Many foreign investors in Bali assume that pausing operations automatically pauses bureaucratic obligations. They often leave their Foreign investment entity (PT PMA) “dormant” to save costs, believing that if there is no income, there is no paperwork.
However, under Indonesian law, a business remains a fully active legal subject until it is formally dissolved or granted specific non-effective status. Ignoring this reality is a dangerous game that triggers hidden risks for Bali dormant company compliance.
In reality, a non-operating venture is still required to report to the tax office and the investment board.
Failing to file annual tax returns or quarterly investment reports can lead to accumulating administrative fines, the revocation of your Business Identification Number, or even forced dissolution.
For foreign directors, neglecting these duties can also result in immigration blacklists, preventing future entry into Indonesia.
The solution is to adopt a proactive strategy rather than “ghosting” your own firm. Whether you intend to pause operations for a future project or close down permanently, you must follow specific legal protocols.
This guide outlines the essential steps for maintaining Bali dormant company compliance, helping you navigate between “Non-Effective” tax status and proper liquidation to ensure your record remains clean.
Table of Contents
- Legal Reality: No Formal Dormant Status in Bali
- Tax Obligations for Non-Active Companies
- Investment Reporting (LKPM) and OSS Rules
- The Three Paths: Keep, Pause, or Close
- Step-by-Step: Managing a Compliant Pause
- Real Story in Bali: The Cost of Silence
- Step-by-Step: Closing and Liquidation
- Risks of Neglect: Fines and Blacklisting
- FAQs about Dormant Companies in Bali
Legal Reality: No Formal Dormant Status in Bali
In many jurisdictions, you can simply tick a box to declare a corporation dormant. In Indonesia, specifically under Company Law No. 40/2007, there is no automatic “dormant” classification.
A PT PMA is considered active from the moment it receives its Ministry of Law decree. As long as your Tax Identification Number (NPWP) is active, the government expects regular reporting, which is the cornerstone of Bali dormant company compliance.
The authorities view a business with zero activity not as “closed,” but as an operating entity with zero turnover. Consequently, the absence of activity must be reported, not ignored.
If a firm fails to conduct business activities for three years, authorities have legal grounds to dissolve it. This makes active management essential to avoid court orders and potential shareholder liability.
Tax Obligations for Non-Active Companies
Even if your office in Canggu is shuttered, your digital footprint remains live. The Directorate General of Taxes (DJP) requires every holder of an active NPWP to file the Annual Corporate Income Tax Return.
If your entity made no money, you must file zero tax returns (“Nihil”) to satisfy regulatory standards. Failing to do so attracts annual fines, creating a costly red flag on your tax record.
Furthermore, if your firm is registered as a VAT-able entrepreneur (PKP), you are obligated to file monthly VAT returns, even if they are nil. Missing these filings triggers a fine of IDR 500,000 per month.
This accumulation of fines is a primary reason why legitimate closures are delayed, as all debts must be cleared to achieve full Bali dormant company compliance before dissolution.
Investment Reporting (LKPM) and OSS Rules
Beyond taxes, the Online Single Submission (OSS) system requires the quarterly BKPM investment activity report (LKPM). Submitting a “zero realization” report is mandatory to keep your NIB active and maintain good standing.
You can manage these submissions through the official OSS System to ensure your investment data stays current.
A common misconception is that if you haven’t started building, you don’t need to report. In reality, the Investment Coordinating Board (BKPM) monitors these reports.
Repeated failure to submit LKPMs, or submitting them without a valid narrative explaining the inactivity (e.g., “Project on hold due to global market conditions”), undermines your Bali dormant company compliance and can lead to license revocation.
The Three Paths: Keep, Pause, or Close
When facing a period of inactivity, you essentially have three strategic choices to ensure Bali dormant company compliance:
- Keep: Maintain full compliance. Ideal for short-term pauses. You continue filing all zero tax returns and LKPMs. It requires effort but keeps licenses ready for reactivation.
