Confusion in 2025 and how to do business in a changing environment?

The mass departure of entrepreneurs, the global “exodus” of business from Bali - so far these are only the headlines of newspapers and public publications, which sell fears very well.

Just as the Indonesian government and state bodies sell fears.

The island’s immigration service is especially trying. The search for illegal workers is taking on truly pre-pandemic proportions, but THERE ARE NOT LESS ILLEGAL WORKERS.

At the same time:

BUT!!! IN FACT - there are only more new developers and businesses in Bali. Despite all the “scares”.

With a high degree of probability, this is due to the fact that economically, Indonesia and Bali are still an excellent market and the income from it significantly exceeds the costs of bribes, business protection, unforeseen expenses on fines of the emerging market...

So is it possible to cleanse the island of “filth” and how should businesses behave in 2025 in order to strengthen their positions in the market and not fall under another demonstrative flogging?

Let's try to figure it out in this article.

What exactly were you expecting???

There really are a lot of people working illegally in Bali. There are so many violations by foreigners who decided that this is their island that any government simply MUST react to this. For example, this is:

And according to the good old Asian tradition, many large enterprises and development projects are subject to IMMEDIATE inspections, and those who advertise activities prohibited for foreigners directly in the most popular resources for expats continue to conduct their business =).

Although you don’t have to be very insightful to find THOUSANDS of expats conducting illegal activities on the island, simply by opening FACEBOOK or INSTAGRAM.

So what is the system?

To understand how to do business in Indonesia, you need to understand how the system works.

1 - The government creates laws that attract foreign capital. For example, attractive conditions for doing business with reduced taxes. Read about the attractive conditions for doing business in Bali in comparison with other countries in Southeast Asia here - https://bali-legal.com/en/luchshee-reshenie-dlya-otkryitiya-biznesa-en.

2 - After foreigners contribute their capital and begin active operations, the government unilaterally introduces changes to its own program, for example, increasing the minimum authorized capital by 10 times (as it was in 2021).

3 - Anyone who does not meet the NEW requirements is equated to violators of the law and such violations are “punished” with fines or bribes.

This is how the “gray zone of entrepreneurship” appears. These are those who legally opened their business, hired Indonesian employees, create a quality product, pay taxes and improve the standard of living of the local population, but NO LONGER MEET THE NEW REQUIREMENTS.

They are forced to pay bribes (if they want to continue their business) and the government always has a lever of pressure that is used at the first convenient opportunity.

This is approximately the same in almost any area, however, there are FOUR MAIN REASONS FOR WHICH FOREIGNERS ARE PUNISHED. If you take this seriously, the business will have significantly fewer problems or will not have any at all.

In general, the policy of repression against foreigners is very similar to fashion. Each period has its own fashion for violations, which are the main focus of the authorities.

At the same time, there are some “permanent” trends, and there are completely new ones, relevant for 1 year - no more.

HERE'S WHAT'S RELEVANT IN 2025

1. THE FIRST REASON IS YOU =)

Or rather, your entire business organization scheme.

Let me remind you that it is PROHIBITED for a foreigner to do business in Bali without the appropriate permission.

To conduct business legally, a legal entity must be registered. All about how to register a legal entity in 2025 - https://bali-legal.com/en/osobennosti-biznesa-polnyij-gajd-2024-en.

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This legal entity acts as a sponsor for a foreign entrepreneur and (as a resident of Indonesia with a tax number) determines the position and powers of the foreigner within his own company. In order to manage your company in Bali, you need KITAS - a document that allows a foreigner, among other things, to live on the island for two years, a multi-visa, a residence permit ...

What KITAS is used for and how to get it, read HERE - https://bali-legal.com/en/kitas-(vnzh-na-2-goda)-en.

And here it is important to understand. KITAS is needed to manage the company, not to live on the island. If you have your own existing business, you cannot do without KITAS, but if you are looking for opportunities to live longer and cheaper in Bali, organizing a fictitious company for a residence permit is a path to failure.

OPEN A KITAS ONLY IF THERE IS A NEED FOR IT FROM THE POINT OF VIEW OF COMPANY MANAGEMENT. ENTREPRENEURS WITH A KITAS ARE ALWAYS UNDER SPECIAL CONTROL.

THE REASON FOR SUCH CONTROL IS CLEAR - THESE PEOPLE HAVE MONEY TO PAY OFF.

