How You Can Be Deceived When Registering a Company

Last month, a client approached us wanting to open a company for short-term villa rentals, management, repair, and maintenance. After a legal review, Legal Indonesia specialists explained that short-term property rentals for foreign companies are prohibited in Indonesia.

For other purposes, the activity code KBLI 68111 (Real Estate Activities) was suggested, which allows managing and servicing villas only through a contract with a local company having the appropriate license. The client was thoroughly explained the legal nuances and offered a safe solution.

However, he decided to register the business through another agent, who assured that:

• foreigners are allowed short-term rentals;

• contracts with local companies are not required;

• KITAS can be obtained without Indonesian citizens;

• registration cost is lower.

What This Can Lead To

1. Mismatch of activity with registered KBLI

   If the actual activity does not match the code specified at registration, the received income may be recognized as illegal or an erroneous source, which is considered as tax evasion.

2. Violation of labor legislation

   Lack of local employees and registration with BPJS (social security system) increases the risk of inspections by regulatory authorities. Possible consequences — fines and blocking of NIB (business registration number).

3. Immigration violations

   If the owner actually works without the appropriate type of KITAS, it is considered illegal employment.

   Risks include:

• cancellation of KITAS,

• overstay and deportation,

• being blacklisted by immigration.

Why Other Agents Say It's Possible

Some agencies simply sell company registrations, without providing legal support, reporting, and assistance with obtaining KITAS. They do not bear responsibility for the legality of the business and often disappear when the client starts to have problems.

Conclusion

Low registration costs often mean a lack of professional support and legal guarantees.
To conduct business legally and safely in Bali, it is important to correctly choose the KBLI codes, capital structure, and type of KITAS.

Legal Indonesia provides a full range of services for foreign entrepreneurs: from registering PT PMA and choosing the appropriate KBLI to obtaining a KITAS and business support in accordance with Indonesian law.

Book a consultation to learn how to open a company in Bali without violations and risks.

Contact us for details