Buying Property in Indonesia Through a PMA Company

Updated 7 August 2026 · Okusi Associates · All guides

Every week someone asks whether they can buy a Bali villa freehold. The answer is no. Not with a clever notary, not through a trusted Indonesian friend, not via a company. Hak Milik — freehold — is reserved to Indonesian citizens by Article 21(1) of the Basic Agrarian Law (UUPA, Law 5/1960), and that provision has stood untouched since 1960. Everything a foreign buyer can lawfully do in Indonesian property is built on rights other than freehold. Most of those rights are perfectly serviceable; the losses happen to people who pretend the freehold rule does not apply to them.

This guide covers the corporate route — holding property through a foreign-owned company (PT PMA) — and how it compares with the alternatives, from Bali to Lombok, Sumba, Labuan Bajo and beyond.

The titles that actually exist

Indonesia has no single concept of “ownership”. The UUPA created a hierarchy of distinct rights, each with its own holder class and duration. The ones that matter to a foreign buyer:

Title	Who may hold it	Initial term and renewals
Hak Milik (freehold)	Indonesian citizens only (UUPA Art 21(1))	Unlimited
Hak Guna Bangunan (HGB, right to build)	Indonesian citizens and Indonesian legal entities — including a PT PMA	30 years + 20 extension + 30 renewal on state land (PP 18/2021 Art 37(1))
Hak Pakai (right of use)	Indonesian citizens, Indonesian legal entities, foreign individuals holding immigration documents	30 + 20 + 30 on state land (PP 18/2021 Art 52(1))
Hak Sewa (lease)	Includes foreigners domiciled in Indonesia (UUPA Art 45)	No statutory term — purely contractual

One caution on the 80-year arithmetic. Outside Nusantara and certain special zones, only the initial term is granted; extension and renewal are separate applications assessed on discretionary criteria (PP 18/2021 Art 41). Treat the number printed on the certificate as the number you hold, and extension as an application to be made, not an entitlement already banked.

How the PMA route works

A PT PMA is an Indonesian legal entity, and that is the whole point: it qualifies to hold HGB and Hak Pakai in its own name (PP 18/2021 Arts 34, 49(2)(b)). It still cannot hold freehold. HGB is registered, mortgageable, transferable, and survives changes in the company’s shareholders — the asset sits in the entity, and the entity is what changes hands. For property-sector companies, land and buildings count towards the IDR 10 billion investment-plan requirement, which a genuine property acquisition typically satisfies on its own.

The structure is genuinely appropriate where the property is a commercial operation, where the holding exceeds the personal cap of one parcel and 2,000 m², where there is development or resale intent, or where the owner holds no Indonesian residence status. It is over-engineered for a single home occupied by a foreigner who holds a stay permit and whose purchase clears the regional price floor for personal Hak Pakai — IDR 5 billion for a landed house in Bali, IDR 3 billion in Nusa Tenggara Barat, IDR 1 billion in most other provinces (Kepmen ATR/BPN 1241/2022).

Foreign corporate shareholders

A PT requires a minimum of two shareholders, one director and one commissioner (Law 40/2007). The shareholders may be individuals, foreign companies, or a mix — a US LLC or a Seychelles IBC can hold the shares, provided its corporate documents (certificate of incorporation, articles, register of directors and shareholders) are apostilled or consular-legalised, and its beneficial owners are disclosed, which since 2025 is an express requirement of every establishment filing. Whether an IRA-owned LLC preserves its US tax treatment after acquiring Indonesian real property is a question for a US adviser; Indonesian law simply sees a foreign corporate shareholder and its disclosed beneficial owner.

Foreigners may fill both board seats. A commissioner may reside abroad; a director who will actually work in Indonesia needs work authorisation (RPTKA ratification) and a stay permit (KITAS).

What a dormant holding company costs

A PMA that holds one villa and does nothing else is still a company, and its obligations run with its tax number, not its activity. Nil monthly and annual tax returns must still be filed; a VAT-registered company must file its VAT return every month without exception; quarterly LKPM investment reports continue, and repeated non-filing escalates as far as licence revocation. Late-filing fines alone run to roughly IDR 6 million a year for a VAT-registered company that files nothing.

Kept compliant properly, budget for zero-activity accounting and tax reporting at US$ 580 per year (Zero-Activity Tax Reporting - Non-VAT), plus the annual corporate tax return, plus a registered address where the company has no premises. Call it a permanent overhead in the low tens of millions of rupiah annually. Against that, a personal Hak Pakai dwelling carries an annual personal tax return and land-and-building tax (PBB), and nothing else. For a single residence, the individual route is cheaper every year the company exists.

