The Legal Side of Airbnb Rentals: Important Considerations

The Legal Side of Airbnb Rentals: Important Considerations

Table of Contents
Find out about Bali's Airbnb legal landscape. From villa rentals to licenses and taxes, here's a must-read guide for every potential host.

The Rise of Airbnb Villas in Bali

Bali, known for its picturesque landscapes and warm climate, has seen a surge in Airbnb villas, particularly due to the tourism boom over the past decade. 

In 2019 alone, before the pandemic, this island attracted more than 6 million foreign visitors.

In 2023, Bali showed its resilience from the pandemic which welcomed more than 5 million foreign visitors.

While many tourists opt for traditional hotels and guesthouses, a growing number are choosing private Airbnb villas for a more authentic local experience. 

These villas, often spacious, serve not just as accommodations but also as venues for events like weddings and birthday parties.

Legal Considerations for Foreigners

Foreigners interested in renting out their villas on Airbnb in Bali must adhere to specific regulations. 

Notably, villa rental is not included in the Indonesian Positive Investment List (PIL). To legally operate, foreigners need two primary licenses:

Accommodation License: Depending on the number of rooms, you’ll either need a homestay license (Pondok Wisata) for villas with 3 to 5 rooms or a full hotel license (Melati license) for properties with more than five rooms.

Building License (IMB): This license is essential for constructing a property intended for Airbnb villa rental.

Tax Implications for Experience Hosts

If you’re an experienced host in Indonesia, understanding the tax landscape is crucial. Two primary taxes to consider are:

Value Added Tax (VAT): Hosts in business typically need to charge VAT on their services. As of the last update, the general VAT rate in Indonesia stands at 10%. Depending on the nature of the experience, different VAT rates might apply.

Income Taxes: Hosts may need to pay income taxes on their earnings. It’s essential to keep receipts of expenses, as these can often be deducted from income taxes.

Business Licensing in Bali

If you’re considered a “business actor” under the Trade Law, you might need a trade business license (SIUP). 

Additionally, businesses in Bali must obtain general corporate licenses, such as a domicile certificate (SKDP) and a company registration certificate (TDP). 

Those offering specific services, like serving food or alcoholic beverages, might need additional licenses like the Tourism Business License (TDUP) or an alcoholic beverages trading license (SIUP-MB).

Consumer Protection

Businesses must adhere to the Consumer Protection Law, ensuring they provide quality services and avoid misleading representations. 

It’s vital to provide clear, accurate information to guests and ensure pricing transparency.

Entrust Your Villa to Bali Management Villas

Navigating the villa industry can be challenging, but with Bali Management Villas, you’re in expert hands. 

Our team, backed by years of experience and rigorous training, ensures that every aspect of your villa’s management is handled with utmost precision. 

From the moment a reservation is made, we meticulously manage every detail, ensuring a seamless experience for your guests. 

Our commitment to excellence means we tailor our services to meet the unique needs of each guest, from personalized itineraries to transportation arrangements. 

We’ll have a strategic discussion about the best steps to increase your ROI.

By choosing Bali Management Villas, you’re not just getting a management service; you’re ensuring an extraordinary experience for every guest.

Submit your property in no time.

Armel Theurillat
Marketing Manager at Bali Management Villas