Starting a trading company in Bali offers immense potential, from boutique exports in Ubud to retail distribution in Seminyak, yet the regulatory landscape remains a source of significant confusion. Many foreign investors enter the market assuming that obtaining a simple company deed is enough to start selling, only to find their operations halted by banking compliance teams or local authorities demanding a “SIUP.” This disconnect often stems from outdated advice that fails to account for the major shift toward the Online Single Submission (OSS) Risk-Based Approach, leaving entrepreneurs vulnerable to sudden operational freezes.
The agitation peaks when you realize that holding the wrong licensing documents can do more than just delay a bank account opening; it can flag your company for regulatory audits. In 2026, the term “SIUP” is still widely used in conversation, but legally, the Business License Indonesia framework has evolved into a digital-first system anchored by the NIB (Business Identification Number). Failing to distinguish between the old manual permits and the new risk-based verification requirements can lead to severe administrative sanctions, including the revocation of your right to trade.
This guide provides a definitive roadmap for navigating these changes, ensuring your Bali venture remains fully compliant and operational. We will clarify exactly how the classic SIUP has been absorbed into the modern OSS system, identify which specific trading activities require additional technical permits, and outline the distinct requirements for local versus foreign-owned entities. By understanding the current OSS-RBA protocols, you can secure your commercial footing without the fear of legal backlash.
Table of Contents
- The Evolution from SIUP to NIB
- Who Needs a Trading License in 2026?
- Classifications: Micro to Large Scale
- Foreign vs. Local: Critical Differences
- Step-by-Step Licensing Process
- Real Story: The Furniture Export Blockade in Kerobokan
- Post-Licensing Commitments and Risk
- Common Compliance Mistakes to Avoid
- FAQ's about Business License Indonesia
The Evolution from SIUP to NIB
Historically, the SIUP (Surat Izin Usaha Perdagangan) was the holy grail for any trading business in the archipelago, a physical document issued by local trade offices. However, the introduction of the Job Creation Law dramatically reshaped the archipelago commercial permit landscape. The government shifted from a license-based system to a Risk-Based Approach (RBA), centralized through the Online Single Submission (OSS) platform. Today, for many low-risk trading activities, the NIB (Nomor Induk Berusaha) acts as the single valid license, effectively rendering the separate physical SIUP obsolete for general trading purposes.
Despite this legal shift, the legacy of the traditional trading license persists in business culture. Local banjars, landlords, and even some conservative banking branches in Bali may still ask for a “SIUP” when verifying your business. In practice, they are asking for proof of your trading authorization. In 2026, this proof is generated digitally via the OSS system, often appearing as a “Standard Certificate” or a verified business license attachment to your NIB. Understanding that “SIUP” is now a function within the OSS system rather than a standalone paper document is the first step toward clarity.
Who Needs a Trading License in 2026?
Any entity engaged in buying and selling goods or services—whether you are running a surf shop in Canggu, a villa management agency, or an export company—falls under the trading category. The core requirement is selecting the correct KBLI (Standard Industrial Classification of Indonesia) codes during your company setup. If your business activities involve wholesale (perdagangan besar), retail (perdagangan eceran), or distributor services, you are legally required to hold a valid trading license.
For digital nomads and modern entrepreneurs, the lines can sometimes blur. If you are selling digital products or dropshipping from Bali, you are still conducting trading activities under Indonesian law. The OSS business certificate regime applies strictly to these operations. Operating a trading business without the appropriate KBLI code in your NIB is considered illegal business activity. It is crucial to ensure that your deed of establishment matches the activities declared in the OSS system to avoid discrepancies during tax audits or immigration checks.
Classifications: Micro to Large Scale
The government categorizes trading licenses based on the company’s net assets (excluding land and buildings) or annual sales turnover. This classification determines the complexity of the licensing process. “SIUP Mikro” applies to businesses with net assets up to IDR 50 million, while “SIUP Kecil” covers those between IDR 50 million and IDR 500 million. “SIUP Menengah” (Medium) ranges up to IDR 10 billion, and “SIUP Besar” (Large) applies to companies with assets exceeding IDR 10 billion.
In the 2026 OSS landscape, these scales are automatically determined by the capital data you input. For most PT PMA (foreign-owned) companies, the classification is almost always “Besar” (Large) by default due to the minimum investment requirement. This means foreign investors cannot apply for Micro or Small trading licenses. Understanding your scale is vital because medium and high-risk classifications often trigger additional requirements, such as verified environmental permits (SPPL/UKL-UPL) before the commercial permit becomes effective.
Foreign vs. Local: Critical Differences
The path to securing a valid trading license diverges significantly between local PT companies and foreign-owned PT PMAs. A local PT can be established with relatively low capital and can easily secure a low-risk trading license that is effective immediately upon NIB issuance. They enjoy a streamlined process designed to encourage local SMEs. Conversely, a PT PMA is subject to the “Positive Investment List,” which restricts foreign ownership in certain retail and distribution sectors, often requiring 100% local ownership or partnership arrangements.
