Exposed: 9 Legal Structures for Airbnb Business in Bali and Lombok (PMA, Leasehold & Local Permits)

Why Legal Structure Determines the Success of Your Short-Term Rental Investment

The rise of short-term rentals across Indonesia has transformed Bali and Lombok into two of the most active property investment hubs in Southeast Asia. Demand from global travelers continues to grow each year, yet the legal framework surrounding rental operations has also become more complex. Many foreign investors assume that running a rental villa is as simple as putting it on booking platforms, but in reality, the structure you choose will determine whether your operations remain compliant, or put your investment at risk. This is especially true for anyone building or managing an airbnb business in Bali and Lombok, where licensing rules, local approvals, and compliance requirements vary significantly by region.

This article helps investors understand the key differences between establishing a PT PMA, operating under a leasehold structure managed by an Indonesian owner, or partnering with a licensed local operator. Each model affects taxation, operational control, risk exposure, and long-term stability.

Whether you're a foreign buyer planning to turn a villa into a steady income stream, a property manager exploring legal expansion, or a business owner developing a multi-unit rental project, understanding the right structure is the first step toward building a secure and scalable investment in Indonesia’s competitive rental market.

Understanding the Market & Regulatory Climate for Short-Term Rentals

The rapid expansion of the short-term rental sector across Bali and Lombok is driven by sustained visitor growth, shifting travel behavior, and the rise of digital nomads. Reports from international outlets, including the Financial Times, highlight how demand for flexible accommodation continues to outpace traditional hotel offerings, especially in areas already discussing moratoriums on new hotel developments. This demand creates a fertile environment for the airbnb business in Bali and Lombok, but it also places the industry under increased regulatory scrutiny.

At the heart of operational compliance is Indonesia’s evolving OSS-RBA (Online Single Submission, Risk Based Approach) framework. With updates positioned under Government Regulation (GR) 28/2025 and continuing adjustments within the OSS ecosystem, short-term rental operators must ensure that their business classification, risk ratings, and licensing match actual on-ground activities. For many foreign investors, understanding how their chosen structure interacts with OSS requirements is essential, as incorrect filings can lead to penalties or suspension of operations, particularly relevant for anyone running an airbnb business in Bali and Lombok.

Taxation is another area receiving heightened attention. Authorities have been refining guidance on short-term rental income reporting, including PPh (income tax) obligations, PPN (VAT) considerations, and local service tax requirements depending on the district. Platforms like Airbnb have also released updated tax guides to help hosts understand their responsibilities, but investors must remember that Indonesia’s tax rules differ from platform-level suggestions and require proper local compliance.

This tightening regulatory landscape aims to create a level playing field among villas, guesthouses, and hotels while ensuring that tourism growth remains sustainable. For investors, it underscores the importance of selecting a business model that aligns with licensing, zoning, and tax expectations, critical foundations before scaling an airbnb business in Bali and Lombok in 2026 and beyond.

Your Legal Pathways as a Foreign Investor: A Quick Comparison

As the airbnb business in Bali and Lombok becomes increasingly attractive to global investors, choosing the right legal structure is the foundation of long-term, compliant success. Foreigners have three main pathways: establishing a PT PMA, entering a leasehold arrangement combined with an Indonesian-held accommodation license, or partnering with a fully local operator under a management contract. Each option comes with its own permissions, limitations, benefits, and hidden risks.

1. PT PMA (Foreign-Owned Hospitality Company)

A PT PMA allows investors to operate legally as a villa, guesthouse, or boutique accommodation provider under the correct KBLI hospitality classifications.
Pros:

• Full operational control
• Ability to sign long-term leases under the company
• Eligibility for proper permits (PBG/SLF, operational licenses)
• Clear taxation structure

Cons:

• Higher setup and compliance cost
• Mandatory reporting and governance obligations

2. Leasehold + Indonesian License (Hybrid Partner Model)

In this model, the land and property are leased by a foreigner, but the accommodation license (e.g., Pondok Wisata or hotel license) is held by an Indonesian individual or entity.
Pros:

• Faster setup
• Lower cost of entry
• Common for individual villa investments

Cons:

• License is not owned by the foreign investor
• Higher dependency and legal exposure
• Requires strong contract protection

3. Local-Operator or Management Contract Model

The foreign investor owns or leases the villa, while a licensed Indonesian operator runs the business on their behalf.
Pros:

• Simple, low liability
• Operator handles compliance, taxes, staffing

Cons:

• Lower control
• Revenue-sharing model reduces margins

Choosing the right structure is crucial for anyone planning to scale an airbnb business in Bali and Lombok, and a strategic comparison helps prevent costly missteps. With regulations tightening each year, aligning your model with licensing laws has become a non-negotiable requirement for a sustainable airbnb business in Bali and Lombok.

