Find Out How To Start A Lifestyle Business in Bali
2 February 2023
There are some regulations that need to be understood in order to plan how to start a lifestyle business in Bali, as there are many foreigners who consider setting up a lifestyle business to support themselves in Bali, but there are certain Indonesian rules to keep in mind. for foreign companies, especially with capital and investment requirements.
Let’s look at some key business information and some common challenges foreigners face when starting a lifestyle business in Bali, as well as alternative ways to set up a business there.
Common Lifestyle Businesses in Bali
For a lifestyle business there isn’t really a specific niche, however let’s look at some of the most popular businesses in Bali:
- Photography and videography services
- Short-term rentals like villas or guesthouses
- Businesses in the food and beverage industry like restaurants or cafes
- Spiritual health, holistic and wellness services/retreats
- Travel agencies or tour operators
- Clothing and jewelry design and distribution
- Import and sales of cosmetics
- Recreation and leisure activities (yoga, surfing, diving, golf)
- Consulting services, for example, marketing, branding and social media management
Common myths regarding doing business in Bali
There are several misconceptions about Bali lifestyle businesses, let’s look at the most common ones that are found:
Foreigner cannot be a director of a local company
There is actually no law that does not allow a foreigner to be a director of a company in Indonesia, however, only a director in a local company can be an Indonesian citizen.
Local companies cannot sponsor work permits for foreigners
Depending on the size of the company’s capital, it is taken into account that local companies can sponsor work permits (KITAS) for foreigners, as well as the number of work permits that a company can sponsor.
Local companies pay lower taxes
Tax rates are the same for both local and foreign companies, which range from 11% to 22%. However, there are some companies, such as hotels, that must declare additional taxes, this is something that depends on the type of company.
Having a local partner makes the company registration process faster
Having a local partner does not change the registration process or requirements, as a partially foreign-owned company is a foreign-owned company.
Companies in Indonesia can only sponsor a limited number of work permits for foreigners
The number of KITAS that a local company can sponsor depends on its capital, which means, there is no regulation specifying the number of work permits and there is no restriction for a foreign company.
Challenges of Lifestyle Businesses
Meeting the Minimum Capital Requirements and Investment Requirements
It is very important to meet some requirements as lifestyle businesses are usually small businesses, the minimum capital requirement for Foreign Owned Limited Liability Company (PT PMA) must be met is IDR 10 billion (approximately $700,000). You should also have a capital declaration letter to show paid-up capital and an investment activity report (LKPM) periodically to show that you are investing money. Even so, it is not necessary to present an investment plan, nor to show the bank account of the company.
Limited Percentage of Foreign Ownership
It is important to know the types of restrictions that your business may have, especially hospitality businesses, with the help of Emerhub you can find out if your planned business is open to foreign ownership, as there are many companies that are open to full foreign ownership and some business classifications (KBLI) only allow partial foreign ownership.
Regulations for Multiple Businesses Under One Company
It is necessary to take into account some regulations, for example, the minimum investment requirement of IDR 10 billion is for each KBLI, and there are some KBLIs that cannot be under the same PT PMA, since a PT PMA cannot have KBLI of manufacturing and distribution. Also, it is important to know that companies with a PT PMA share tax reports, investment reports and liabilities, and the partners will also be responsible if they cannot consolidate all the data on time.
Set Up a Company in Bali through Special Purpose Vehicle in Bali
You can also create your business through a special purpose vehicle, which is a legal entity that owns shares on behalf of another party. For example, you do not have to follow the regulation for foreign-owned companies if a local Indonesian company is your special purpose vehicle.
In this way with an agreement, you can have full control of the company, even if it is under the name of the special purpose vehicle, it can also protect your interests and your actions.
Let’s see some examples in this list:
- Restaurants and cafés
- Surf and diving centers
- Yoga studios
- Travel agencies/tour operators