: a tax rate is not a permission
The 10% rate is often quoted as if it let a foreigner rent out a villa in their own name. It does not. PP 34/2017 says how rent is taxed, whoever receives it; it says nothing about who may run a letting business. That is set by the Investment Law: foreign investment in Indonesia has to take the form of a limited liability company under Indonesian law (Law 25/2007, Article 5(2)). A personal business registration (NIB) is issued against an Indonesian ID number (NIK), which a foreigner does not hold.
So for a foreign owner the answer is the same for a yearly tenant and for nightly guests: the rent is earned by a PT PMA, which needs a real-estate or accommodation business classification on its NIB. The 10% final tax is what the Indonesian landowner pays on the lease you signed with them, and what an Indonesian or resident individual pays on a house they let.
How rental income is actually taxed
Renting out land and/or a building in Indonesia falls under Article 4(2) of the income tax law (PPh Pasal 4 ayat 2), a final withholding tax set by Government Regulation PP 34/2017. The rate is 10% of the gross rent for a resident taxpayer, whether an individual or a company, and it is final — it is not added to other income and taxed again at a different rate.
If your tenant is a business or a government body, they are required to withhold the tax and pay it to the state on your behalf. If your tenant is an individual with no such obligation, the responsibility to calculate and pay the tax falls on you. PP 34/2017 sets no higher rate for a landlord without a tax number. The 20% figure some guides attach to “no NPWP” is a different rule: Article 26 of the income tax law taxes rent paid to a non-resident at 20% of the gross, and most practitioners read it as applying in place of the 10% final rate, though the tax office has not settled the point.
| Who’s earning the rent | Income tax | Other tax that may apply |
|---|---|---|
| Resident individual landlord (such as the Indonesian landowner), long-term lease | 10% final (PPh 4(2)) on gross rent | VAT if registered as PKP |
| Non-resident landlord | 20% of gross rent (PPh 26), in most practitioners’ reading | Same VAT rule |
| PT PMA earning rental or accommodation income | 22% standard corporate tax on net profit | VAT if PKP-registered; PBJT if short-term letting |
When VAT is added on top
VAT registration becomes mandatory once a business’s annual turnover reaches IDR 4.8 billion, at which point it must register as a Pengusaha Kena Pajak (PKP) and start charging VAT on its invoices. Below that threshold, registration is optional. The effective VAT rate for ordinary goods and services, including most rentals, works out to 11% in 2026 — the statutory rate rose to 12% in 2025, but the government applies it to a reduced tax base for everything except luxury goods, so 11% is the number that reaches an invoice in practice.
If you use a PT PMA, the rules changed in 2026
A PT PMA earning rental or accommodation income pays standard corporate income tax at 22% on its net taxable profit, not the 10% final tax a resident individual landlord pays. Companies with annual turnover under IDR 50 billion can still claim a partial reduction on part of their taxable income under Article 31E, but the headline rate for a PT PMA is 22%.
Some small companies used to elect a simpler 0.5% final tax on turnover instead of standard corporate tax. Government Regulation PP 20/2026, effective 22 April 2026, removed that option for newly incorporated PT and PT PMA companies — the 0.5% scheme is now reserved for individual entrepreneurs, one-person PTs and qualifying cooperatives. A new PT PMA set up to hold a rental villa goes onto the standard 22% regime from day one, on top of the IDR 2.5 billion minimum paid-up capital per KBLI code that has applied since BKPM Regulation 5/2025.
Short-term letting adds licensing, not just a different tax rate
Renting nightly through Airbnb, Booking.com or a similar platform is treated as an accommodation business, not a simple lease, and it carries obligations beyond tax. It needs an NIB (business registration number), the Villa classification — KBLI 55193, held through a PT PMA for a foreign-owned property — valid PBG and SLF building certificates, and registration for the local PBJT hotel and restaurant tax, capped at 10% and collected by the regency.
Enforcement of this licensing requirement is not theoretical: the Ministry of Tourism’s confirmed delisting run for unlicensed listings began 1 August 2026, not the 31 March date still repeated on some older guides. See the dedicated licensing guide for the full document checklist and what happens if a listing is delisted.
Common questions
Can I rent out a villa I hold on a leasehold?
Only if the lease permits subletting, and as a foreigner only through a PT PMA, which holds the business licence and declares the income. Many leases are silent on subletting or prohibit it outright, and silence is not permission.
Can a foreigner rent out a Bali villa in their own name?
No. Letting is a business, foreign investment has to be made through a PT PMA (Law 25/2007, Article 5(2)), and a personal business licence needs an Indonesian ID number. That holds for a yearly tenant as much as for nightly guests.
What tax rate applies to rental income in Bali?
10% of the gross rent, final, for a resident landlord; most practitioners read 20% of the gross (Article 26) for a non-resident. A PT PMA, the structure a foreign owner lets through, pays standard 22% corporate tax on its net profit instead.
Does the rate double without an NPWP?
Not under PP 34/2017, which sets 10% final with no higher rate for a landlord without a tax number. The 20% figure belongs to Article 26, the tax on rent paid to a non-resident.
Does a PT PMA pay less tax on rental income than an individual?
Not automatically — a PT PMA pays 22% on net profit rather than 10% on gross rent, and since PP 20/2026 it can no longer elect the lower small-business final tax. Which is cheaper depends on your margins, not the headline rate alone.
Is VAT charged on Bali villa rental income?
Only if the owner is registered as a PKP (taxable entrepreneur), which becomes mandatory once annual turnover reaches IDR 4.8 billion. Below that, registration is optional.
Is short-term letting taxed differently from a long-term lease?
Yes. Nightly letting is an accommodation business requiring an NIB, the correct KBLI classification, building certificates and local PBJT hotel tax — on top of whichever income tax regime applies to the structure.
Looking for a home in Bali?
Tell the Baliestate assistant your budget and dates. It replies in minutes with homes that fit and books the viewings.
General information, not tax advice. Sources: Government Regulation PP 34/2017 (10% final tax on rent of land and buildings); Income Tax Law Articles 4(2) and 26; Investment Law 25/2007, Article 5(2). Rates and thresholds change, and whether a specific arrangement counts as a lease or an accommodation business affects which regime applies — confirm current obligations with an Indonesian tax consultant.