What tax applies to income from renting out a villa in Bali?

Two kinds of rental, two tax treatments

Indonesian income tax treats leasing a property differently from running accommodation.

Leasing land or a building. Income from renting out land or a building, in whole or in part, is subject to a final income tax (PP 34/2017 Article 2(1)). The rate is 10% of the gross rental value (Article 4(1)). “Gross” means everything the tenant pays in connection with the property, including maintenance, upkeep, security, service and other facility charges, whether they are in the lease or in a separate agreement (Article 4(2)). The official explanation of Article 2(1) gives a room in a house, a pavilion and a swimming pool as examples of part of a building.

Lodging services. The same regulation says this rule does not cover income from lodging services and their accommodation (Article 2(3)). The official explanation gives rooms, student and worker hostels and boarding houses as examples. Income outside the final tax is taxed under the general rules, where the rate depends on who receives it:

• A company, such as a PT PMA: 22% from tax year 2022 (UU 7/2021, amending Article 17(1)(b) of the income tax law).
• A resident individual: progressive rates under Article 17(1)(a), from 5% on the first IDR 60,000,000 of taxable income to 35% above IDR 5,000,000,000 (UU 7/2021).

UU 7/2021 has itself been amended since (by UU 6/2023), so have a tax adviser confirm the rates that apply in the year you earn the income.

Which side of the line a given arrangement falls on, for example a villa let for a year to one tenant against nightly bookings with housekeeping, is a question for a licensed tax consultant. See tax and accounting firms.

The regional hotel tax (PBJT)

Separately from income tax, UU 1/2022 sets a regional tax on certain goods and services (PBJT). Hotel services under it include villas, guesthouses, bungalows, resorts, cottages and private homes used as hotels (Article 53(1)). The tax is borne by the consumer, and the business that sells the service is the taxpayer that must account for it (Article 56). The rate is at most 10% (Article 58(1)) and each regency sets its own by regional regulation (Article 58(4)). It is owed where the service is supplied, from the time of payment or supply (Article 59(2) and (3)).

Ask your villa manager who registers for, collects and pays the hotel tax for your villa, and get copies of the filings.

Who files, and when

• Every taxpayer who meets the conditions must register with the tax office and receives a taxpayer number, the NPWP (UU 28/2007 Article 2(1)).
• Where the tenant is a company or another appointed withholding agent, the tenant withholds the 10% final tax; otherwise the landlord pays it (PP 34/2017 Article 3(1) to (3)).
• Monthly returns are due within 20 days after the end of the tax period; the annual income tax return within 3 months after the year end for an individual and 4 months for a company (UU 28/2007 Article 3(3)).

If you own through a company

A company pays the corporate rate on income outside the final tax, and files a company return. For the investment rules that apply to a foreign-owned company running accommodation, see PT PMA for property investors. For how management fees work, see villa management fees explained.