Bali Grapples With Illegally Operating Tourist Accommodation Businesses

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Bali is in the process of cracking down on badly behaved tourists and foreigners breaking the conditions of their visas on the island.

As part of the strategy, authorities in Bali are also investigating the apparent rising number of illegally operating accommodation businesses that are owned and operated by both local people and foreigners. 

In Buleleng Regency, the authorities are investigating and auditing accommodation providers in the areas.

According to data revealed by the Tourism Task Force in Buleleng, the majority of accommodation businesses in the Regency do not yet have a Business Identification Number (NIB) and Regional Taxpayer Identification Number (NPWPD).

This means that they are operating outside of the law and in most cases not paying the relevant Hotel and Restaurant Taxes. 

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Speaking to reporters on Tuesday 5th September, the Head of the Buleleng Tourism Service, I Gede Dody Sukma Oktiva Askara, said that it is not only hotels, villas, and B&Bs that are not registering their businesses properly.

He noted that quite a few long-term accommodations and boarding houses are marketed online and have not been included in the Task Force’s data collection. Buleleng Regency is home to popular destinations like Lovina Beach and Munduk.

Askara said that the Task Force is working on finding accommodation businesses that are not registered business entities by looking at social media, accommodation booking platforms, Google Maps, and anecdotal reports.

He confirmed that the Task Force is following up on businesses suspected of operating illegally that are owned by both local people and expatriates. 

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Askara explained, “There are many problems below. The cases vary. The task force went down accompanied by personnel who knew the area. So, for those who have been found and have not met the administrative requirements for NIB and NPWP, we will educate them. The Licensing Service and the Regional Financial and Revenue Management Agency will continue to follow developments.”

Not all accommodation outlets suspected of breaking the law could be visited during the first round of site visits from investigators.

Aksara said that more spot checks will be conducted in due course. The Task Force will be focusing on star-rated hotels and accommodations with more than ten rooms first, then working down to investigate the paperwork of smaller properties. 

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Askara shared his hopes that the operation will help better control accommodation in Buleleng Regency and collect tourism taxes that can be used to further support the local economy.

While Buleleng Regency is not the busiest tourism regency in Bali, it is not the only area that is investigating tourism accommodation businesses. 

In Badung Regency, home to resorts like Canggu, Seminyak, Legian, Kuta, Uluwatu, and Nusa Dua, investigations are also underway. Spot checks on private rental villas in and around Ubud have also been happening for the last few months. 

In June this year, Bali’s Governor Wayan Koster announced a crackdown on illegally operating tourism accommodations in Bali in a bid to collect tax revenue the provincial government is owed.

Speaking at the time Governor Koster said, “There are many illegal villas in Bali, there are even homestays where many tourists stay, and the hotel-restaurant text is not imposed, which is detrimental.”

He added, “That’s why the Regents and Mayors have been asked to file records of illegal villas and homestays.”

This is something that both foreign-owned and locally-owned accommodation businesses must take seriously.

Many foreigners have invested in accommodation properties in Bali and are advised to check that all business permits and paperwork are in order.

The Task Force is especially focusing on Business Identification Number (NIB) and Regional Taxpayer Identification Number (NPWPD), though if a foreign-owned business is investigated owners can expect to have to produce their visa documents for inspection too. 

The Bali Provincial Government is cracking down on illegally operating accommodation businesses due to a deficit in the hotel and restaurant tax budget of around IDR 3 trillion.

The provincial government is also on a mission to generate more tax revenue through tourism. 

In 2024, Bali will introduce a new tourism tax on all international arrivals to the island. The tax is set to be introduced at IDR 150,000 per person.

Discussions are underway to establish how tourism tax funds will be spent, with many local leaders calling for revenue to be spent on tackling issues such as traffic congestion and waste management.