Bali is intensifying its crackdown on illegal holiday rental villas to address issues such as tax evasion, environmental violations, and misuse of properties. The government and tourism authorities have identified that a significant number of villas are operating without proper construction permits, business licenses, or tourism permits, which undermines Bali’s reputation and strains its infrastructure.
This comes amid rising concerns from the Bali Tourism Office, which recently announced plans to gather tourism associations for clarification after reports surfaced of crowded tourist hotspots but unusually quiet hotels. Authorities suspect illegal villas diverting guests away from licensed accommodations, further fueling the crackdown.
This heightened scrutiny also affects the real estate market in Bali, as buyers are urged to ensure compliance before investing.
What Villa Owners Must Do to Stay Compliant
Obtain Proper Permits and Licenses
Owners must ensure their villas have all necessary permits, including construction permits that comply with Indonesian safety standards and business licenses specifically for tourism accommodation. Many illegal villas currently only have permits for single-family residential use, which is insufficient for commercial rental purposes.
Register as a Legal Business
Villas must be registered as legitimate tourism accommodation businesses with the Bali Tourism Office or relevant authorities. This includes paying applicable taxes on rental income and employing staff according to Indonesian labor laws.
Comply with Tax Regulations
Strict adherence to tax laws is essential. Illegal villas cause significant tax revenue losses for the government, which is a key reason for the crackdown. Owners must declare income and pay taxes accordingly to avoid fines, closures, or prosecution for tax evasion.
Avoid Shortcuts and Seek Professional Guidance
Taking shortcuts by operating without permits or proper registration risks severe penalties, including fines, forced closure, and legal action. Owners are advised to consult visa agencies or legal professionals to navigate the complex regulatory environment and ensure full compliance.
Prepare for Increased Enforcement and Inspections
Authorities are conducting spot checks and secret inspections, especially in high-tourism areas like Canggu, Berawa, and Uluwatu. Owners should be prepared for these enforcement actions and maintain up-to-date documentation.
Additional Context
The Bali Villa Rental and Management Association is working with the government to help illegal villa operators become legal and to serve as an official verification authority for tourist rental villas.
The crackdown is part of a broader government effort to develop Bali into a world-class destination with sustainable tourism that contributes fairly to public infrastructure and environmental management.
Tourists are also being warned to only rent legally registered villas, as renting illegal properties may lead to fines or other penalties.
In summary, villa owners in Bali must secure the correct permits, register their properties as legal tourism businesses, comply fully with tax laws, and seek professional advice to remain compliant amid the government’s ongoing crackdown on illegal villas
