nomadr
Go Back

Business Permits & Incorporation for Foreigners in Canggu

Good to know

Good to Know

  • The IDR 2.5 billion paid-up capital requirement (cut from IDR 10 billion in October 2025) is real company capital you can use for rent, staff, and assets — it is not a government fee, but it is a genuine liquidity bar that rules out incorporating a PT PMA as a low-cost way to run a small freelance-style business.
  • Choosing the wrong KBLI (business classification) code is one of the most common and expensive mistakes — it can block bank account opening, staff hiring, or later property-related activity, so get this confirmed before signing the incorporation deed.
  • The whole process — deed signing, OSS submission, even bank account setup steps — can generally be handled remotely via Power of Attorney, so you do not strictly need to be in Bali in person to incorporate, though being local helps with document logistics.
  • Reports from mid-2026 suggest virtual offices may no longer be accepted as a registered address for new PT PMAs specifically in Bali — this appears to be a recent and locally-specific tightening, so verify current acceptance with a notary or the OSS system before budgeting for a virtual office.
  • A PT PMA cannot hold freehold (Hak Milik) land directly — it typically holds Hak Guna Bangunan (Right to Build) or Hak Pakai instead, which matters if the business plan includes leasing or buying property in the Canggu area.
  • There is no legal 'freelancer' or informal sole-proprietor status for foreigners in Indonesia — even small consulting gigs or e-commerce technically require a PT PMA to be done legally, which surprises many nomads used to freelancing freely elsewhere.
  • As of 2026 regulatory changes (PP No. 20/2026), a PT PMA can no longer use Indonesia's simplified 0.5% small-business tax rate no matter how small its revenue — it goes straight into the standard 22% corporate tax system with full monthly and annual filing obligations from day one.
  • Using a local nominee (friend, partner, or even a spouse in some setups) to informally run a business instead of forming a proper PT PMA is a well-documented risk pattern in Bali — the business legally belongs to the nominee, and relationship breakdowns have led to foreigners losing their businesses entirely.
  • A PT PMA's tax and reporting burden is real even for a one-person consulting business: expect monthly withholding tax filings, monthly installment tax payments, quarterly investment reports to BKPM, and an annual corporate return — most small operators hire a local accountant or tax consultant rather than self-file.

Business Tax And Structure Options

Corporate Tax Overview

Standard Rate
22% flat corporate income tax on net taxable income (not gross revenue), applying equally to a foreign-owned PT PMA and a domestic PT.
Listed Company Rate
Companies with at least 40% of shares listed on the Indonesia Stock Exchange, held by 300+ shareholders each under 5%, for at least 183 days in the tax year, can qualify for a reduced 19% rate — not typically relevant to a small nomad-run PT PMA.
Reduced Rate For Smaller PT Pmas
Companies with annual revenue below IDR 50 billion may still benefit from a reduced effective rate on part of their income under Article 31E: a 50% reduction of the standard rate applies to the portion of taxable income attributable to gross revenue up to IDR 4.8 billion, giving an effective rate of about 11% on that eligible slice, with the remainder taxed at 22%.
Detail
A foreign-owned PT PMA and a locally owned PT PMDN, on the same figures, meet the same rate, and the standard corporate income tax rate in Indonesia is 22 per cent, a figure that has applied since 2020, fixed by Law No. 7 of 2021 with a planned reduction to 20% cancelled.
2026 Regulatory Change Important
Under new Government Regulation PP No. 20/2026, PT PMA (foreign-owned companies) are now completely excluded from the 0.5% 'Final UMKM' micro-business tax scheme that some small local businesses use — a PT PMA must use the standard corporate tax pathway from day one, regardless of how small its initial revenue is.
Worldwide Income Note
A PT PMA is a resident company from the day it is incorporated, so it is taxed on income from inside and outside Indonesia, with relief available for foreign tax paid, unlike a plain branch/permanent-establishment structure which is taxed only on Indonesia-attributable profits.

Filing And Compliance Obligations

Transfer Pricing
PT PMA entities with related-party transactions (e.g. billing a foreign parent company) must prepare transfer pricing documentation under PMK 172/2023.
Annual Obligations
The annual corporate income tax return must be filed by the end of the fourth month after the fiscal year closes — April 30 for a calendar-year filer — and must include financial statements, tax payable computation, and related-party disclosures.
Monthly Obligations
A PT PMA must handle monthly withholding tax filings (covering PPh 21 on employee salaries, PPh 23 on certain domestic payments, and PPh 26 on payments to foreign parties), plus monthly VAT (PPN) reporting if registered as a PKP (taxable entrepreneur), and monthly PPh 25 corporate tax installment payments.
Bookkeeping Standard
Bookkeeping must follow Indonesian accounting standards, be maintained in Bahasa Indonesia, and be denominated in rupiah.
Investment Reporting
Separately from tax filings, a PT PMA must submit a quarterly Investment Activity Report (LKPM) to Indonesia's Investment Coordinating Board (BKPM), reporting on realized investment and operations.
Self Assessment System
Indonesia uses a self-assessment system: the company itself calculates, pays, and reports its own tax liabilities each period, with the tax office (DJP) able to issue an assessment or collection notice later if filings are missed or tax underpaid.

