Laws & Rental Regulations

Owning a villa in Bali sounds like a dream — and it can be.

Owning a villa in Bali can be an amazing investment, especially with the island’s growing tourism and high demand for private rentals.

But before you start welcoming guests, it’s important to understand the permits and licenses you need to operate legally.

Getting your paperwork right protects your business, keeps your guests safe, and avoids unnecessary problems with local authorities.

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 1. Pondok Wisata License (Small Accommodation License)

This is one of the most important — and most misunderstood — permits in Bali.

The Pondok Wisata (also called a “Homestay License”) is required if you are renting out a small-scale villa, homestay, or guesthouse with up to 5 rooms or one villa unit.

It allows individuals or locally registered businesses to legally operate short-term accommodation for tourists.

Key points:

• The license must be under an Indonesian individual or company name. - If you are a foreign investor, you’ll need a local partner or setup a PT PMA to hold this permit legally.

  
  

• The villa should be located preferably in a Tourism (Pink) Zone, where short-term rentals are fully legal and supported by local regulations.

  Some properties in Residential (Yellow) Zones may still operate short-term rentals with local community (Banjar) approval, but this is not guaranteed by law and can vary by area. For long-term stability and compliance, Tourism Zones remain the safest choice.

  
  

• According to regulations, the number of rooms (or bedrooms) cannot exceed 5 for a property to qualify under the Pondok Wisata license. If a villa has more than 5 bedrooms, it would require a different type of license (e.g., hotel licence).

  
  

• Rental income from Bali villas is subject to Indonesian tax, usually around 10% of gross revenue. The property owner is responsible for the tax, but our team manages all reporting and filing to keep everything accurate, transparent, and compliant with local regulations.

Pondok Wisata gives you the legal right to host guests and earn from short-term stays.

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2. IMB / PBG – Your Building Permit

The IMB (Izin Mendirikan Bangunan) was Bali’s original building permit. In 2021, it was replaced by the PBG (Persetujuan Bangunan Gedung) — meaning Building Approval.

This document confirms that your villa:

• Was built legally on properly zoned land (preferably a Tourism/Pink Zone)

• Follows structural and environmental safety standards

• Is registered for the right purpose (e.g., accommodation use, not residential)

  
  

Why it matters: Without a valid PBG, you can’t apply for a Pondok Wisata (rental license) or business registration.It’s the foundation of a legal and insurable villa in Bali..

3. NIB – Business Identification Number

Once your building is approved, you’ll need an NIB (Nomor Induk Berusaha) — your villa’s official Business ID issued by the Indonesian government.

This number:

• Registers your villa as a legal business

• Connects to your tax ID (NPWP)

• Allows you to open a business bank account, hire staff, and pay local taxes properly

Why it matters: If your villa earns income, it’s legally considered a business — even if managed by a property company. Having an NIB keeps your operations transparent, compliant, and safe from penalties.

In Short:

1️⃣ IMB/PBG (Building Permit) → 2️⃣ NIB (Business ID) → 3️⃣ Pondok Wisata (Rental License) → 4️⃣ You’re ready to operate legally in Bali.

Setting up the right documents is the key to protecting your investment and avoiding future issues — but the process can be confusing if you’re new to Bali’s regulations.

Need help setting up your villa legally?

At BaliReverie, we assist villa owners from start to finish — from building permits and licensing to full-service property management once your villa is ready.Let’s make sure your property is fully compliant, profitable, and stress-free to run.

Contact Us Today to get personalized guidance for your villa project.