2. WORK WITHOUT A WORKER KITAS

The locals' conviction that foreigners are taking their jobs knows no bounds. The Balinese really think that we are invaders, conquerors. That it is we who are the cause of most of the misfortunes and the growth of corruption in the country, and not because they themselves do not want to grow and change.

Our mentalities are very different and we cannot understand each other here. In order to fully delegate your business or your work to a Balinese, you need him as an employee to match the level of service that you or your company provides to your clients. And this is almost impossible.

WE DO NOT COMPETE, WE CREATE WHAT LOCALS CANNOT CREATE.

However, if you want to work in Bali, you need a special type of KITAS - Worker KITAS.

In general, the government here has already done everything to scare off foreigners from competing with local specialists, and many foreigners refuse to legalize their work and income using this method.

Here you can read who can make a working KITAS for themselves - https://bali-legal.com/en/legalizaciya-na-bali-en.

The immigration service simply checks whether you are really using the investment KITAS for its intended purpose and whether you are violating the rules for using KITAS (any other work on it, except for being a director, managing your own business - is STRICTLY PROHIBITED).

If it turns out that a foreigner worked, or more precisely:

DO NOT WORK WITHIN YOUR COMPANY AS AN EMPLOYEE. OR USE YOUR BUSINESS PROTECTION OR KITAS FOR PROTECTION IN CASE OF INSPECTIONS. HERE YOUR INCOME IS AT RISK AND YOU NEED TO PROTECT IT FIRST.

Read about how this works - https://bali-legal.com/en/legal-bali-second-en.

3. CLASSIC DEVELOPMENT MISCONCEPTIONS

The land in Bali is sacred (as is the belief of locals that foreigners are taking away their jobs).

Local authorities can always use their levers, which have existed for many years, against you if you become objectionable for any reason. What are the levers? - LAND APPOINTMENT AND CONSTRUCTION WITHOUT PERMITS (one follows from the other).

Right now, heated debates and misunderstandings are flaring up regarding the PARQ project (the largest development project on the island), which was frozen and effectively closed due to the fact that some of the buildings are located in the so-called green zone.

More about zones and documents - https://bali-legal.com/en/land-on-bali-en.

Who will ultimately be the loser? The developer? The state? The foreign employees who are the first to flee the sinking ship? - NO.

The main victims will be INVESTORS who love to buy real estate in Bali remotely from beautiful pictures.

According to PARQ, the total losses of investors, according to preliminary calculations, will be at least USD 100,000,000.

Yes, developers can make mistakes, because the market is not regulated in any way, they can engage in illegal construction and even outright fraud, because:

The most common scams by developers - https://bali-legal.com/en/kak-obmanyivayut-developeryi-na-bali-en.

If you invest in housing under construction, you YOU CAN AND SHOULD CHECK THE DEVELOPER YOURSELF.

How to check the developer yourself? - https://bali-legal.com/en/kak-proverit-zastrojshhika-samostoyatelno-en.

4. IGNORING BASIC RULES OF BUSINESS

Gray and semi-legal schemes for running an existing business are gradually fading into the background.

A new tax accounting system is being introduced - CORETAX, which should bring Indonesia closer to developed Asian countries in terms of control over business not only by foreign but also local companies.

More about the new tax accounting system - https://bali-legal.com/en/novaya-sistema-ucheta-nalogov-en.

And now, for companies conducting real business in Bali and Indonesia, the rules provide for several mandatory points, by checking which you can understand how legal your business is in general.

PRESENCE OF AN OFFICE ADDRESS THAT IS EASY TO CHECK

You are all right if:

You MUST make changes if:

SUBMISSION OF REPORTS TO LKPM

You have everything is fine if:

You MUST make changes if:

DYNAMICS OF CONTRIBUTION OF AUTHORIZED CAPITAL

You are OK if:

You MUST make changes if:

FOR KITAS HOLDERS: the share of the authorized capital in the statutory documents is not less than 10 billion per investor and not less than 10% in the company.

You are OK if:

You MUST make changes or do a check if:

To reduce the risk for an existing company - simply check compliance with all points of this article. Use it as a hint in the current situation and assign a task to your subordinates - to bring their business into compliance with the current requirements of Indonesia.

or fill out the form below to receive a free consultation on running a business, calculating taxes and supporting business processes on a turnkey basis.

Together, we will make life on the island comfortable.