Dividend And Repatriation Withholding

Not A Price
This is a tax rate, not a cost paid for a good or service, so no local/USD price object applies here.
Note
When a PT PMA pays dividends, interest on a loan from an overseas lender, royalties to a foreign brand owner, or management fees to a parent company, it must withhold PPh 26 tax, generally at a default rate of 20%, though this can be reduced under an applicable tax treaty between Indonesia and the shareholder's home country.

PT Pma Setup Capital And Cost Reference

Minimum Paid Up Capital
IDR 2,500,000,000

As of BKPM Regulation No. 5 of 2025 (effective October 2025), minimum paid-up capital for a new PT PMA was reduced to IDR 2.5 billion, down from an earlier IDR 10 billion requirement.

Declared Investment Plan Per Business Line
IDR 10,000,000,000

Separate from paid-up capital, a PT PMA must declare a total investment plan exceeding IDR 10 billion per five-digit KBLI business classification and per project location (excluding land and buildings) — this is a declared commitment via the OSS system, not cash that must be deposited upfront.

Typical Bali Agent Setup Fee Range

Low
IDR 25,000,000
High
IDR 35,000,000
Note
Agent/consultant fees to establish a PT PMA in Bali (excluding the capital itself) typically fall in this range, somewhat higher than equivalent fees in Jakarta.

Freelancer Vs Company Structure For Foreigners

The Legal Route
The standard, legally recognized path for a foreigner to invoice clients, hire staff, open a corporate bank account, and sponsor their own KITAS is to incorporate a PT PMA (Perseroan Terbatas Penanaman Modal Asing) — Indonesia's foreign-investment limited liability company, which can be up to 100% foreign-owned depending on the business sector's classification (KBLI) under the Positive Investment List.
Spousal Exception
A foreigner legally married to an Indonesian citizen can operate a small business informally under the spouse's UD (sole proprietorship), but this is a household-asset structure, not limited liability, the business is legally the spouse's, and it cannot sponsor a KITAS for anyone other than the spouse.
Core Legal Reality
Foreigners cannot legally operate a sole proprietorship (Usaha Dagang) in Indonesia — these are strictly reserved for Indonesian citizens, so a foreigner running invoicing, a café, consulting, or e-commerce informally under their own name (or 'freelancing' without a registered entity) is operating outside the law, regardless of how small the income is.
Local PT Alternative
A cheaper 'Local PT' structure exists with a much lower minimum capital, but by law it can only be owned by Indonesian citizens, so foreigners using it rely on Indonesian nominee shareholders — carrying the same nominee-related risk described above and not offering the foreigner direct legal ownership.
Why It Matters For Nomads
Because informal freelancing/sole proprietorship is not a legal option for foreigners, most nomads earning Indonesia-sourced income (as opposed to remote income from foreign clients while just living in Canggu) end up needing to weigh the cost and compliance burden of a full PT PMA against simply keeping their income structured through a foreign entity and personal tax residency arrangement elsewhere.
Common But Risky Workaround
Some foreigners have historically used a local nominee (a spouse, partner, or friend's name) to hold a business informally, but this carries real legal exposure — the business and its assets legally belong to the nominee, not the foreigner, and disputes have resulted in foreigners losing control of businesses they built and funded.

Incorporation Process And Requirements

Primary Vehicle
PT PMA (Perseroan Terbatas Penanaman Modal Asing) — a foreign-owned limited liability company. This is the only legal structure that lets a foreigner hold equity directly, invoice clients, generate local revenue, and sponsor a work/investor visa (KITAS) in Indonesia. A Representative Office (KPPA) is an alternative for market research only — it cannot invoice or earn revenue, so it does not count as 'incorporating a business.'
Jurisdiction Context
Canggu is part of Badung Regency, Bali, and falls under Indonesia's national company-registration framework — there is no separate Bali or Canggu-specific incorporation regime. All figures below are national rules that apply equally to a business set up in Canggu.

Typical Costs

Capital Commitment Separate From Setup Cost
The IDR 2.5 billion paid-up capital is not a 'fee' — it remains company money that can be used for business operations, assets, or construction. It should be budgeted as a liquidity requirement, not a sunk incorporation cost.
Notary Fees
IDR 10,000,000

Typical range roughly IDR 5–15 million depending on notary and complexity.

Professional Service Package
IDR 90,000,000

Using a local incorporation/legal firm to manage notary coordination, KBLI selection, and OSS submission typically costs the local-currency equivalent of roughly USD 3,000–7,000, depending on sector complexity; this is on top of government fees and capital.

Government Fees Standard Sector
IDR 5,000,000

For standard, non-regulated sectors without special licensing, official government/PNBP fees are typically below this figure.

