In Bali, there are some options in terms of company structures that you can choose from to acquire property. However, some of these options have restrictions that you must be aware of, especially when you are a foreign investor who is considering running your business as well as buying and owning your own property in Bali.
We will go into details of these options so that you can acquire your property in Bali with the least effort possible.
Buying Property in Bali: Legal Company Structure Options
Special Purpose Vehicle Structure through Local Limited Liability Company (PT)
This used to be a very common choice in Bali but it is relatively risky as compared to other structures. This practice is becoming less and less prevalent because the BKPM is now performing stricter investigation into its ownership. Most of the time BKPM finds that the income of the Indonesian individual owning the property does not match the price of the property purchased.
But, the practice is perfectly fine with a Special Purpose Vehicle company as there is a legally binding agreement. You as the beneficiary and a representative of the Special Purpose Vehicle company will have to sign a loan agreement in order for the process to be legal.
Right of Use (Hak Pakai)
Under the local PT through Special Purpose Vehicle structure, foreigners can obtain a Hak Pakai when it comes to acquiring property in Bali.
Here are some of the aspects of Hak Pakai:
- Foreign nationals who have been living in Bali for a significant amount of time every year are entitled to a Hak Pakai
- It can only be used on residential properties
- Each foreigner can only obtain one Hak pakai
- Foreigners are required to possess a KITAS to apply for Hak Pakai
- The maximum property size under this Hak Pakai is 5,000 square metres. However, it can be increased to 7,000 square metres upon the approval from relevant authorities
- The land must be registered with the land office
- The land is controlled by the government throughout the duration
Foreign Limited Liability Company (PT PMA)
By opening a PT PMA, your company is eligible for Hak Milik. PT PMA is the most common form of legal entity run by foreigners in Bali.
To set up a PT PMA, you will need to have a business plan, a local bank account with investment capital, and active business operations.
You will have a higher protection if you acquire your property in Bali via PT PMA.
Benefits of Purchasing Property with PT PMA
Acquiring property with a PT PMA is a more preferred choice than using a Special Purpose Vehicle.
Here are the advantages:
- Foreigners have full freehold ownership of property when using a PT PMA
- Your ownership is protected through a legal agreement
- If disputes arise, your case can go to the international court
- Unlike Hak Pakai, you can lease or own multiple assets within the company
- You can hold right-to-build permit for property construction purpose
- You can rent out or sell the property, and receive incomes
- Income can be received by the PT PMA
Buying Property in Bali with Cekindo’s Assistance
There are complex laws and regulations when it comes to choosing the right company structure for legal property acquisition in Bali.
Therefore, you will require expert advice at different stages from setting up your legal entity to purchasing or renting a property on the island.
At Cekindo, we render comprehensive assistance to help you understand the legal complication of setting up a company and obtaining property.
Cekindo is the total business solution provider for all your business needs. Our professional team of consultants will work closely with you to know your requirements and offer you the best advice and solutions at the right time.
Let’s discuss your business needs. Start by filling in the form below.