Furthermore, a PT PMA must prove a total investment plan of over IDR 10 billion per business line (KBLI) to qualify for their license. This is a strict barrier to entry designed to filter for serious investment. While a local company might be trading within days, a foreign company must ensure their capital is paid up and reported correctly to obtain a verified status. Attempting to bypass these rules by using a local nominee to hold a “SIUP Mikro” is a high-risk strategy that violates investment laws and jeopardizes asset ownership.
Step-by-Step Licensing Process
Securing your Business License Indonesia begins with the Deed of Establishment. Once your PT or PT PMA is legally incorporated and has obtained Ministry approval (SK Kemenkumham), the next step is registering for a Tax ID (NPWP). With these foundational documents, you proceed to the OSS RBA system. You will log in using your company credentials and map your KBLI codes to your specific business location in Bali. This stage requires precision; selecting a “wholesale” code when you actually run a “retail” shop can lead to violations of local spatial planning (ITR), as many tourism areas in Bali restrict wholesale warehousing.
Upon completing the data entry, the OSS system issues the NIB. For low-risk trading activities, the system effectively auto-approves the business license. However, for medium-high risk sectors, the license status will appear as “Unverified” or “Not Effective.” You must then upload fulfilling documents—such as location permits or specific product certifications—to the system. Only after the relevant government agency reviews and approves these documents does your license become fully active, allowing you to legally commence commercial operations.
Real Story: The Furniture Export Blockade in Kerobokan
Sarah, a Canadian entrepreneur, set up a PT PMA in Kerobokan to export custom teak furniture. Her legal agent set up the company and handed her the NIB document, telling her she was “ready to go.” Sarah assumed this single document replaced the old legacy trade permit entirely and immediately began accepting orders. She arranged for her first container shipment three months later.
However, her KBLI code for “Wholesale of Furniture” was categorized as Medium-Low risk, which required her to upload a statement of capability regarding her warehouse standards to the OSS system—a step her agent missed. When the goods reached the port, Customs flagged her NIB as having an “unverified” business license status. The container was blocked from loading. Sarah faced weeks of demurrage fees and nearly lost her buyer. She had to scramble to hire a competent consultant to log back into OSS, fulfill the missing commitment, and get the license verified. The delay cost her $4,500, a painful lesson that obtaining the NIB is just the start of the process.
Post-Licensing Commitments and Risk
The concept of “Post-Licensing Commitments” is central to the current Business License Indonesia regime. Unlike the old system where you got a permit and forgot about it, the OSS system demands ongoing compliance. For many trading licenses, you are required to submit an Investment Activity Report (LKPM) every quarter. Failure to submit these reports can result in your NIB being frozen, which instantly halts your ability to import or export goods.
Additionally, specific products require further permits attached to your general trading license. For example, trading in cosmetics, food, or medical devices requires distribution permits from BPOM or the Ministry of Health. The OSS system links these requirements. If you hold a general trading license but start selling regulated goods without the specific technical license, you are non-compliant. To ensure you navigate these complex layers of compliance effectively, consulting a trusted tax management company can save you from inadvertent violations and keep your license in good standing.
Common Compliance Mistakes to Avoid
A frequent error among foreign investors in Bali is misaligning their business activities. It is common to see a company registered for “Management Consulting” (to avoid the high capital requirements of trading) actually engaging in the retail sale of clothing or jewelry. This discrepancy is easily spotted during tax audits or immigration field checks. If your invoices show sales of physical goods but your Indonesian trade authorization is for services, you face penalties for license misuse.
Another critical mistake is neglecting the location permit (PKKPR). In Bali, zoning is strictly enforced. You cannot obtain a valid trading license for a factory or heavy warehouse in a designated tourism or residential zone. The OSS system automatically checks your location against the spatial planning (ITR). Investors often sign long-term leases for cheaper land in “Green Zones” only to find out later they cannot secure a verified license, rendering their investment useless. Always verify the land use designation before signing any property contracts.
FAQ's about Business License Indonesia
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Does the SIUP still exist in 2026?
Technically, the standalone SIUP document has been replaced by the NIB and the Business License (Izin Usaha) issued via the OSS system, though the term "SIUP" is still used colloquially to refer to trading authorization.
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Can a foreigner get a micro trading license?
No, foreign-owned companies (PT PMA) are classified as Large Enterprises and must meet the minimum investment requirement of IDR 10 billion, disqualifying them from micro or small license categories.
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How long does it take to get a business license via OSS?
For low-risk trading activities, the NIB and effective license can be issued almost instantly upon completing registration. Medium to high-risk activities may take 1-3 months for verification.
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Is a virtual office allowed for a trading license in Bali?
Yes, virtual offices are generally accepted for administrative headquarters of trading companies, provided the zoning allows for office use, but you may need a separate warehouse location for physical goods.
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What happens if I don't submit my LKPM report?
Failing to submit the mandatory Investment Activity Report (LKPM) can lead to written warnings and eventually the suspension or revocation of your NIB and business license.