Formation Steps

  • 1. Choose the correct KBLI (business classification) code(s) — this determines foreign ownership limits, licensing path, and risk classification; codes must be specific, not broad/general, under current rules.
  • 2. Reserve and get approval for a company name (three non-obscene words) from the Ministry of Law and Human Rights.
  • 3. Draft and notarize the Deed of Incorporation (Akta Pendirian) containing the Articles of Association, before a licensed Indonesian notary — this can be signed via Power of Attorney, so physical presence in Indonesia is not required.
  • 4. Submit the notarial deed to the Ministry of Law and Human Rights for legal entity approval; once approved, a Decree (SK Kemenkumham) is issued confirming legal entity status.
  • 5. Register for a Tax Identification Number (NPWP) at the local tax office.
  • 6. Secure a registered domicile/business address matching the intended activity and zoning.
  • 7. Apply for the Business Identification Number (NIB) through the OSS-RBA (Online Single Submission, Risk-Based Approach) system, managed by the Ministry of Investment/BKPM — this also triggers issuance of standard business and location licensing depending on risk level.
  • 8. Obtain any additional sector-specific licenses if the business is medium/high-risk (e.g. tourism accommodation, food and beverage, health, education, fintech).
  • 9. Open a corporate bank account and deposit the paid-up capital.
  • 10. File the capital declaration and begin ongoing compliance: quarterly LKPM investment reports to BKPM, monthly/annual tax filings, and BPJS (social security) registration once staff are hired.

Realistic Timeline

Regulated Sectors
8–12+ weeks for activities requiring extra ministry approvals (e.g. food processing, health, finance, education).
Property Holding PT Pma
For a PT PMA intended to hold land/property rights (HGB), total time from engagement to an operational, property-holding entity is typically about two to four months, and can extend further if there are licensing backlogs or capital-verification delays.
Core Registration Via Oss
Roughly 2–6 weeks for the NIB and standard licensing once documents (KBLI selection, notarial deed, name approval) are ready, for low/medium-risk activities with no special sector license.
Full Operational Readiness
About 4–8 weeks in total including corporate bank account opening and tax activation for straightforward sectors.

Capital Requirements

Minimum Paid Up Capital
IDR 2,500,000,000

Reduced from IDR 10 billion to IDR 2.5 billion effective 2 October 2025 under Investment Ministry (BKPM) Regulation No. 5 of 2025. This is the cash amount that must be committed and deposited into the company's Indonesian bank account; it does not have to be deposited at the moment of registration — a capital declaration letter is accepted first, with the actual bank deposit following once the corporate account is opened. Once deposited, funds generally cannot be withdrawn for non-business purposes for 12 months.

Minimum Total Investment Plan
IDR 10,000,000,000

This is a declared investment commitment per business activity (per 5-digit KBLI code) and per project location, excluding land and buildings — not cash paid upfront. It is monitored over time through quarterly investment (LKPM) reporting to the Ministry of Investment/BKPM. Each additional KBLI code adds another IDR 10 billion to this commitment.

Official Government Links

Ministry Of Investment Bkpm
https://www.bkpm.go.id
Oss Single Submission System
https://oss.go.id

Core Structural Requirements

Directors
At least 1 director; at least one director role is generally expected to be an Indonesian resident (this can be a foreign KITAS holder resident in Indonesia)
Shareholders
Minimum 2 (individuals, companies, or a mix; can be 100% foreign in open sectors)
Commissioners
At least 1 commissioner (supervisory role; can be foreign and non-resident)
Registered Office
A physical commercial-use business address in Indonesia is required (matching the company's business activity and zoning); as of mid-May 2026 some sources report that virtual offices are no longer accepted for new PT PMA registrations in Bali specifically — this is a recent and evolving rule that should be double-checked with a local notary before relying on it.

Local Partner Or Sponsor Mandate

General Rule
No mandatory local shareholder is required for most sectors. Under Indonesia's Positive Investment List, the default is that business fields are open to 100% foreign ownership unless specifically restricted.
Restricted Sectors
A defined list of business classifications (KBLI codes) carry foreign-ownership caps (e.g. private broadcasting capped around 20%, wholesale of alcoholic beverages capped around 49%) or require a local partner; a small number of sectors (mainly defense/state-security-related) are fully closed to foreign capital.
Nominee Structures Illegal
Using an Indonesian 'nominee' to hold shares on a foreigner's behalf instead of forming a proper PT PMA is illegal under Indonesia's Investment Law; such arrangements are void in Indonesian courts and can expose both parties to criminal liability.
Villa And Hospitality Relevance
Most tourism, hospitality, F&B, and property-rental KBLI codes commonly used by nomads/small businesses in the Canggu area are open to 100% foreign ownership, but the exact KBLI code chosen determines this — using the wrong code is a common and costly mistake.
AI-generated estimateData refreshed July 2026

This section has no cited sources.

More About Canggu

Data last updated July 2026 · Verify anything important.