Thinking of Renting Your Villa on Airbnb in Bali? Read This First

If you’re a foreigner who owns a villa in Bali, whether as an investment or a home, the rules around short-term rentals are changing fast. What used to be a relatively informal way to earn income through platforms such as Airbnb, Booking.com, or Vrbo is now firmly regulated. Bali’s government is actively cracking down on illegal listings and has set a clear legal framework that every property owner must follow.

This isn’t a “ban on Airbnb”, but it is a crackdown on unlicensed, unregistered, and non-compliant rentals. If you want to stay fully legal and avoid fines, delisting, or worse, here’s what you must know.

Why the Rules Are Tightening?

Bali’s tourism authorities, supported by national law, have moved from a loosely regulated system to a formal licensing regime for all short-term accommodations.

The goal is to:

• Ensure fair competition with hotels, which must pay tax and meet strict standards

• Increase tax revenue from visitors

• Improve safety, zoning compliance, and transparency across the island’s tourism ecosystem

• Remove illegal rentals that don’t contribute to local development

This comes as part of broader regulatory reforms under Indonesia’s new Tourism Law and business licensing framework, and the approach is being actively enforced across Bali.

Deadline: 31 March 2026

All villas and short-term rental properties listed on platforms like Airbnb must have complete and valid licences by 31 March 2026.

After this date:

• Online platforms are expected to remove listings that cannot show valid permit documentation

• Enforcement actions, including fines, closure orders, and even demolition, are increasingly common

• Foreign operators risk immigration penalties if they operate without proper authorization
  

This means simply hosting guests without the proper legal basis is no longer an option.

What You Need to Rent Legally

There’s more to compliance than just putting your villa on Airbnb. Here’s the minimum set of legal steps:

1. Set Up a Legal Business Entity, PT PMA

Foreigners cannot hold tourism accommodation licences in their personal name. To operate legally, you must set up a PT PMA, a foreign-owned company in Indonesia capable of holding business licences and complying with tax and regulatory requirements.

This is not an optional step; without a PT PMA, you cannot legally register as a tourism business or obtain the key permits you need.

2. Obtain an NIB (Business ID Number)

The Nomor Induk Berusaha (NIB) is your master business licence identifier in Indonesia’s OSS system. It registers your company as a legal operator before applying for tourism permits.

3. Tourism Operation Licence (TDUP / Pondok Wisata)

To operate a short-term rental, you must register as a tourism business. This is done through a TDUP (general tourism business registration) or Pondok Wisata (homestay licence).

Important for foreigners: A Pondok Wisata licence cannot be held in your personal name; it must be linked to your PT PMA structure.

4. Building Permits (PBG & SLF)

Your villa must be built and certified for commercial use, meaning:

• PBG (Persetujuan Bangunan Gedung) – Building approval

• SLF (Sertifikat Laik Fungsi) – Certificate confirming your building is safe and fit for commercial accommodation
  

5. Tax Registrations

You must register for Indonesian tax, both national and local, including:

• NPWP (national tax number)

• Local hotel tax (PHR) registration

• Guest reporting obligations
  

Foreign guests must also be reported to local authorities within 24 hours of arrival, an obligation tied to your accommodation licence.

Zoning: A Non-Negotiable Requirement

Even with all the correct licences, your villa has to be zoned for tourism or commercial use.

• Tourism Zone (Pink): Best option, short-term rental allowed with licences.

• Commercial / Mixed-Use Zone: Possible with correct permits.

• Residential or Agricultural Zone: Short-term rental is generally not permitted, and no amount of paperwork can fix that.

Zoning issues are one of the leading causes of compliance refusal. Always check your property’s zoning status before you invest or attempt to get compliant.

Why Working With a Licensed Agent & Notary Matters

Trying to “cut corners” is no longer a risk worth taking. Authorities are coordinating directly with platforms like Airbnb and Booking.com, and unlicensed listings are being systematically removed.

A licensed local agent and notary will:

✔ Advise the right legal structure for your ownership and business;
✔ Help you navigate PT PMA company formation;
✔ Prepare and submit licence applications;
✔ Verify zoning and building compliance;
✔ Manage your ongoing tax and regulatory reporting.

This isn’t just about avoiding fines; it’s about ensuring your villa remains in business legally and sustainably well into the future.

Penalties for Non-Compliance

Operating without full compliance can lead to:

• Your Airbnb listing being removed from platforms

• Fines, closure orders or revocation of permits

• Forced cessation of your rental business

• In severe cases, property demolition or immigration penalties for foreign operators

This isn’t theoretical, authorities have already begun enforcement actions across the island.

Final Thoughts

Expert guidance, thorough documentation, and full legal compliance are no longer optional if you want your villa rental business in Bali to survive, let alone thrive.

The era of informal Airbnb hosting is over. If you’re serious about hosting tourists and earning income, it’s time to get your paperwork in order and work with reputable legal and property professionals who understand the new landscape.

Your villa can still be a successful hospitality asset, but now it must be a legal one too.

This article is provided for general informational purposes only and is intended as a practical guide to understanding current regulations relating to short-term villa rentals in Bali.

It does not constitute legal advice, tax advice, immigration advice, or investment advice. Regulations, enforcement practices, zoning classifications, and licensing requirements may change, and individual circumstances vary significantly depending on ownership structure, land title, zoning, and business setup.

Before taking any action, including setting up a PT PMA, applying for licences, listing your property on Airbnb, or entering into rental agreements, you should seek independent advice from a qualified Indonesian notary, licensed legal consultant, and/or professional tax adviser.

We strongly recommend conducting proper due diligence and obtaining professional guidance to ensure full compliance with Indonesian law.