OWNERSHIP

What are the different type of ownership in Bali ?

o In Bali, there are different types of ownership rights that individuals can hold for properties. Here are the common ownership rights and their respective durations:

o Hak Milik (Freehold): Hak Milik is the highest form of ownership and grants full rights and control over the property. It is akin to freehold ownership in other countries. The duration of Hak Milik ownership is indefinite, without a specific expiration date. This type of ownership can be held by Indonesian citizens or Indonesian legal entities, such as companies.

o Hak Pakai (Right to Use): Hak Pakai is a right to use the land for a specific purpose and period. It is commonly used by foreigners to acquire long-term leasehold rights. The duration of Hak Pakai can vary, typically ranging from 25 to 70 years, depending on the terms agreed upon in the contract. Hak Pakai can be held by both individuals and legal entities.

o Hak Guna Bangunan (Right to Build): Hak Guna Bangunan allows individuals or legal entities to have the right to build and own structures on land owned by the government or other parties. The duration of Hak Guna Bangunan is typically 30 years and can be extended for an additional 20 years, subject to certain conditions and requirements.

o Hak Sewa (Leasehold): Hak Sewa refers to the leasehold rights of a property. It allows individuals or legal entities to lease the property from the owner for a specific period. The duration of Hak Sewa is determined by the terms of the lease agreement between the parties involved, which can range from a few years to several decades.

It's important to note that while Hak Milik and Hak Pakai provide stronger ownership rights, Hak Sewa and Hak Guna Bangunan offer viable options for foreigners to have long-term control over properties in Bali. It's advisable to consult with legal professionals and experts familiar with Indonesian property laws to ensure a clear understanding of the specific rights, obligations, and duration associated with each ownership type.

Which ownership title allow me to sublease my property ?

o In Bali, the ability to sublease a property depends on the specific terms and conditions outlined in the lease agreement and the type of ownership rights held. Here's an overview of subleasing requirements and the ownership rights that may allow subleasing:

o Hak Pakai (Right to Use): As a foreigner, if you hold Hak Pakai rights, it may be possible to sublease the property. However, it's important to review the terms of your lease agreement to determine if subleasing is permitted. Some Hak Pakai agreements may explicitly prohibit subleasing, while others may allow it with certain conditions or restrictions. Consult your lease agreement and seek legal advice to understand the specific terms and requirements.

o Hak Guna Bangunan (Right to Build): Similarly, for properties held under Hak Guna Bangunan, the ability to sublease will depend on the terms outlined in the agreement. It is advisable to review the lease agreement and consult legal professionals to confirm if subleasing is allowed and any specific requirements that need to be met.

o It's important to note that if you hold Hak Milik (Freehold) ownership, subleasing is generally allowed. As the owner of the property, you have the freedom to sublease it based on your preferences and the market conditions. However, it is still essential to review any local regulations or restrictions that may apply and seek legal advice to ensure compliance with the relevant laws.

o When considering subleasing, it's crucial to keep the following requirements in mind:

o Compliance with Regulations: Ensure that the subleasing arrangement complies with local regulations and licensing requirements. Certain areas or property types may have specific regulations governing subleasing activities.

o Consent from Landlord: If you are a tenant subleasing the property, obtain written consent from the landlord or property owner before entering into any sublease agreements. It is essential to have a clear understanding of the landlord's requirements and any restrictions on subleasing.

o Sublease Agreement: Prepare a comprehensive sublease agreement that outlines the terms, duration, responsibilities, and obligations of both the sublessor (you) and the sublessee. It is advisable to seek legal advice to ensure that the sublease agreement complies with local laws and protects your interests.

o Tax Considerations: Understand the tax implications associated with subleasing. Consult with tax professionals to ensure compliance with local tax regulations and reporting requirements.

o Remember that regulations and requirements may vary, and it's important to consult legal professionals and experts familiar with Indonesian property laws to obtain accurate and up-to-date information regarding subleasing requirements and the specific ownership rights you hold.

If I resell my property, what are the taxes ?

o When reselling a property in Bali, there are several taxes that may be applicable. The specific taxes and their rates can vary based on various factors, including the type of property and the ownership rights held. Here are some common taxes to consider:

o Income Tax: If you make a profit from the sale of your property, it may be subject to income tax. The applicable tax rate for individuals can vary based on factors such as the duration of ownership and the profit amount. As of my knowledge cutoff in September 2021, the individual income tax rates in Indonesia range from 5% to 30%. It's important to consult with a tax professional or accountant to determine the specific income tax obligations based on your circumstances.

o Value Added Tax (VAT): VAT may be applicable to the sale of certain properties. The current VAT rate in Indonesia is 10%. However, the application of VAT on property sales can vary depending on factors such as property type and the status of the seller (taxable or non-taxable). Consulting with a tax professional is crucial to understand if VAT applies to your property sale.

o Transfer Fee (BPHTB): The Transfer Fee, known as Bea Perolehan Hak atas Tanah dan Bangunan (BPHTB), is a tax imposed on the transfer of property ownership. The rate can vary between regions but is generally around 5% of the property's sale value. The buyer is typically responsible for paying the Transfer Fee, but it's important to clarify the responsibility with the buyer during the negotiation process.

o Capital Gains Tax: Capital Gains Tax may be applicable if you sell your property for a profit. The rate for capital gains tax is typically 5% for individuals. However, specific exemptions or reduced rates may apply based on the duration of ownership and other factors. Consult with a tax professional to understand the capital gains tax implications for your property sale.

