INVESTING IN BALI STARTS WITH AURORA PROPERTY​​

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For foreigners looking for a reliable path to owning property in Indonesia, establishing an Indonesian legal entity, known as a PT PMA, is a viable solution. Through this path, foreigners can obtain ownership of their Hak Guna Bangunan (HGB), which provides legal protection and clarity. This article discusses a unique approach that allows foreigners to gain a strong foothold in Indonesian real estate through a PT PMA structure accompanied by creation and use rights.
PT PMA and Hak Guna Bangunan (HGB) ownership:
Foreigners are not allowed to directly own land in Indonesia. However, by creating a PT PMA, they are entitled to obtain an HGB certificate and to dispose of land and buildings on behalf of their company for a period of up to 80 years. These rights can be registered in the personal name of the foreign citizen, which provides 100% legal protection under Indonesian law.
The concept of Hak Pakai and Hak Guna Bangunan (HGB):

Hak Pakai allows foreigners to use land and buildings for a predetermined period of time (up to 80 years), which gives a sense of ownership and control. Hak Guna Bangunan (HGB), on the other hand, refers to the right of creation, allowing PT PMA businesses to build and own structures on leased land. This approach provides a strong legal basis and clear justification for foreign ownership of real estate in Indonesia.
Legal safeguards and protections: The PT PMA structure provides substantial legal safeguards to ensure that the property ownership rights of foreign nationals in Indonesia are respected and protected. By complying with Indonesian regulations and obtaining the necessary licenses, PT PMA structures create a solid legal framework that guarantees security and peace of mind for foreign investors.

Hak Sewa: A secure option to use real estate in Indonesia
Hak Sewa, commonly known as the right to lease, gives individuals and businesses in Indonesia the option to use vacant land or buildings for a specified period of time. This agreement gives tenants the right to occupy real estate owned by others, whether on the basis of ownership (Hak Milik), right to build (HGB) or right to use (Hak Pakai).
Hak Sewa grants tenants the right to use a vacant parcel of land or buildings for a predetermined period of time, usually ranging from 1 to 25 years. The lease agreement between the landowner (landlord) and the tenant stipulates the terms, including the possibility of extending the lease. During the lease term, tenants may build capital structures on the leased land and even transfer or sublease the lease right to a third party, which provides flexibility in the use of the property.
Indonesian individuals, Indonesian legal entities, and foreign individuals and entities can participate in property leases through Hak Sewa. This opens up a wide range of opportunities for tenants, including commercial leasing of office space, factory buildings, restaurants, hotels and stores. In addition, residential properties such as apartments, condominiums, villas and houses can also be rented through Hak Sewa.
It is important to note that Hak Sewa cannot be used as collateral for mortgage purposes and cannot be registered with the National Land Agency. However, tenants enjoy the freedom to use the leased property within the stipulated terms, including the construction of structures and the ability to sublet or transfer the lease to a third party.
Hak Sewa, or right to lease, offers a secure and flexible option for using property in Indonesia. Whether for commercial or residential purposes, individuals and businesses can enter into leases to gain access to vacant land or buildings for a set period of time. By complying with lease terms and entering into mutually beneficial agreements with landlords, tenants can make the most of Hak Sewa to meet their real estate needs in Indonesia.

In Indonesia, land ownership is divided into different forms, with Hak Milik (Freehold) being the most secure and exclusive. The purpose of this article is to give a complete overview of land titles in Indonesia, to highlight the limitations and privileges associated with Hak Milik, and the alternative Hak Pakai (right of use) available to foreign nationals. Delving into the intricacies of these land titles, we shed light on the possibilities and limitations of land ownership in Indonesia.
Hak Milik (Freehold): Exclusive title for Indonesian citizens
Hak Milik represents the strongest form of land ownership in Indonesia. However, it is limited exclusively to Indonesian nationals. Foreign nationals and limited liability companies (PT/Perusahaan Terbatas) are not eligible for Hak Milik title land. Although Hak Milik grants broad use rights, including the ability to use the land for any purpose (subject to zoning restrictions), it does not give the owner the right to develop natural resources on or under the land. The Hak Milik title has no time restrictions and can be freely transferred, gifted, exchanged or inherited by will. It may also be used as collateral in mortgages.

Hak Pakai (right of use): A way for foreigners to acquire land
On the other hand, foreign nationals can acquire land in Indonesia under the Hak Pakai title, which grants the right of use. Although it differs from Hak Milik in terms of the strength of ownership, Hak Pakai offers foreign nationals a viable alternative for establishing land ownership. The Hak Pakai title grants foreign nationals the right of use for a set period of time, allowing them to use the land for a variety of purposes. This form of title allows foreign nationals to engage in land tenure within certain rules and restrictions.
Understanding the differences and possibilities:
It is important to distinguish between Hak Milik and Hak Pakai when considering land ownership in Indonesia. While Hak Milik is exclusively for Indonesian citizens, Hak Pakai offers legal opportunities for foreign nationals to acquire land. By navigating the rules and meeting the specific requirements for Hak Pakai, foreigners can participate in land ownership in Indonesia, albeit with some restrictions.

