Navigating the Regulatory Landscape: A Comprehensive Guide for 100% Foreign Investment (PMA) in Indonesia's Real Estate and Tourism Sectors (December 2025)

Indonesia continues its push to attract Foreign Direct Investment (FDI), simplifying licensing processes through the Online Single Submission (OSS) system. However, for investors venturing into specific sectors like real estate and tourism, particularly in high-demand areas such as Bali, navigating the intricate web of industry-specific regulations and inter-ministerial policies remains critical.

A recent case study involving a foreign investor seeking to establish a 100% Foreign Investment Company (PT PMA) for property development, a restaurant, and a SPA in Bali highlights the crucial distinctions between initial licensing approval, fundamental legal business restrictions, and the mandatory procedural requirements for tax compliance that follow.

The Regulatory Framework and KBLI Codes

All business activities in Indonesia must be registered using the Classification of Indonesian Business Fields (KBLI – Klasifikasi Baku Lapangan Usaha Indonesia), which dictates the required permits, capital structure, and, crucially, limitations on foreign ownership. The guiding laws are Presidential Regulation (Perpres) No. 10 of 2021 and its subsequent amendment, Perpres No. 49 of 2021, which establish the Positive Investment List (Daftar Prioritas Investasi). The Ministry of Investment/BKPM oversees this via the OSS system.

The investor sought confirmation on the following codes, resulting in clear separation between permitted and prohibited activities:

The Critical Restriction: The Villa Accommodation Dilemma

The primary business concern—the ability to own, develop, and commercially rent villas—was decisively restricted by the OSS administration.

The Ruling and Legal Basis:

The OSS administration clarified that the activity of operating a villa as commercial accommodation (rentals) falls under KBLI 55193 (Other Accommodation). Pursuant to Perpres No. 49/2021, KBLI 55193 is explicitly reserved for Cooperatives and UMKM (Micro, Small, and Medium Enterprises).

Consequently:

•   A PT PMA cannot use KBLI 68111 (Real Estate Owned or Leased by the Company) to engage in the business of buying, owning, and commercially leasing villas.

•   The investor's initial plan to build villas and subsequently operate them as rental units is not permitted for a 100% foreign-owned entity.

The Recommended Alternative:

If the foreign investor insists on the accommodation business, the only permissible route for a PT PMA is to convert the plan to a Star-Rated Hotel (Hotel Bintang) and comply with the specific requirements and obligations outlined in the Ministry of Tourism regulations. Alternatively, the PMA can function only as a management service provider (KBLI 68200) for villas owned by others (e.g., individuals), but cannot own the rental assets themselves.

The Green Zone: Permitted 100% Foreign Activities

Several key business activities sought by the investor are fully open to 100% foreign ownership:

1.  Restaurant (KBLI 56101): The provision of prepared food and beverages for immediate consumption is explicitly open, with no foreign equity cap.

2.  SPA Activities (KBLI 96122): Wellness and body treatment services are permitted with 100% foreign ownership.

3.  Real Estate Services and Management (KBLI 68200): This KBLI is the legally compliant mechanism for PMA to engage in the property sector without owning the assets for restricted purposes. KBLI 68200 covers:

o   Property Management: Managing commercial property, apartments, and office buildings on behalf of others (on a fee/contract basis).

o   Brokerage/Agency: Facilitating the buying, selling, and leasing of real estate for a fee.

The Inter-Ministerial Conflict: The Procedural Deadlock and the Mandatory Tax Representative (UPDATED)

The final clarification phase focused on a critical procedural roadblock arising from the split requirements of the licensing body (OSS/BKPM) and the taxation body (DJP/CoreTax). This issue pertains to the two types of NPWP: the Company's NPWP (Badan Usaha) and the Individual's NPWP (Pribadi).

1. The NPWP Discrepancy (Licensing vs. Taxation)

Requirement OSS (Licensing/NIB) DJP (Tax Compliance)

Shareholder’s Personal NPWP (Investor)  NOT Required. Passport is sufficient for the initial NIB registration.  REQUIRED if the shareholder receives income (e.g., dividends) to avoid the default 20% PPh Pasal 26 withholding tax.

Company’s NPWP (Badan Usaha)    Mandatory (Issued automatically or manually after NIB). Mandatory for all corporate tax reporting.

2. The Procedural Deadlock and EFIN Access

The most significant constraint for a 100% foreign-run PT PMA is the requirement to obtain an EFIN (Electronic Filing Identification Number) to activate access to the DJP Online/CoreTax system.

•   To apply for the EFIN, the company must be represented by a designated individual (Director or authorized Tax Manager) who submits their personal NPWP and KTP/KITAS to the KPP (Tax Office).

•   In the case where all directors and shareholders are WNA non-residents (only holding passports, no existing NPWP/KITAS), the company cannot legally apply for the EFIN and therefore cannot fulfill its mandatory corporate tax obligations (PPN, PPh 21/25, SPT Tahunan).