- Pause: Apply for Non-Effective (NE) tax status. This relieves you of monthly and annual tax filing requirements, though you must still maintain a domicile. This is the middle ground for inactive corporate status Bali.
Close: Execute formal liquidation. If the business is no longer viable, simply walking away is not an option. You must formally dissolve the entity to sever liabilities.
Step-by-Step: Managing a Compliant Pause
If you choose to pause without closing, follow this sequence to secure NE status and maintain Bali dormant company compliance:
- Clear Tax Debts: Ensure all previous tax returns are filed and taxes paid. The tax office will not grant NE status if you have arrears.
- Submit NE Application: Apply to your local tax office (KPP) for Wajib Pajak Non-Efektif. Provide a statement proving business has ceased.
- Update OSS: Continue submitting the BKPM investment activity report with zero realization. Clearly explain why there is no activity to satisfy checks.
- Maintain Domicile: Ensure you have a valid registered address, such as a virtual office, to receive official notices.
Real Story in Bali: The Cost of Silence
Lars (45, Amsterdam) thought he could press “pause” on his Seminyak villa project and walk away. In 2024, the Dutch developer put his Bali PT PMA on hold to wait out high material prices. To save costs, he stopped filing zero tax returns. It was a false economy that ruined his regulatory standing.
When he returned in 2026, the cost of fixing his “abandoned” status was ten times higher than maintaining it. The tax office had flagged his entity for missing VAT returns, suspended his Business Identification Number (NIB), and slapped him with millions in fines. His “sleeping” venture was a financial nightmare.
Lars engaged a crisis management team to negotiate a penalty reduction. It took three months to clear the red flags. He learned that regarding Bali dormant company compliance, silence isn’t golden—it’s expensive.
Step-by-Step: Closing and Liquidation
When a venture has served its purpose, formal liquidation is the only safe exit. The process begins with a General Meeting of Shareholders (RUPS) to approve dissolution and appoint a liquidator. This decision must be notarized to initiate the end of all obligations.
Next, the liquidator announces dissolution in a newspaper to notify creditors. Simultaneously, the tax office conducts a final audit. Once assets are distributed and debts settled, a final RUPS report is filed, and the Ministry revokes the legal status.
Only then is the entity gone. Skipping this process leaves directors liable for “zombie” debts and unresolved Bali dormant company compliance issues.
Risks of Neglect: Fines and Blacklisting
The consequences of neglecting your Foreign investment entity extend beyond the bank account. For foreign investors, the severe risk is personal. Directors of non-compliant firms can be placed on immigration watchlists, preventing travel.
Financially, accumulated fines for VAT and corporate tax can reach tens of millions of Rupiah. Additionally, an entity with a suspended Business Identification Number due to missing LKPM reports cannot import goods or sponsor visas.
Rehabilitating a blacklisted venture is often more expensive than creating a new one, making neglect of Bali dormant company compliance the costliest strategy.
FAQs about Dormant Companies in Bali
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Can I just stop paying staff and close the office?
No. You must legally settle severance and resolve leases. Simply locking the door does not end liabilities.
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How much does it cost to maintain compliance?
Costs are minimal compared to fines. You mainly pay for a virtual office and small fees for tax and LKPM reporting to ensure Bali dormant company compliance.
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Can I process a KITAS under a dormant entity?
Generally, no. To sponsor a KITAS, the firm must show activity. A business filing zero tax returns cannot justify hiring foreign staff.
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How long can an entity stay dormant?
There is no strict limit for "Non-Effective" status, but Company Law allows dissolution if inactive for 3 years. Regular review of your Bali dormant company compliance is advised.
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Does this apply to local PTs?
Yes. Local PTs have similar obligations, though Foreign investment entity structures face stricter LKPM scrutiny.
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What is a "Nihil" tax return?
A tax return declaring zero income. It is a mandatory filing to inform the government the venture is alive but not generating revenue.
