Setting up a Co-living Space in Indonesia
Co-living spaces are becoming quite popular in big cities like Jakarta, but what does it take to open one?
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A co-living space is a type of housing facility where tenants live in a shared space. This option is particularly attractive for digital nomads and remote workers because oftentimes, spaces like this are already equipped with topnotch facilities to live and work. It’s more convenient and cost-effective.
This type of business has become quite popular in big cities such as Jakarta. If you’re looking to open a co-living business in Indonesia, you’ve come to the right place. In this article, we’ll discuss what you need to know and do to set up a co-living space in Indonesia.
The percentage of foreign investment for co-living spaces is not regulated in the negative investment list, so this can be a 100% foreign-owned business.
Co-living spaces fall under the same category as boarding houses (called Kost in Indonesia). A kost or boarding house is a type of long-term rental where certain areas are shared among all tenants, like a communal kitchen or living room. As such, the process, requirements, and regulations to open a co-living space are similar to a kost business.
Registering a co-living business
To being setting up your co-living business, you must start with the incorporation process. This stage involves getting your tax registration and NIB (business identification number) for your company.
Because you are offering rooms for rent, you can set up your business under the “other accommodation services” business classification (KBLI). It would be wise to include a co-working aspect to the business as well. To do this, you can add the real estate KBLI to your company. You can combine these KBLIs in one company.
After settling your incorporation, you can begin working on the construction or acquisition of your building. You can also set up your property’s facilities at this point.
Applying for a license to operate for a co-living space
While completing the construction and set up of your facilities, you should start preparing the requirements to obtain your license to operate. You cannot accept tenants without this license, even if your property is ready.
To apply for a license to operate, you must also submit the following documents:
- Application Letter
- Director’s identification documents. Passport or KITAS for foreigners, and KTP or family card (KK) for Indonesian nationals.
- Technical proposal. This document must explain the service you are providing and must include your pricing. The number of rooms, the property’s floor place, and facilities must also be indicated.
- Approval from the neighbors. Kost businesses must get approval from the owners of adjacent properties. Emerhub can facilitate this and assist in getting approval from your neighbors. This must be submitted along with copies of neighbors’ KTP (resident identity card).
- IMB (building permit). You must also have the appropriate building permit (IMB) to operate a co-living business in your property. Emerhub can assist in obtaining the building permit for your property. With our land and building due diligence service, we can also assist in verifying if your property is the best option for your business.
- Proof of payment on the latest tax on Land and Property (PBB)
- Previous kost license. If you have a previous kost license, you will need to submit this as well.
- Proof of payment on hotel tax. This is necessary if your property has more than 10 rooms for rent.
- Statement letter from owner. You will need to submit this if you are taking over an existing business.
Under the “other accommodation services” business classification, revenue made from tenants living on the property is subject to a 10% withholding tax. However, tenants do not have to pay value-added tax (VAT).
On the other hand, customers availing of services under the co-working space are subject to 10% VAT since this area of the business falls under the real estate classification.
Using a Nominee Company
To minimize taxes on your revenue, you can look into operating your business through a nominee company. Taking this option, you can pay as little as 1% of your revenue in taxes. However, each business cannot have more than 10 rooms, and your annual revenue must be less than IDR 4.8 billion.
Let’s talk about getting your co-living business started in Indonesia. Fill out the form below or send an email to [email protected].
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