Renting Out a Villa in Bali: Licenses, Tax and 2026 Rules

Renting out a villa in Bali? How long-term leases and holiday rentals are licensed and taxed in 2026, what foreign owners may do, and what changed.

Renting out a villa in Bali can mean two different things in law. A monthly or yearly lease to a tenant is a contract, and the owner owes a 10% final tax on the rent; short stays for holiday guests are a tourist-accommodation business that needs licenses, which a foreigner cannot hold personally. Here is how both work as of October 2026, what foreign owners can do, what changed in 2025–2026, and what is still unclear.

Renting out a villa in Bali: a lease or a business?

The law treats a lease and accommodation differently. The 10% final tax on rent (Government Regulation, PP, 34/2017) excludes lodging services, which are taxed under the normal income tax rules, while the regional tax on hotel services expressly lists villas and private homes used as hotels (Law 1/2022).

No rule we found sets a number of nights that separates the two, so get advice if your plan sits near the line.

Long-term renting: monthly and yearly leases

The legal basis and the 10% tax

A lease (sewa-menyewa) gives someone the use of a property for a period, for an agreed rent (Civil Code art. 1548). A private written lease is valid without a notary, the Civil Code sets no nationality condition for tenants (the Basic Agrarian Law, art. 45, expressly lists foreigners domiciled in Indonesia among those who may lease land), and selling the villa does not end an earlier lease unless the lease said so (art. 1576).

The owner owes 10% of the gross rent as a final income tax (PP 34/2017), for monthly and yearly leases alike, service and maintenance charges included.

• Company tenants withhold: an Indonesian company (a PT PMA included) or a government body deducts the tax and gives you a withholding slip.
• Private tenants normally do not: the tax is owed when the rent is paid or falls due, whichever comes first, and you pay and report it yourself through the tax office’s Coretax system by the monthly deadline.
• Tax number: foreigners must register for an NPWP (tax number) once tax-resident (more than 183 days in Indonesia within 12 months, or living here with the intention to stay) and earning income such as rent. Non-residents should ask a registered tax consultant.

Do you need a license for a long-term lease?

We could not find an official or legal source that says clearly whether a private owner letting one villa monthly or yearly needs a business license. The tax is certain; the license is not. PP 28/2025, the licensing regulation since June 2025, requires a business license for any business activity, and renting out property is its own business line in OSS (code 68111). So if you rent through a company or run rentals as a business, plan on licensing. For a single villa, get a licensing consultant’s or notary’s answer in writing.

What the lease should cover

Our villa rental contract checklist covers each clause. For owners, the essentials are the rent and who bears the 10% tax; who pays electricity, any banjar (village) contribution and the land and building tax (PBB); the deposit; repairs; early exit; and subletting, which needs your consent (Civil Code art. 1559). Landlords and villa managers are also expected to register foreign tenants with immigration through the APOA app (Aplikasi Pelaporan Orang Asing, foreigner reporting app).

We help owners in southwest Bali find long-term tenants: list your property with us.

Short-term rental rules in Bali (2026): a licensed business

Renting to holiday guests by the night or week is tourist accommodation. A Bali villa rental license covers the zone, the building and the business; a villa rented out without these approvals is operating illegally.

1. Zoning: the zone must allow tourist accommodation. For a business, the check is a KKPR (confirmation that the use fits the spatial plan) in OSS; see our Bali zoning guide.
2. Building: a PBG (Persetujuan Bangunan Gedung) that matches what is built, and an SLF (Sertifikat Laik Fungsi), both basic requirements for a business license under PP 28/2025.
3. Business license: an NIB (Nomor Induk Berusaha) from OSS for the right business line. In the 2020 classification (KBLI), villas (55193) and homestays, called Pondok Wisata (55130), had their own codes.
4. Taxes: the regional tax on hotel services (PBJT) of up to 10%, at a rate set by the regency; the income is taxed under the normal income tax rules.
5. Guest reporting: immigration requires lodging providers, villas included, to report foreign guests through the APOA app. Failing to report can bring up to three months’ detention or a fine of up to IDR 25 million.

Who can hold the license?