The Mandatory Resolution:

The PT PMA must immediately bridge this gap by either:

1.  Appointing a Tax Representative (Kuasa)—typically an Indonesian individual or consulting firm—who holds a valid NPWP and is officially delegated the authority to secure the EFIN on behalf of the PT.

2.  Expediting the KITAS and Personal NPWP application for one of the foreign directors to establish them as a tax resident/subject within Indonesia.

Without this designated NPWP-holding individual, the PT PMA, despite being legally established with an NIB, is operationally blocked from full compliance, confirming that while an investor's personal NPWP is not a barrier to getting the license, a designated individual’s NPWP is an immediate prerequisite for functioning.

Conclusion: The Call for Regulatory Certainty

The comprehensive discussion has provided invaluable clarity, successfully outlining a permissible path for foreign investment in Indonesian services and real estate management.

However, the case underscores the urgent need for synchronized government policies. While the OSS system effectively simplifies licensing, the immediate and mandatory procedural deadlock at the DJP level (EFIN activation) for fully foreign-run entities requires clearer, published guidelines on appointing Kuasa or tax representatives during the initial establishment phase. Clear, consistent, and synchronized regulatory frameworks are the single most important factor in translating FDI interest into successful, compliant business operations in Indonesia.

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Frequently Asked Questions (FAQ) for PT PMA Investment in Indonesian Real Estate and Tourism (Updated)

1. What is the fundamental restriction on PMA ownership of villas for rental?

The restriction is based on Perpres No. 49 of 2021, which reserves the activity of commercial Villa Accommodation (KBLI 55193) exclusively for Cooperatives and UMKM. Therefore, a large foreign entity (PMA) cannot enter this specific micro-sector.

2. Can a PMA proceed with licensing even if the foreign investor/shareholder does not have a personal NPWP?

Yes. The OSS administration confirmed that the company can secure the NIB (licensing) using the Passport of the foreign investor. The NPWP Pribadi is not a barrier to the initial licensing phase.

3. What is the main problem if the PMA has no one with an NPWP to manage taxes?

The main problem is the EFIN Deadlock. Without a Director or designated Tax Manager who possesses a valid personal NPWP (and KTP/KITAS), the PT PMA cannot obtain the EFIN (Electronic Filing Identification Number). Without the EFIN, the company cannot access the DJP Online/CoreTax system and is legally unable to file mandatory corporate taxes (PPN, PPh 21, PPh 25).

4. What is the immediate solution for the EFIN Deadlock?

The PT PMA must immediately resolve the issue by:

1.  Appointing a Tax Representative (Kuasa), usually an Indonesian firm or citizen, who already holds an NPWP, to submit the EFIN application on behalf of the company.

2.  Alternatively, immediately processing the KITAS and personal NPWP for one of the WNA directors to make them the official tax subject for the company.

5. What activities are permitted 100% for PMA under KBLI 68200?

KBLI 68200 (Real Estate on a Fee or Contract Basis) permits PMA to engage in Property Management (managing assets for others) and Brokerage/Agency (facilitating buying/selling/leasing for a fee). This is the safest way for PMA to engage in the non-accommodation property sector.

6. Will the company be penalized if the foreign shareholder does not have an NPWP?

The company (PT PMA) will not be penalized for the lack of the shareholder's NPWP in its initial corporate tax reporting. However, when the company decides to pay dividends, it will be legally obligated to apply the default, higher withholding tax rate of 20% (PPh Pasal 26) instead of the potentially lower rate offered by a Tax Treaty, until the shareholder provides a valid NPWP/Tax ID.

7. Does the company's NPWP (Badan Usaha) guarantee full tax compliance access?

No. While the NPWP Badan Usaha is necessary, it is the EFIN (linked to the NPWP of the responsible Director/Kuasa) that guarantees full digital access to the DJP Online system for filing all compliance reports.

8. Is 100% foreign ownership allowed for Restaurants and SPA businesses?

Yes. KBLI 56101 (Restaurant) and KBLI 96122 (SPA Activities) are fully open to 100% foreign ownership.

9. What legal document must the foreign shareholder use instead of an NPWP during the initial OSS application?

The foreign shareholder must use their Passport as the primary identification document for the initial NIB registration via OSS.

10. Can a PMA buy and sell commercial property (apartments, offices)?

A PMA can legally facilitate the buying and selling of commercial property using KBLI 68200 (acting as a broker/agent). Direct trading of self-owned property for resale often requires KBLI 68111, which may face regulatory scrutiny depending on the asset class and scale. The safest approach is the service model (KBLI 68200).

11. What is the legal basis requiring the Tax Representative to have an NPWP?

The requirement stems from DJP regulations that mandate the individual submitting tax documentation and accessing the official tax system (EFIN/DJP Online) must be a legally registered Wajib Pajak (Taxpayer) with a valid NPWP and supporting identity (KTP/KITAS), ensuring accountability.

12. What tax documents does the DJP (Tax Office) accept for a non-resident shareholder?

The DJP confirms that non-resident shareholders can apply for a personal NPWP using their Passport (along with photos) and confirming their status with the KPP where the company is domiciled (based on PER-7/PJ/2025).