Establishing a PT PMA: The Full-Control Framework for Short-Term Rental Operators

For many foreign investors exploring the airbnb business in Bali and Lombok, setting up a PT PMA (Foreign Investment Company) is the cleanest way to achieve full legal and operational control. A PT PMA is a formally registered Indonesian company that allows non-Indonesian shareholders to run commercial activities under specific KBLI business classifications, especially those covering hotel, villa, and short-term accommodation operations.

1. Understanding the PT PMA Structure

A PT PMA operates like a standard Indonesian company but with investment restrictions, capital requirements, and certain reporting rules that apply only to foreign-owned entities. To run a short-term rental operation or manage multiple villas, the PT PMA typically uses KBLI codes related to accommodation services. These codes legally authorize the company to operate villas or hospitality assets as a commercial enterprise, ensuring regulatory compliance from day one.

2. Required Licenses & Approvals (OSS-RBA)

Setting up a PT PMA for hospitality requires obtaining several licenses through OSS-RBA (Online Single Submission – Risk Based Approach):

• Business Identification Number (NIB) – the foundation of all activities
• Risk-based licences aligned with hospitality KBLI
• KKPR / Spatial Approval for land use
• PBG / Building Approval and SLF / Building Feasibility Certificate
• Environmental documents (UKL-UPL/AMDAL) depending on building size
• Operational licences for accommodation service providers

These documents ensure the accommodation is legally eligible for commercial use—not simply a residential property listed online.

3. Advantages of Using a PT PMA

A PT PMA structure offers several compelling advantages for operators who want full control over their airbnb business in Bali and Lombok:

• 100% company-controlled operations
• Ability to open bank accounts, sign contracts, and hire staff legally
• Eligibility to obtain formal hospitality and operator licences
• Clear corporate governance and audit-ready records
• A strong long-term structure suited for scaling

4. Disadvantages & Compliance Commitments

However, PT PMAs come with responsibilities that investors should evaluate carefully:

• Higher minimum capital requirements
• Mandatory reporting such as LKPM (investment activity report)
• Monthly/annual tax filings (VAT, PPh, local taxes)
• Need for proper accounting, HR, payroll, and compliance systems
• Potential requirements for expatriate work permits (RPTKA/IMTA)

A PT PMA is ideal for serious operators but may be excessive for owners managing one small villa.

5. Practical Checklist for Setting Up a PT PMA

A ready-to-use checklist for investors planning long-term accommodation operations:

• Define capital structure and shareholders
• Select correct KBLI codes for accommodation
• Prepare incorporation documents and notarial deed
• Register through OSS and obtain NIB
• Request KKPR, PBG, SLF
• Set up tax accounts and e-billing
• Register for VAT if required
• Establish HR, payroll, and contract templates
• Apply for expatriate permits if needed
• Set up accounting and compliance cycles

6. When a PT PMA Is the Best Choice

A PT PMA becomes the most strategic structure when the investor:

• Operates multiple villas or a micro-resort
• Plans to scale into a management company
• Requires full control over pricing, operations, and branding
• Needs certainty for long-term property rights and contracts

For hospitality investors with regional ambitions, the PT PMA provides a durable platform to manage and grow an airbnb business in Bali and Lombok without relying on local intermediaries.

Leasehold & Local-Licensing Structures: A Practical Path for Single-Villa Investors

For many newcomers exploring the airbnb business in Bali and Lombok, the leasehold model remains one of the most common entry points, particularly for investors who want a single villa or a small portfolio without establishing a PT PMA. In this structure, the foreign investor typically secures a long-term Hak Sewa (leasehold) or rental agreement, while the Indonesian property owner holds and manages the hospitality permits under their own name.

1. How This Model Works

Under Indonesian regulations, the Pondok Wisata licence (the standard permit for small villa or homestay accommodation) cannot be held by a foreigner, which is why this model relies on the local owner as the licensed party. The investor controls daily operations through a mutually agreed management contract, while the owner provides the legal umbrella required for accommodation activities.

This approach is flexible, and many airbnb business in Bali and Lombok owners adopt it because it allows market entry without the heavier compliance burden of a PT PMA.

2. Structure Options

Several variations exist depending on the relationship between the investor and the Indonesian landowner:

• Long Lease + Operator Agreement
  The foreign investor secures a 20–30-year lease, then appoints either themselves or a management company to run the villa under the owner’s permit.
• Revenue-Share Model
  The owner contributes the licence and land rights; the investor funds the build or renovation. Revenue is split based on negotiated percentages.
• Management Contract Model
  The investor acts purely as operator, with no long-term lease, receiving a fee or percentage of monthly income.

Each structure alters risk distribution, control levels, and long-term profitability.

3. Benefits of This Model

Many investors choose this model for clear reasons:

• Lower upfront capital, no need for PT PMA establishment or minimum investment
• Simpler setup, local owner processes the licence
• Faster route to market, especially beneficial for newly built or renovated villas

For compact projects, this can be an efficient way to validate demand before committing to larger investments.