Hak Guna Bangunan (HGB), commonly referred to as a building right, gives individuals and businesses in Indonesia the ability to construct and own buildings on various types of land. The purpose of this article is to understand the intricacies of the HGB title, its eligibility criteria, and the rights and restrictions associated with it. By understanding the opportunities offered by HGB, individuals and businesses can explore the potential to acquire residential, commercial and industrial real estate in Indonesia.
HGB title can be held by individuals of Indonesian nationality, Indonesian legal entities, including foreign-invested companies (Penanaman Modal Asing/PMA) or domestic-invested companies (Penanaman Modal Dalam Negeri/PMDN). This means that legal entities established under Indonesian law, including limited liability companies (Perusahaan Terbatas/PT) with domicile in Indonesia, can acquire real estate with HGB ownership. However, it is important to note that HGB title is not available to foreign individuals.
The HGB title allows the owner to build and own buildings on government land (Tanah Milik Negara), freehold land (Hak Milik), and HPL land (Hak Pengelolaan). This makes it the most common title for residential, commercial and industrial real estate in Indonesia. Whether building real estate on public land or using vacant land, the HGB title provides a path to construction and ownership.
An HGB title is initially issued for up to 30 years with the option to renew for an additional 20 years. Subsequent renewals are subject to state discretion and may be renewed for an additional 30 years. However, for approved capital investment companies (PMA or PMDN companies), HGB rights can be obtained for a total term of 80 years, consisting of an initial 30-year term, a 20-year renewal term, and a 30-year renewal term.

Hak Pakai, also known as the right to use, is of significant value to individuals and entities wishing to use vacant land in Indonesia. By understanding the possibilities offered by the Hak Pakai, both foreign nationals and Indonesian citizens can utilize the potential of this registered form of rights.
Hak Pakai is a title specifically designed for foreign individuals, foreign representative offices, and Indonesian citizens and legal entities established under Indonesian law. It gives the owner the right to use the land, including the ability to construct buildings, subject to permit requirements. To acquire Hak Pakai title, foreigners must be resident or reside in Indonesia with either a limited stay permit (KITAS) or a permanent residence permit (KITAP).
Government Regulation and Duration:
Government Regulation (GoR) No. 103 of 2015 defines the specific conditions for granting Hak Pakai rights to foreigners. It allows foreigners to own one property with a maximum land area of 3,000 m2. The initial term of use rights is set at 30 years. After this period, it can be extended for another 20 years. After 50 years, the foreigner can extend the right of use for another 30 years, bringing the total maximum period to 80 years.
In the realm of land rights, the Hak Pakai is the only registered form that can be granted to foreign persons. This is evidenced by the land certificate, which reflects the name of the foreigner and the specified term, which serves as formal proof of this unique ownership right. Under Indonesian law, a Hak Pakai title can be freely sold, gifted, exchanged, and inherited unless otherwise specified in the transfer document. However, it is important to note that unlike Hak Milik title, Hak Pakai cannot be used in the form of a mortgage.

For foreign nationals looking for reliable and profitable investment in Bali real estate market, it is recommended to use a foreign capital company (PT PMA). In this section, we will review PT PMA as a recognized foreign limited liability company in Indonesia and highlight its key role in acquiring real estate. By acquiring a “Right to Build” certificate (Hak Guna Bangunan), foreign investors can open up a wide range of opportunities in real estate in Indonesia.
A foreign company registered as a PT PMA has significant advantages when acquiring real estate in Indonesia. Recognized as a legal entity by the Indonesian government, PT PMA allows foreign investors to acquire two different types of land rights: “Right to Build” (Hak Guna Bangunan) and “Right to Use” (Hak Guna Usaha).

Right to Build:
Under the “Right to Build” title, foreign investors can lay a solid foundation for their real estate ownership endeavors. The term of this title is 30 years, which can be extended for another 20 years. In addition, it can be renewed for another 30 years after the first term expires, allowing the land to be used for 80 years.

Right to use:
In addition to the right to build, foreign investors can also take advantage of the opportunities provided by the Right to Use title. This title is valid for 25 years and can be renewed for another 25 years. In addition, it can be renewed for another 35 years, allowing the land to be used for 85 years.

Benefits of PT PMA:
Purchasing real estate through a PT PMA has many advantages. As a recognized foreign limited company in Indonesia, PT PMA provides a solid legal framework for foreign investors. It allows them to navigate the confusing field of land ownership, providing a smooth and protected investment path. Using PT PMA, foreign nationals can take advantage of the opportunities provided by Right to Build and Right to Use titles, maximizing their potential in the Indonesian real estate market.
Investing in real estate in Bali becomes a safe and prosperous venture if foreign nationals choose to use a foreign owned company (PT PMA). By obtaining the “Right to Build” certificate (Hak Guna Bangunan), foreign investors can gain a strong foothold in the Indonesian real estate market. With the potential terms, extensions, and benefits associated with Right to Build and Right to Use titles, foreign investors can embark on an exciting journey taking advantage of the limitless opportunities Indonesia has to offer.