An Indonesian individual or company, or a PT PMA, not a foreigner personally. Under the investment ministry’s BKPM Regulation 5/2025, a PT PMA needs paid-up capital of at least IDR 2.5 billion and an investment plan above IDR 10 billion per business line and location; for accommodation businesses, land and buildings count toward the plan (have a licensed consultant confirm this). It also files regular investment reports (LKPM). See our guide to owning property through a PT PMA.

The 2026 closure. Since the third week of May 2026, with the investment minister’s approval, Bali has closed OSS to new applications from foreign-owned companies in 18 business lines until further notice. The list includes renting out owned or leased property (68111), hotels under 6,000 m² (55110, 55120) and other accommodation (55900), but not villas (55193) or homestays (55130). No regulation number was given, and in practice the closure may reach beyond the listed lines. Existing companies were not ordered to close, but cannot apply for new licenses in the closed lines.

Villas and Pondok Wisata may also be reserved for micro, small and medium businesses (not confirmed officially). So do not assume a new PT PMA can license a villa rental in Bali in late 2026; check with a licensed consultant first.

Can foreigners rent out property in Bali? It depends on your title

Yes, but it depends on how you hold the villa: leaseholders need the landowner’s permission to sublet, Hak Pakai is for living in, and holiday rentals always need a licensed business. Our guide to buying property in Bali as a foreigner explains each title.

What changed in 2025–2026

In force

• Licensing: PP 28/2025 (since June 2025) and BKPM Regulation 5/2025 (since October 2025). The new KBLI 2025 code list (BPS Regulation 7/2025), which OSS was due to adopt by 18 June 2026, and the OSS closure in effect since May 2026 (announced; no regulation number found) are described above.
• Farmland and nominees: Governor’s Instruction 5/2025 (December 2025) told the regencies not to approve farmland conversion until a provincial regulation was in place. That regulation, Perda Bali 4/2026, has applied since about late February 2026: it strictly controls the conversion of productive land and bans nominee ownership. Do not plan a new rental villa on farmland.

Announced, not yet in force

• Platform checks: no regulation yet requires booking platforms to check licenses, but unlicensed listings risk being removed. List only a licensed villa, and keep its NIB and business code at hand.
• No Airbnb ban: Airbnb and other booking platforms are not banned in Bali; the target is unlicensed accommodation.
• No general moratorium: beyond the farmland rules above, we found no regulation that stops new hotels, restaurants or villas, so the plot’s zone decides.

Enforcement on the ground

• Regional tax: Badung’s revenue office treats a home rented out to tourists with hotel-like facilities, such as a pool, as a villa, and records operating villas as regional taxpayers even without a license. Tax registration is not a license.
• Immigration: in 2025 the Ngurah Rai immigration office worked with Badung officials to supervise foreigners staying in unlicensed accommodation.

What tax do you pay on rental income in Bali?

On a lease, the owner pays a 10% final tax on the gross rent. On short stays, normal income tax rules apply, plus the regency’s tax on hotel services of up to 10%. Our guide to Bali property taxes and buying costs has worked examples.

Rental returns: test the numbers

We do not quote rental yields: a projection is only as good as its assumptions. Test any figure against:

• Licensing: can the villa legally be rented that way, and who holds the license?
• Tax: 10% of the rent on a lease, or income tax plus up to 10% regional tax on short stays.
• Costs: management, cleaning, pool and garden, repairs, utilities, platform fees.
• Vacancy: gaps between tenants, and quiet seasons.
• Time: for a leasehold, the years left.

A yearly lease is usually paid in full upfront, so the year’s income is known when the tenant signs. Holiday income depends on occupancy, fees, management and licenses.

Checklist before you buy for rental income

1. Choose your model: long-term tenants or holiday guests.
2. Match the title: a leasehold that allows subletting, a PT PMA only if your business line is open to it, Hak Pakai only to live in.
3. Get the zone confirmed in writing for your planned use.
4. Compare the PBG and SLF with the villa as built, pool and extensions included.
5. For a villa with rental history, ask which licenses it holds, in whose name, and whether you can use them; see our due diligence guide.
6. Ask a licensing consultant which business line and code apply to you.
7. Plan the tax: who pays the 10%, your NPWP, and the regency’s view on PBJT.
8. Rebuild the projection with real costs.

When you are ready, browse our villas for sale.