Bali Cracks Down On Illegally Operating Vacation Villas: Everything Tourists Need To Know

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Vacation villas in Bali are one of the most popular accommodation options for holidaymakers visiting the island.

Villas have also been a go-to investment for local and international property developers and entrepreneurs looking to get in on Bali’s tourism boom.

As more villas have popped up left, right and center, especially over the last five years, so too have the number of building and business permit violations. 

Leaders in Bali are on a mission to crack down on illegally constructed and illegally operating private rental villas all across the province. The crackdown comes in a number of different directions.

The authorities are working to ensure that all villas have been constructed in accordance with building permits and spatial planning laws, as well as ensuring that everything is above board in terms of business operations, too.

There have been concerns from leaders that there are potentially thousands of illegally operating villas in Bali, which pose a threat to the local economy as well as the environment, and in some cases, public safety. 

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The Bali Villa Association (BVA) has been calling on the government to do more to bring standardisation to the villa industry in Bali. This week, the organisation has been speaking to the media about the need to improve licensing and tax compliance amidst the rapid growth of tourist accommodation in Bali. 

Speaking to reporters, Ismoyo Sumarlan, the Chairman of the Bali Villas Association (BVA), explained that legality remains a challenge for villa businesses.

He touched on how a range of changes to licensing regulations in recent years have made it difficult for some businesses to align their legal documents.

This means that there are two kinds of businesses that are operating illegally: those who are out-and-out breaking the law, and those who simply haven’t kept up with changing legislation but who want to be operating above board.

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Political leaders in Bali have also been vocal about their concerns for these kinds of violations, citing that tax revenue has been negatively impacted. 

Sumarlan told reporters, “Previously, villas had two sins: not having permits and not paying taxes. At that time, permit amnesty was implemented, requiring them to have a Taxpayer Identification Number (NPWPD). After that, hotel and restaurant tax revenue increased significantly.”

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Sumarlan echoed sentiments shared by Indonesia’s Deputy Tourism Minister, Ni Luh Puspa, from earlier this month. She told the media that the Ministry of Tourism wants to support villa owners in getting their businesses in order, not punish those who have been left behind.

Though she was clear that those who were breaking the law outright would be brought to justice.

Sumarlan explained, “BVA is ready to assist members who experience difficulties in the licensing process. In addition, we must also work together to face the various challenges of the tourism industry influenced by global conditions.”

All of this should bring more peace of mind to tourists who are looking to book private vacation villas in Bali.

There has been plenty of speculation online that villa rental listings would disappear from booking platforms or that properties would be closed down, leaving tourists in the lurch. That is not the case.

These reforms are hoped to help enforce existing laws to protect tourists, legitimate businesses, and generate more tax income.

More changes could be on the horizon, too, which should help tourists be even more discerning in their holiday villa rental booking process.

Last week, the Bali Villa Rental Management Association (BVRMA) formally proposed that Bali implement a hotel-style star rating system for the island’s privately owned holiday villas.

The BVRMA Chairman, Kadek Adnyana, told reporters that the proposal is still in the review stage.

Though he confirmed that his team is working with Bali’s universities to develop classification standards that will serve as a reference for tourists to help clarify villa quality standards, amenities, and pricing for tourists and investors. Watch this space!