· It's important to note that tax regulations can change over time, and it's advisable to seek professional advice from a tax consultant or accountant with expertise in Indonesian tax laws. They can provide up-to-date information, guidance, and assistance in ensuring compliance with tax obligations related to the sale of your property in Bali.

Can I use a company to buy a property ?

o Yes, you can use a company to purchase a property in Bali. Using a company for property acquisition can offer certain advantages and may be a suitable option depending on your circumstances. Here are some key points to consider:

o Legal Entity: To purchase a property through a company, you would need to establish a legal entity in Indonesia. This can be in the form of a foreign-owned company (PT PMA) or a local Indonesian company (PT). Engaging a legal professional familiar with Indonesian company laws is crucial to guide you through the establishment process.

o Ownership Rights: Depending on the type of property and the ownership rights available, different ownership options may be open to companies. For example, Hak Pakai (Right to Use) and Hak Guna Bangunan (Right to Build) can be held by companies. However, Hak Milik (Freehold) ownership is generally limited to Indonesian citizens and Indonesian legal entities.

o Operational Considerations: Using a company for property ownership may involve additional administrative and operational considerations. This includes complying with local company laws, maintaining proper accounting records, fulfilling tax obligations, and conducting regular corporate governance activities.

o Asset Protection and Liability: Owning a property through a company can provide a layer of asset protection and potentially limit personal liability. In case of legal disputes or financial issues, the property would be owned by the company, not directly by individuals.

o Tax Implications: Property ownership through a company may have tax implications. Consultation with a tax professional is essential to understand the tax obligations associated with company ownership, including corporate income tax, capital gains tax, and other relevant taxes.

o Professional Guidance: It's highly recommended to seek advice from legal professionals, such as lawyers specializing in property and corporate law, as well as tax consultants, to ensure compliance with all legal and regulatory requirements when using a company for property purchase in Bali.

· It's important to note that regulations and requirements related to property ownership through a company can change over time, and it's advisable to seek up-to-date advice from professionals well-versed in Indonesian property and company laws. They can provide accurate information and guide you through the process of using a company to buy a property in Bali.

If I’m married to an Indonesian citizen, as a foreigner can I buy a property ?

As a foreigner married to an Indonesian citizen, you have the opportunity to buy a property in Indonesia, including Bali. However, there are some restrictions and regulations that you need to be aware of. Here are the key points to consider:

o Hak Pakai (Right to Use): As a foreigner married to an Indonesian citizen, you can acquire Hak Pakai, which grants you the right to use and control the property for a specific period. The duration of Hak Pakai can range from 25 to 70 years, depending on the agreed terms.

o Marriage Certificate: To be eligible for Hak Pakai, you will need to provide a valid marriage certificate to demonstrate your marriage to an Indonesian citizen. This certificate will be required during the property purchase process.

o Consent from Spouse: Your Indonesian spouse's consent is typically required for property transactions involving foreign individuals. Their consent is generally obtained through a notarized agreement or a statement of consent.

o Land Ownership: While you can acquire Hak Pakai, which provides long-term rights to use the land, the actual ownership of the land will be in the name of your Indonesian spouse or an Indonesian legal entity (such as a company). It's important to understand and be comfortable with this arrangement.

o Investment Approval: In some cases, approval from the Indonesian Investment Coordinating Board (BKPM) may be required for property acquisitions involving foreign individuals. This requirement depends on factors such as the property value, location, and purpose.

o Land Size Restrictions: There are limitations on the maximum land size that foreign individuals can acquire in certain areas. These restrictions vary based on local regulations and zoning.

o Consult Professionals: It is advisable to consult with legal professionals who specialize in Indonesian property laws, as well as notaries and real estate agents experienced in handling transactions involving foreign individuals. They can provide guidance on the specific requirements and assist you throughout the property purchase process.

· It's important to note that regulations and requirements related to property ownership by foreign individuals can vary and may be subject to change. Therefore, it is recommended to seek up-to-date advice from professionals familiar with Indonesian property laws to ensure compliance and a smooth property acquisition process.

Do I need the license to run a property rental business on my property ?

