Bali is well known as a relocation hub for foreign entrepreneurs. Through its low cost of living, vibrant culture, and growing expat community, it comes as no surprise that there is a rise in business operations.
Are you planning on opening a business in Bali or have you recently relocated? Then this article will serve as your guide for ensuring that you maintain tax compliance with local legislations on both a personal level and for your business.
Tax requirements in Bali
Register tax card
To ensure tax compliance in Bali, businesses and individuals must register for a tax card. The personal tax card is also known as an NPWP and is mandatory for tax residents residing in Bali, as it establishes your tax identity and attributes you with a unique tax code.
If you are planning to open a business in Bali, then you should obtain the tax card as soon as possible, as it is required for a company’s legal representative. To apply for the document, you will have to present your Indonesian Identification (KTP) or a copy of your passport and your KITAS.
If you are residing in Bali without a KITAS, then you should also take a look at this article on opening a bank account in Indonesia without a KITAS to facilitate your financial independence and compliance.
Acquire an EFIN
If you are a business owner in Bali, then it is also necessary to set up an Electronic Filing Identification Number (EFIN) to keep your finances compliant and secure. By obtaining an EFIN, your business has access to an encrypted system in which to record your financial records and transactions.
An EFIN is essential for using the Indonesian online tax service and also allows you to authenticate digital transactions. More and more businesses and services in Bali are shifting to an online format, therefore getting an EFIN set up should be one of your priorities once you’ve acquired your tax card.
On top of adding an extra layer of security to your financial reporting, using the online tax service through your EFIN will also ensure that your business’s tax reports are processed faster than through a traditional paper filing system.
When to report taxes in Bali?
Ensuring financial compliance within the Indonesian tax system can be complex and submission requirements vary depending on whether you are declaring personal or business income taxes. Every tax entity (individual or business) is required to submit an annual tax return, however, for business owners, it is also mandatory to submit monthly income tax reports.
| Type of report | Who does it concern? | What does it include? | Filing deadline |
| Monthly tax report | Businesses | Income tax (reported even in zero income situations), Value Added Tax (VAT) – if business is VAT registered | 20th of every following month |
| Annual tax report | Individuals and businesses | Any form of income, Assets, liabilities | End of the 4th month (April) after fiscal year-end |
If you plan on reporting taxes for a business operating in Bali, it is best practice to put an accounting system in place to manage your expenses and earnings. Consider partnering with Emerhub’s Tax & Accounting experts to streamline the process and ensure timely and accurate reporting.
Ensure tax compliance for your business in Bali
Payroll management compliance
If you are considering running your own business in Bali, then you will need to ensure that you have an efficient payroll management process for both Indonesian and foreign employees. There are some strict regulations in terms of Indonesian payroll standards by which you will need to comply.
Salaries in Indonesia vary depending on the region in which you are working. This also applies to the minimum required salaries for the main regions of Bali:
- Badung region IDR 3.318.628,06
- Denpasar city IDR 3.096.823,00
- Gianyar region IDR 2.928.713,00
- Tabanan region IDR 2.913.164,74
To dive a little deeper into the topic of payroll compliance, be sure to check out our guide to payroll management in Indonesia.
Submit your investment reports
The investment activity report (LPKM) is mandatory to submit for new foreign-owned businesses in Bali, businesses with foreign shareholders, and businesses investing more than IDR 500,000,000. The report demonstrates the authorized capital that has been invested in that period.
The LKPM allows the Investment Coordinating Board (BKPM) to assess the financial stability of the market and monitor any potential trends in the local economy. If you have already acquired your business license, then you only need to submit the report bi-annually, versus quarterly reporting for companies that have not yet acquired the license.
Simplify your business compliance in Bali through Emerhub
To ensure that your business remains compliant with the many regulations, it is advisable to partner with a tax, accounting, and HR service provider. This is a beneficial solution that allows you to focus on your core business needs and growth while allowing experts to handle the complexities of ensuring business compliance.
Emerhub’s team is well-versed in the different local requirements for businesses operating in Bali, which can prevent you from having to navigate through complex reports and ensure that you don’t encounter any issues.
If you are interested in getting in touch with one of our advisors about your compliance needs in Bali, contact us via the form below!
