Many foreign investors in Bali open a PT PMA (Foreign Owned Company) with high hopes, only to pause their plans due to market shifts or personal reasons.
It is a common assumption that if a company has no revenue, no staff, and no office, it effectively ceases to exist. This dangerous misconception leads many shareholders to simply walk away from their corporate entity, believing that silence from the tax office equals safety.
The reality is that Indonesia does not automatically classify a company as “dormant” or “inactive” without a formal legal process. A registered company remains an active legal entity with mandatory monthly and annual obligations, regardless of its bank balance.
Ignoring these duties triggers a snowball effect of automatic penalties, license revocations, and strict scrutiny from the Investment Coordinating Board (BKPM). This Bali inactive company risk is not just about a forgotten pile of paperwork; it is a financial time bomb that can explode years later.
To protect your personal assets and your ability to do business in Indonesia in the future, you must actively manage or formally close any unused entity. Abandoning your own company is the worst possible strategy.
This guide outlines the hidden dangers of neglecting an inactive PT PMA, the specific penalties you will face, and the correct legal pathways to either maintain or liquidate your corporate structure safely.
Table of Contents
- Defining an Inactive Company in Indonesia
- Ongoing Tax and Reporting Obligations in Bali
- The Threat of OSS and NIB Revocation
- Personal Liability for Directors
- Real Story: The Silent Debt in Canggu
- Immigration and Visa Consequences in Bali
- Options: Maintenance vs. Liquidation
- Practical Compliance Checklist
- FAQs about Dormant Companies in Bali
Defining an Inactive Company in Indonesia
In many Western jurisdictions, declaring a company “dormant” is a simple checkbox exercise that pauses all reporting requirements. Indonesia operates differently.
Under Indonesian Law, a PT or PT PMA is considered active from the moment of its establishment until it is legally dissolved and its Tax Identification Number (NPWP) is revoked. There is no automatic “pause button” for corporate liabilities just because business has slowed down.
This regulatory stance creates a significant Bali inactive company risk for foreigners who leave the island thinking their business is effectively closed.
The government expects every registered entity to report its status. If you stop reporting, the system does not assume you are closed; it assumes you are non-compliant.
This distinction is critical because non-compliance attracts administrative sanctions and fines that accrue monthly, often unnoticed by the absent owner until they attempt to re-enter the country.
Ongoing Tax and Reporting Obligations in Bali
Even if your company has generated zero income and has zero transactions, you are legally required to file tax returns.
The Directorate General of Taxes (DGT) mandates that all registered companies submit monthly tax reports (SPT Masa) and annual corporate income tax returns (SPT Tahunan). For an inactive company, these are filed as “NIL” reports, stating zero activity, but they must be filed.
Failure to submit these reports triggers automatic fines. While the monthly penalty of IDR 500,000 for late VAT filings might seem small, it accumulates rapidly over time.
Worse, consistent failure to file can lead the tax office to issue an official summons or conduct a “deemed assessment,” where they estimate your taxes based on industry averages rather than your actual zero income.
This escalates the Bali inactive company risk from a minor administrative annoyance to a serious financial liability.
The Threat of OSS and NIB Revocation
Beyond taxes, foreign-owned companies (PT PMA) have strict investment reporting duties. You must submit the Investment Activity Report (LKPM) every quarter through the Online Single Submission (OSS) system.
This report informs the government about the progress of your investment realization. If your company is inactive, you must still log in and report that there is no new investment activity.
Ignoring the LKPM requirement is one of the fastest ways to kill your company’s legal standing. The OSS Risk-Based Approach (OSS-RBA) system automatically flags companies that miss consecutive reports.
This can lead to the suspension or revocation of your Business Identification Number (NIB). Without a valid NIB, your company effectively loses its license to operate, making it illegal to conduct any future business or even maintain a bank account.
Personal Liability for Directors
One of the most overlooked aspects of holding a dormant entity is the personal exposure of the Board of Directors. Under Indonesian Company Law, directors have a fiduciary duty to manage the company prudently.
Neglecting compliance obligations, resulting in fines or the revocation of licenses, can be legally interpreted as negligence.
If the company accumulates debt—including tax debt—and goes bankrupt or is dissolved, directors can be held personally liable for those losses if they are deemed to have failed in their duties.
This means the “corporate veil” that usually protects your personal assets can be pierced. The Indonesian tax authority also has the power to pursue directors personally for unpaid corporate taxes and penalties, a situation that can persist even years after you thought the business was abandoned.
