Buying a villa in Bali is exciting… but what are the tax conditions?
Acquiring a villa in Bali is an exciting and often profitable adventure. But beyond the dream of sunsets and rental income, one crucial question always comes up: what taxes should a foreign investor expect?
Good news: the Indonesian tax framework is flexible and relatively favorable. Bad news: it’s often misunderstood, poorly explained, and too frequently ignored.
Here’s a clear and up-to-date overview of the tax obligations a foreign investor can expect in 2025.
1. Acquisition Tax: BPHTB
When acquiring a property (even leasehold), you’ll need to pay the BPHTB (Bea Perolehan Hak atas Tanah dan Bangunan), the equivalent of a property acquisition tax.
- Rate: 5% of the property’s value (often based on the official valuation or contract value)
- Paid by the buyer
- Sometimes negotiable between buyer and seller, depending on local practice
🟡 Note: For leasehold purchases, this tax may be adjusted but should still be anticipated.
2. Rental Income Tax
If you rent out your villa, the income generated is taxable in Indonesia, even if you are a foreigner and receive payments abroad.
Two main options:
a. Through a company (PT PMA)
- Tax: 10% on gross income (withholding tax for short-term rentals)
- You can deduct certain expenses if using the real regime
- Advantage: better legal protection, VAT recovery possible, smoother resale
b. In your own name via a management agreement
- Flat tax of 10 to 20%, depending on the agreement
- Less flexible in tax planning but easier to implement at first
🔍 Tip: Always request a clear contract with your manager and check whether your rental income is being reported properly.
3. VAT (PPN) on Certain New Properties
For villas that are newly built and sold turnkey by a company, VAT of 11% may apply.
- Mainly affects “investor” developments with managed services
- Always verify if the price is net or gross (often not clearly stated…)
4. Annual Property Tax: Pajak Bumi dan Bangunan (PBB)
This is the annual land and building tax. It’s very affordable by international standards.
- Calculated based on the official cadastral value of land and buildings
- Typically between IDR 500,000 and 3,000,000 per year (~$30 to $180) for a standard villa
- Often paid by the occupant (you or your company) and not automatically included
5. Capital Gains Tax on Resale
When reselling your villa (leasehold or usufruct), a capital gains tax may apply.
- Flat rate of 2.5% to 5% of the sale price
- Paid by the seller
- Exemptions possible if selling through share transfers (e.g. company shares)
6. Import Tax on Furnishings
If you ship furniture or high-end equipment from abroad, be prepared for:
- 10 to 35% import tax depending on the goods
- Customs clearance delay: 2 to 6 weeks
- A complex process that must be planned ahead
💡 Tip: Buying locally or from Java is often simpler and more cost-effective.
In Summary: Reasonable Taxes — But Don’t Overlook Them
Tax | Indicative Rate | Frequency |
Acquisition Tax (BPHTB) | 5% | One-time (upon purchase) |
Rental Income Tax | 10–20% | Annual |
VAT (if applicable) | 11% | One-time (on new builds) |
Land & Building Tax (PBB) | IDR 500K – 3M | Annual |
Capital Gains Tax | 2.5–5% | Upon resale |