4. Key Risks & Limitations

However, this model comes with risks that must be understood clearly:

• Nominee risk if informal agreements mimic ownership rather than lease rights
• Limited control over permits and legal compliance
• Permit fragility, the licence belongs to the Indonesian owner, not the investor
• Community & Banjar issues, if tourism use is not well-coordinated
• Financing challenges, lenders prefer PT PMA structures for collateral clarity

Small legal oversights in this model can lead to shutdowns, disputes, or revenue disruption.

5. Essential Safeguards for Investors

To minimise exposure, investors should insist on:

• Strong lease agreements with renewal options
• Indemnity clauses protecting against licence misuse or non-compliance
• Escrowed deposits for large build or renovation budgets
• Verified land certificates and ownership checks
• Routine compliance reviews with legal and tax advisers

When the agreements are robust and compliance is constantly monitored, the leasehold partnership becomes a workable alternative for operating or testing an airbnb business in Bali and Lombok, particularly when scaling is not the initial goal.

Partnering With Licensed Local Operators for Seamless Hosting

For many investors starting an airbnb business in Bali and Lombok, partnering with a licensed local operator or villa management company offers a streamlined and low-effort approach to running a profitable short-term rental. In this third-party management model, a professional local operator handles booking management, daily operations, guest services, reporting, and tax compliance under their existing licences, minimizing the investor’s day-to-day involvement.

1. Key Advantages of the Local-Operator Model

This approach provides significant benefits, especially for remote or first-time investors:

• Local operational expertise
• Established relationships with banjar, suppliers, and tourism stakeholders
• Consistent compliance with guest registration, taxes, and hospitality rules
• Reduced operational workload, ideal for passive or semi-passive ownership

For investors without deep local knowledge or time to manage a property, this is one of the most practical options.

2. Disadvantages & Things to Watch Out For

Despite the convenience, there are trade-offs:

• Management fees (often 15%–25% of revenue)
• Reduced control over guest experience and pricing strategies
• Dependency on the operator’s compliance and reputation

Poor operators can create reputational risks or cause compliance gaps that ultimately affect investor returns.

3. When This Model Makes the Most Sense

This structure is ideal for investors who want a hands-off, fully managed setup, especially when building or scaling an airbnb business in Bali and Lombok without personally managing staff, guests, or government reporting.

Compliance, Taxation & Reporting Essentials for Sustainable Operations

Running a legally sound airbnb business in Bali and Lombok requires more than a good property and strong occupancy, it demands full compliance with Indonesia’s tax, licensing, labour, and community regulations. This section outlines the core areas every investor must address, regardless of whether they operate through a PT PMA, a leasehold structure, or a local operator.

1. Tax Obligations (PPh, PPN & Withholding Taxes)

Indonesia’s tax regime for short-term rentals includes:

• PPh (Income Tax) – applied to business profits based on the chosen legal structure.
• Final PPh for Property Rentals – applicable only in certain lease scenarios.
• PPN (VAT) – may be required when turnover exceeds thresholds or when using hospitality KBLI classifications.
• Withholding Tax (WHT) – applicable for foreign service providers or cross-border payments.

Airbnb’s own tax guidance and Indonesia’s Directorate General of Taxes updates reinforce the need for accurate reporting and guest documentation to avoid penalties.

2. Licensing & OSS-RBA Requirements

Under OSS-RBA, all accommodation businesses must hold a valid primary business license aligned with the correct KBLI, typically falling under accommodation or villa operator categories. Buildings must also comply with PBG/SLF requirements, and the upcoming adjustments under GR 28/2025 will strengthen environmental and operational monitoring. Sources such as wiyasalaw.co.id emphasize stricter scrutiny on newly issued hospitality permits.

3. Labour & Immigration Considerations

If expatriates are hired for management roles, businesses must secure RPTKA, IMTA, and KITAS, requirements that apply across all operational models.

4. Desa Adat Rules & Community Relations

Especially in Bali, desa adat regulations dictate operating hours, noise limits, and community fees. Reporting from international outlets such as the Financial Times notes increased community pressure and enforcement in tourism zones.

5. Recordkeeping & CoreTax Compliance

Proper bookkeeping, nightly guest registration, and CoreTax integration are essential for smooth audits and long-term operational health.

With these elements in place, investors can operate an airbnb business in Bali and Lombok with long-term stability and minimized regulatory risk.

Quick Decision Matrix: Choosing the Right Structure for Your Investment

Selecting the ideal setup for your airbnb business in Bali and Lombok depends on matching your project goals with the right legal and operational framework. Use this rapid checklist to evaluate your direction:

• Scale & Control Needs: Single villa or multi-unit portfolio?
• Capital Capacity: Ability to fund a PT PMA vs a simpler leasehold setup.
• Timeline: How quickly you need to launch.
• Local Risk Tolerance: Comfort with community rules and permit dependencies.
• Tax Optimization: Preference for corporate vs individual tax routes.
• Expat Hiring Plans: Need for IMTA/RPTKA approvals.

Next Steps: Conduct a property verification, consult legal experts, and run OSS licensing pre-checks to ensure your structure aligns with current regulations.