Real Story: The Silent Debt in Canggu
When Samy, a property developer from Perth, paused his villa project in Canggu, he thought he had hit the “pause” button on his expenses too. He stopped paying his consultant, ignored the tax emails, and assumed his inactive company would simply hibernate.
He was wrong. While Samy was back in Australia, his company wasn’t sleeping—it was accruing fines. Every month of silence added another penalty to a ledger he couldn’t see, turning a simple hiatus into a ticking financial time bomb.
Two years later, in 2026, Julian returned to Bali ready to restart. He walked into a local bank to reactivate his corporate account, only to be told his NIB had been suspended.
Confused, he hired Bali Visa to investigate. The audit revealed a disaster: his company had been flagged by the Investment Coordinating Board (BKPM) for failing to submit eight consecutive LKPM reports. Furthermore, the tax office had issued multiple warning letters for unfiled annual returns.
Samy faced a stark choice: pay millions in fines to restore the entity or liquidate it. The Bali inactive company risk he had ignored cost him over IDR 35 million in restoration fees and fines, not to mention the six-month delay to his project. “I thought I was saving money by cutting the consultant fees,” Samy admitted. “Instead, I was just racking up a debt I didn’t know I had.”
Immigration and Visa Consequences in Bali
For many foreigners, their PT PMA is the sponsor of their Investor KITAS or Working KITAS. An inactive company directly jeopardizes your right to stay in Indonesia.
If your NIB is revoked or your company is blacklisted due to non-compliance (such as missing LKPM reports), the company loses its eligibility to sponsor visas.
This can lead to the sudden cancellation of your residency permit. You might find yourself unable to extend your KITAS, forcing an unplanned departure from Indonesia.
Additionally, directors of companies with outstanding tax liabilities can be placed on a travel ban list, preventing them from leaving the country until the debts are settled.
Managing your Bali inactive company risk is therefore essential not just for your business, but for your personal freedom of movement.
Options: Maintenance vs. Liquidation
If you have a PT PMA that is currently not operating, you generally have three options, but “doing nothing” is not one of them. The first option is Maintenance, where you pay a professional service to file all NIL tax returns and LKPM reports.
This keeps the company in “good standing,” ready to be used whenever you decide to resume business.
The second option is applying for Non-Effective (NE) Taxpayer status. This is a formal application to the tax office requesting a temporary suspension of tax filing obligations. If approved, you no longer need to file monthly tax returns, though annual reporting and OSS obligations may still apply.
The third and final option is Liquidation. If the business idea is dead, you should formally close the company. This involves a legal process of dissolution, settling all debts, revoking the tax ID, and publishing the closure in the State Gazette.
While liquidation takes time and money (typically 3-6 months), it provides a clean break and eliminates future Bali inactive company risk.
Practical Compliance Checklist
To ensure your inactive company does not become a liability, follow this compliance checklist. First, verify your tax status. Log into the DGT online portal or ask a consultant to confirm if you have outstanding tax returns or fines.
Second, check your OSS status to ensure your NIB is active and that no warning letters have been issued regarding LKPM.
Third, ensure you have a registered address. Even inactive companies need a valid domicile. If your virtual office lease expires and you don’t renew it, you lose your domicile, which triggers a tax audit and license revocation.
Finally, review your corporate documents to ensure your Board of Directors is still valid and has not expired, as expired terms can block you from signing necessary liquidation or tax documents.
FAQs about Dormant Companies in Bali
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Can I just stop paying my consultant and let the company die?
No, this is highly risky. The company remains a legal entity with accumulating liabilities. Ignoring Bali inactive company risk can lead to personal director liability and future bans on doing business in Indonesia.
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Do I need to file monthly tax returns if I have zero income?
Yes, you must file "NIL" (Zero) tax returns every month. Failure to do so results in automatic fines for every missing month.
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What is the penalty for not submitting LKPM reports?
Missing LKPM reports leads to warning letters, followed by the temporary suspension and eventual revocation of your Business Identification Number (NIB), effectively freezing your business.
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How much does it cost to keep an inactive company compliant?
Costs vary, but you should budget for a registered office fee and a monthly accounting service to handle the NIL tax and LKPM filings. This is far cheaper than the fines for non-compliance.
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Can I close a company immediately?
No, liquidation is a formal process involving tax audits and legal dissolution, typically taking 3 to 6 months to complete fully.
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Will an inactive company affect my personal bank account?
It can. If the company is flagged for tax evasion or money laundering compliance checks due to non-reporting, banks may scrutinize the directors' personal accounts associated with the business.
