Bali's Short-Term Rental Rules Are Changing on 31 March 2026: What Investors Need to Know

From 31 March 2026, new rules will govern short-term villa rentals on Bali. From that date, foreign investors will no longer be able to list their villa through their own PT PMA on platforms such as Airbnb and Booking.com. What do the rules involve, why are they being introduced, and what do they mean for your investment?

Background: why is the government stepping in?

Short-term rental on Bali has grown sharply in recent years. Thousands of villas have been listed through international booking platforms, often without the proper permits. Payments have largely run through overseas accounts, keeping the income out of sight of the Indonesian tax authorities.

That has created friction in the sector. Hotels and other registered accommodations do pay tax and must meet strict requirements. Meanwhile, they've been competing with private rentals that don't. Local government has also missed out on significant tax revenue as a result.

With the new policy, the government wants to achieve three things:

• Visibility: every rental accommodation should be registered and accounted for.
• Fair competition: everyone renting out a property follows the same rules and tax obligations.
• Tax revenue: rental income must be declared and taxed in Indonesia.

What's changing?

No more renting through your own PT PMA. Many foreign investors set up their own PT PMA to operate their villa directly. From 31 March, that will no longer be allowed for short-term rental. The "villa accommodation" business activity is reserved for Indonesian companies.

Rental only through a licensed local PT. Short-term rental will have to run through a licensed local PT acting as the official operator. That operator must hold:

• a valid NIB (Nomor Induk Berusaha), the business registration number;
• the correct KBLI classification for accommodation;
• the relevant tourism permits and tax registrations.

Platforms will help enforce it. Airbnb and Booking.com will start requiring a valid NIB and the correct KBLI for every listing. Listings that don't meet these requirements will be removed from the platforms. That also applies to villas in a zone where short-term rental isn't permitted, and to villas without the proper licences.

Bali only. The rules apply to Bali. For now, they don't apply to Lombok or Sumba.

Does a PT PMA still make sense?

In the past, many investors were advised to set up a PT PMA even when it wasn't strictly necessary for their situation. A villa could, for example, also be leased in someone's personal name. The downside of that was not having full control over the operation yourself — which is exactly why many investors chose to set up their own PT PMA: to run the rental themselves.

Under the new rules, that advantage mostly disappears. Even with your own PT PMA, you'll need to work with a licensed local PT for short-term rental. For short-term rental specifically, a PT PMA adds little value as a result — while still carrying the costs of setting one up, the capital requirements, bookkeeping and periodic reporting.

Still considering setting one up? Take a hard look at what you actually need it for. A PT PMA can still make sense for other purposes — holding certain ownership rights, long-term rental, or other business activities. If short-term rental is your only goal, a simpler structure may achieve the same result.

Zoning: the land designation is what decides it

Whether short-term rental is even possible depends on the zone your villa sits in.

• Pink zone (tourism): short-term rental is almost always allowed here, provided the permits are in order.
• Yellow zone (residential): short-term rental generally isn't allowed here. In certain areas it can be, with the right licence. This varies by location and needs to be checked per plot.

Either way: even with the right zoning, rental still has to run through a licensed local PT.

What does this mean for you as an investor?

From operator to landlord. You remain the owner or leaseholder of the villa, but operations shift to a local operator. They take care of the permits, tax remittance, staff and platform listings. You receive a fixed fee, a revenue share, or a combination of both.

New contracts are needed. The arrangement with the operator needs to be set out in a new operating or rental agreement. Pay attention to the division of responsibilities, the revenue split, and the termination terms.

Choose a reliable operator. You become dependent on a local party. Check that the operator genuinely holds the right registrations. Nominee arrangements with an Indonesian frontman are void and carry significant risk.

Factor in the tax burden. Gross revenue is subject to a 10% local accommodation tax (PB1/PHR), reported monthly. Profit transferred abroad can also fall under a 20% withholding tax. Build this into your return calculations.

Check the zoning before you buy. A villa in a yellow zone may be attractively priced. If short-term rental isn't allowed there, the achievable return is significantly lower.

What this means for the market

The new rules mark a step toward professionalising Bali's rental market. For investors, that means more rules — but also more certainty. Illegal operators will disappear from the platforms, competition becomes fairer, and licensed villas end up in a stronger position. Four things will determine a profitable investment going forward: the right zone, a suitable ownership structure, a reliable local operator, and a clear contract.

Need help? Not sure about the right structure for your investment, or what the new rules mean for your villa? Get in touch. I'll happily connect you with a specialist who can advise you personally on your situation.

This article is for informational purposes only and does not constitute legal or tax advice. Always have your situation reviewed by a local specialist.