Getting a real estate deal in Bali is not just about finding your dream home. Understanding the tax implications is crucial to ensuring a smooth and compliant process. In this article, we’ll shed light on the various taxes associated with buying and selling real estate in Bali, distinguishing between ownership (Hak Milik) and rental (Hak Sewa) transactions. Familiarize yourself with tax obligations to navigate the Balinese real estate market with confidence.

Tax obligations for freehold real estate transactions (Hak Milik):
Buyer Tax Obligations:
When buying freehold (Hak Milik) property, buyers are required to pay a land and building acquisition tax (BPHTB). This duty is 5% of the state assessed value, known as NJOP (Nilai Jual Objek Pajak).

Seller Tax Obligation:
For sellers involved in Freehold real estate transactions, the applicable tax is the PPh income tax. This tax is calculated at a rate of 2.5% based on the NJOP value as determined by the state appraisal.

Tax Obligations for Leasehold Real Estate Transactions (Hak Sewa):
Buyer’s tax liability:
Buyers generally do not have any tax consequences in leasehold real estate transactions (Hak Sewa).

Seller’s Tax Liability:
When selling rental properties, sellers may be subject to final income tax. For Indonesian citizens or holders of KITAS (temporary residence permit) or KITAP (permanent residence permit), the final income tax is set at 10% according to current regulations. However, for foreigners who do not have KITAS or KITAP, the final income tax rate increases to 20%.

Navigating the tax landscape of real estate transactions in Bali is essential to a successful and compliant experience. Whether you are involved in real estate transactions by ownership (Hak Milik) or leasehold (Hak Sewa), understanding your tax obligations as a buyer or seller is critical. Be aware of the land and building acquisition tax (BPHTB), the PPh income tax and the final income tax rates applicable to your particular situation. By staying informed and seeking professional guidance, you will be able to confidently navigate the intricacies of real estate taxation in Bali’s dynamic real estate market.

With the flourishing land market in Bali and other Indonesian islands, the Department of Land and Construction has implemented regional regulations to better regulate land usage. The days of unrestricted land development are now behind us, as most regions in Bali are properly regulated. In this article, we explore the significance of land zoning in Bali, guided by the Regional and Spatial Planning Regulations (RTRW) with a legal duration of 20 years. By understanding the various zoning types and their implications, prospective buyers and investors can make informed decisions when purchasing land in Bali.

The Four Main Land Zoning Types:

• Government Owned Land:

Government-owned land is reserved for specific purposes and is intended only for individual investors. Examples of such land include beaches, nature reserves, forests, and other designated areas.

• Residential Zone (Yellow Zone):

The Residential Zone, as the name suggests, is designated for residential properties such as houses or villas for residential purposes only. This zone allows for various building licenses suitable for residential properties, including houses, villas, apartments, or rooms for rent. Some commercial licenses may also be permitted within residential areas, offering flexibility for property owners.

• Commercial and Tourist Zone (Red or Pink Zone):

The Commercial and Tourist Zone encompasses a broad range of commercial activities, including hotels, resorts, condotels, apartments, and amusement parks. It is also open to residential properties. Property owners in this zone can apply for commercial licenses and Pondok Wisata permits, which allow for the rental of properties on a daily basis. The Red or Pink Zone presents exciting opportunities for investors interested in commercial ventures and tourist accommodations.

• Agricultural Zone (Green Zone):

The Agricultural Zone, known as the Green Zone, is exclusively reserved for farming activities. Residential or commercial buildings are strictly prohibited within this zone. Building permits for houses, villas, or other capital structures will not be issued. However, it’s important to note that while permanent structures are not allowed, temporary structures and houses without foundations may be constructed. Additionally, with the agreement of the village administration and the National Land Agency (BPN), it is possible to transfer land from the Green Zone to the Yellow or Red Zone. This option offers potential for future development and is often the most affordable choice for land acquisition in Bali.

Choosing the Right Zone:

For foreign investors and buyers, several factors come into play when selecting the ideal land option in Bali. The Red (Tourist) Zone offers lucrative opportunities for commercial ventures such as hotels; however, it tends to be the most expensive choice. The Yellow (Residential) Zone provides a more affordable option for personal residences or monthly rental properties. The Green (Agricultural) Zone, while prohibiting capital structures, offers an inexpensive alternative. With the proper agreements in place, this land can be transferred to the Yellow or Red Zone, providing potential for development at a lower cost. Professional assistance from our company can facilitate this process and guide you through the intricacies of land zoning in Bali.

Understanding the diverse land zoning types in Bali is crucial for buyers and investors navigating the real estate market. By comprehending the regulations and limitations associated with each zone – Government Owned Land, Residential Zone (Yellow Zone), Commercial and Tourist Zone (Red or Pink Zone), and Agricultural Zone (Green Zone) – you can make informed decisions aligned with your goals and budget. Consider the implications and potential for future development when selecting the ideal land option in Bali. With the right knowledge and professional guidance, you can unlock the possibilities and make a sound investment in Bali’s vibrant real estate landscape.