How to Handle Inspections and Audits as a Foreign Business in Bali

Bali is a dream destination for entrepreneurs looking to build a business in paradise. But even paradise comes with rules. One of the most misunderstood and often neglected areas is how to handle audits as a foreign business.

Whether you're operating a restaurant in Seminyak or a boutique hotel in Ubud, government inspections and audits as a foreign business are inevitable. Understanding how these processes work and what the Dinas and other authorities look for is crucial to long-term success.

Why Audits Happen

Government bodies carry out audits as a foreign business to ensure regulatory compliance, labor law enforcement, proper tax contributions, and alignment with business permits. These audits aren’t always scheduled; sometimes they come unannounced, especially if a competitor, customer, or neighbor files a complaint.

Key Agencies Involved

When it comes to audits as a foreign business, expect involvement from several bodies:

1. Dinas Tenaga Kerja (Manpower Office) — Inspects your employee documentation, BPJS registration, and employment contracts.
2. Dinas Pariwisata (Tourism Board) — Ensures your business operates legally within the tourism sector.
3. Imigrasi (Immigration) — Verifies foreign workers’ KITAS or KITAP and cross-checks their working permits.
4. Kantor Pajak (Tax Office) — Conducts financial audits as a foreign business to examine tax filings, invoices, and financial statements.
5. Satpol PP or Local Government Officers — Inspect operational compliance and may check signage, licenses, and waste management.

What Inspectors Look For

If you're preparing for audits as a foreign business, here are some common areas of inspection:

• Business Licenses: NIB, OSS registration, and sector-specific permits.
• Employment Records: Valid employee contracts, BPJS Kesehatan & Ketenagakerjaan compliance.
• Visa & Work Permits: Foreign staff must have a valid IMTA and KITAS.
• Tax Documents: Monthly and annual SPT reports, NPWP registration, Coretax usage.
• Environmental Compliance: Waste disposal, wastewater treatment, and plastic ban compliance.

Common Mistakes That Trigger Audits

Audits as a foreign business often begin due to specific red flags:

• Hiring foreign staff without proper permits
• Ignoring BPJS obligations
• Operating outside the scope of the NIB license
• Late or inconsistent tax reporting
• Complaints from locals or rival businesses

How to Prepare for an Audit

Preparation is the best defense when it comes to audits as a foreign business. Consider the following:

1. Keep Your Documents Updated: Regularly review all permits, employee records, and licenses.
2. Train Your Staff: Ensure your team knows how to respond if inspectors arrive.
3. Designate a Compliance Officer: Appoint someone responsible for document tracking and audit coordination.
4. Work With Professionals: Legal consultants and tax advisors can help ensure your documents are in order.

Real-Life Scenario

A foreign-owned wellness retreat in Canggu failed to report taxes correctly for six months. When a surprise audit was initiated, they were penalized heavily, and their business license was temporarily frozen. If they had prepared for audits as a foreign business, this could have been avoided.

Post-Audit: What Happens Next?

After audits as a foreign business, inspectors will issue:

• Berita Acara Pemeriksaan (BAP): An official report summarizing the audit.
• SPT or Surat Peringatan: A warning letter if any violations are found.
• Follow-Up Actions: Deadlines for rectification or further sanctions.

It’s important to act swiftly, submit corrections, and avoid future violations.

Long-Term Compliance Strategy

• Do Annual Internal Reviews
• Use Cloud Storage for Business Documents
• Establish Strong HR and Finance SOPs
• Join Local Business Associations to stay updated on policy changes

Conclusion

Handling audits as a foreign business in Bali doesn’t have to be stressful. With the right preparation, team, and legal knowledge, audits can be a routine part of keeping your business safe, compliant, and trustworthy. Stay informed, stay organized, and always be audit-ready.

‍