Nominee arrangements: void, and now enforced

The nominee scheme — land registered in an Indonesian’s name, the foreigner’s money behind it, side agreements purporting to reserve control — fails on the face of the statute. UUPA Art 26(2) voids every act intended “directly or indirectly” to transfer freehold to a foreigner, by operation of law; the land falls to the state; and payments already received by the owner cannot be reclaimed. For shares, Law 25/2007 Art 33 declares nominee shareholding agreements null and void. Better documentation does not cure the defect; it evidences it.

The case law is exactly as bleak as the statute predicts. In two Supreme Court cassation decisions from 2022, a French national who funded land at Jimbaran recovered nothing after her nominee sold it, and was ordered to pay costs; and a Dutch national at Bintan whose nominee sued him lost the land, the certificate and possession, with the court declaring the Indonesian nominee the lawful owner. Those are the two live outcomes: the land goes to a third party and the foreigner gets nothing, or the land stays with the nominee and the foreigner gets nothing.

Enforcement has hardened. Bali’s Governor signed a provincial regulation on 24 February 2026 prohibiting nominee land transfers by foreign nationals, with administrative sanctions up to permit revocation and building demolition. And since 2 January 2026 the new criminal code carries up to 7 years’ imprisonment for procuring false information in an authentic deed (UU 1/2023 Art 394) — which is what a nominee purchase generally requires someone to do before the land deed official.

The Indonesian-spouse alternative

An Indonesian citizen married to a foreigner may hold Hak Milik like any other citizen, provided the land sits outside the marital joint property — evidenced by a separation-of-property agreement made by notarial deed (PP 18/2021 Art 70). Without that agreement, the freehold falls into joint property, the foreign spouse acquires an interest, and the one-year forced-disposal clock in UUPA Art 21(3) is engaged. This is a lawful route and categorically different from a nominee arrangement; but the title is the spouse’s alone, and the foreign partner should understand that before comparing it with a PMA, where the shares are theirs.

Leasehold: the honest terms

There is no statutory maximum lease term. UUPA Arts 44–45 prescribe none, and the 25- or 30-year prepaid leases marketed in Bali and Lombok as “leasehold ownership” of 50 to 80 years are market practice, not legal categories. A lease is a personal right against a counterparty, prepaid in full on day one. Due diligence should therefore cover:

The freehold behind the lease. A certificate check (pengecekan sertipikat) at the Land Office through a notary/PPAT: encumbrances, disputes, boundaries, prior mortgages — a hak tanggungan registered before the lease outranks it.
Master-lease and sub-lease authority. If your counterparty is itself a lessee, its right to sublet, and the head lease’s own term and conditions, define everything you are buying.
Extension options, and how they are priced. An option exercisable decades hence is a promise, not property; disputes concentrate there. Insist on a defined price mechanism, and discount any option priced “by agreement at the time” to near zero.
Zoning and permits. Confirm the parcel’s designation against the local RTRW/RDTR spatial plan and its KKPR conformity (valid three years, PP 21/2021 Art 98(4)), and that the building holds its PBG (building approval) and SLF. Good title over land zoned green or agricultural is a bad purchase.
Recording. PP 18/2021 Art 90(1) allows a lease to be recorded against the land certificate. Where the local office will do it, do it.

Agricultural land: the Sumba problem

Buyers in Sumba, Labuan Bajo and rural Java are routinely offered agricultural-zoned land with assurances that conversion to building use is a formality. It is not. The zone is set by the regency spatial plan, development conformity runs through KKPR, and land designated as protected sustainable food agriculture is, in practice, not convertible at all — Bali has gone as far as instructing its regents to refuse agricultural conversion outright. Conversion is sometimes achievable where the plan already contemplates mixed use; it is parcel-specific, slow, and never guaranteed. Buy what the spatial plan says the land is today, not what an agent says it could become.

Rental income, and the Bali closure

Letting a villa on a lease is taxed finally at 10% of gross rent whether the landlord is an individual or a PT (PP 34/2017). Operating serviced accommodation is different: it is a licensed business activity, outside the residential designation of a personal Hak Pakai dwelling, and belongs in a company with the correct KBLI classifications. Note the hard new constraint: since May 2026 Bali has closed OSS licensing to new PMA applications across 18 KBLI codes, including real estate (68111) and villa/other accommodation (55900). A new foreign-owned villa-rental business currently cannot be licensed in Bali, though the closure is provincial and these sectors remain open elsewhere in Indonesia.

Where Okusi fits

Okusi Associates has established over 3,000 foreign-owned companies in Indonesia since 1997, from offices in Jakarta, Bali and Batam. For a property acquisition we structure and establish the Indonesian PMA Company (US$ 1,759), advise on whether the corporate route is actually warranted against personal Hak Pakai or leasehold, coordinate title due diligence with the notary/PPAT, and keep holding companies compliant — including zero-activity reporting for dormant structures. If someone has proposed a nominee arrangement to you, talk to us before you sign anything. The statute is not on your side, and since 2026, neither is enforcement.