· Yes, as a property owner in Bali, you will need a license to legally operate your property as a vacation rental. The specific license required is called a Pondok Wisata License. Here are some key points to consider regarding the license and associated costs:

o Pondok Wisata License: The Pondok Wisata License is a legal requirement for anyone operating a vacation rental property in Bali. This license allows you to offer short-term accommodation to tourists.

o Application Process: To obtain the Pondok Wisata License, you will need to submit an application to the local government or tourism agency in the area where your property is located. The application process typically involves providing necessary documentation, such as property ownership documents, building permits, and other supporting materials.

o Requirements and Criteria: The specific requirements for the Pondok Wisata License can vary depending on the local regulations and zoning in your area. Generally, you will need to meet certain criteria, including safety standards, infrastructure compliance, and environmental considerations. It is advisable to consult with local authorities or engage professional services to ensure you meet all the necessary requirements.

o Costs: The cost associated with obtaining a Pondok Wisata License can vary based on several factors, including the location of your property, the size of the property, and any additional services or facilities offered. The costs typically include application fees, administration fees, and annual renewal fees. It's recommended to consult with local authorities or licensing agencies to obtain accurate information about the specific costs applicable to your property.

o Legal Compliance: Operating your vacation rental property without the required Pondok Wisata License can result in penalties, fines, or even closure of the property. It is essential to comply with the local regulations and obtain the necessary license to ensure a legal and smooth operation.

· It's important to note that regulations and requirements related to vacation rentals and licensing can vary based on the location within Bali. Therefore, it is advisable to consult with local authorities, legal professionals, or specialized consultants who are familiar with the specific regulations in your area. They can provide you with accurate and up-to-date information about the licensing process, requirements, and associated costs for running your property as a vacation rental in Bali.

Main Website of the Indonesian Directorate General of Taxes

🔗 https://www.pajak.go.id

This portal allows you to:

• Understand updated tax regulations

• Read tax guides (mainly in Indonesian) for individuals & companies

• Learn about major tax types in Indonesia:

  • PPh 21 – Personal income tax

  • PPh 22 / 23 / 25 – Corporate tax and other income categories

  • PPN – VAT

  • BPHTB – Land & building acquisition tax

  • PBB – Annual land & building tax

Do you have an exemple ?

· The average cost for a Pondok Wisata License for a villa located in Canggu and built on a 1 are (100 square meters) land can vary depending on several factors. While I don't have access to specific current pricing data, I can provide you with a general idea of the potential costs involved:

o Application Fees: The application fees for a Pondok Wisata License can vary but are typically in the range of IDR 1,000,000 to IDR 3,000,000 (Indonesian Rupiah).

o Administration Fees: You may need to pay administration fees related to processing your license application, which can range from IDR 500,000 to IDR 1,000,000.

o Annual Renewal Fees: The annual renewal fees for the license can vary based on the location and size of your property. For a villa on a 1 are land, the annual renewal fees can range from IDR 1,000,000 to IDR 2,500,000 per year.

· It's important to note that these are general estimates and the actual costs can vary based on the specific requirements and regulations set by the local government or tourism agencies in Canggu. Additionally, there may be other costs involved, such as fees for obtaining necessary permits, conducting inspections, or engaging professional services for compliance with safety and environmental standards.

· To obtain accurate and up-to-date information about the average costs for obtaining a Pondok Wisata License for a villa in Canggu, it is recommended to consult with local authorities, licensing agencies, or professional consultants who specialize in property licensing and regulations in that specific area. They will be able to provide you with more detailed and specific cost information based on the requirements and circumstances of your property in Canggu.

Can I run a property rental business in private ?

· No, you cannot run a property rental business in Bali privately without obtaining the necessary licenses and permits. Operating a property rental business, such as offering short-term accommodation to tourists, requires compliance with local regulations and licensing requirements. In Bali, the specific license required for operating a vacation rental business is the Pondok Wisata License.

o Running a property rental business without the proper licenses and permits can lead to legal issues, penalties, and the potential closure of your business. It's important to follow the local laws and regulations to ensure that your business operates legally and ethically.

o To legally run a property rental business in Bali, you will need to:

o Obtain a Pondok Wisata License: This license is required for offering short-term accommodation to tourists in Bali. You need to go through the application process, fulfill the requirements, and pay the necessary fees to obtain the license.

o Comply with Zoning Regulations: Ensure that your property is located in an area where vacation rentals are permitted according to the local zoning regulations. Some areas may have restrictions on operating vacation rentals, so it's important to check the specific zoning regulations in your location.

o Meet Safety and Infrastructure Standards: Your property must meet the necessary safety standards and infrastructure requirements to ensure the comfort and well-being of your guests. This may involve fire safety measures, adequate sanitation facilities, and other essential amenities.

o Pay Taxes and Fees: As a business operator, you will be responsible for paying the required taxes and fees associated with running a property rental business. This may include local taxes, income taxes, and other applicable fees.

o Comply with Other Legal Obligations: In addition to the Pondok Wisata License, you may have other legal obligations to fulfill, such as registering with local authorities, maintaining proper records, and adhering to consumer protection laws.