In need of Pondok Wisata clarity please

[insectsonline]

Hello there, This Pondok Wisata (PW) business is so unclear. Is there an official govt. site where I can get all the information first hand? I've not had any luck in my own searches.

What I need clarity on is this (for leasehold):

1. Without a KITAS, can I still get a PW? I am thinking yes as the PW is in the land owner's name and not mine (as the foreigner) so my residential status is of no consequence. Can this necessity of needing the signature of the land owner come with another set of issues? Can they leverage off that?

2. Is it correct that running the villa business without having a KITAS I will be subject to 20% income tax, whilst if I had a KITAS the tax would be 10%?

3. If the villa was run with a PW which has now expired, is it not common to have difficulty renewing the PW? Can they just decide not to give your another one and leave you in limbo even if you have a rental IMB?

4. Would they still issue a PW to a villa which is currently in no fit state for rental? I ask this because I hesitate at purchasing a property for rental purposes which has no, or has an expired, PW. Especially when this villa is very run down.

5. If the villa already has a valid IMB, how long does the application for PW usually take? I understand there is some greasing of hands involved to make it shorter, so what outcome could I expect in both scenarios - 1. no greasing and 2. greasing.

6. From research I've uncovered PW prices estimated anywhere from 20Bil IDR to 120Bil IDR. What is a more accurate price for a Seminyak 5 brm villa (I am not sure if the size matters. Does it?)

Thanks for your help people of Bali.

 

[Markit]

It's not uncommon here to first introduce yourself and let the members understand a little more about you and your plans before presenting a questionnaire more akin to a doctorate thesis.

 

[insectsonline]

I didn't expect to be criticised straight off the bat on my very first post.....a tad unwelcoming Markit but I'll take it on the chin......I am an Australian expat who is in the process of conducting my own due diligence, hoping to acquire a rental villa that will one day be my home. It's my hope to one day retire to my beloved Bali with my family, where I have travelled to frequently since 1999.

I am finding it hard getting clear information online. Posts and articles are usually very outdated so I was hoping this forum might be able to shed some light with more current knowledge/experiences.

Sorry if my questions roll out like a doctorate thesis however I am just an efficient individual. Thank you very much. Hopefully we can re-start off better this time.

 

[spicyayam]

Welcome to the forum. I will have a go at your questions...

1. Without a KITAS, can I still get a PW? I am thinking yes as the PW is in the land owner's name and not mine (as the foreigner) so my residential status is of no consequence. Can this necessity of needing the signature of the land owner come with another set of issues? Can they leverage off that?

The PW will be in the land owner's name so as you say your residential status is of no consequence, as in effect the land owner is also the business owner. The person will also be liable for taxes on the income of the business. So obviously you will need to work closely with this person if you go ahead with this.

2. Is it correct that running the villa business without having a KITAS I will be subject to 20% income tax, whilst if I had a KITAS the tax would be 10%?

If you are talking about setting this up as a business with a working KITAS, then you need to set up a PMA company and so forth. It's not cheap and probably not worth your while if it is a single villa.

3. If the villa was run with a PW which has now expired, is it not common to have difficulty renewing the PW? Can they just decide not to give your another one and leave you in limbo even if you have a rental IMB?

In my experience renewing the PW wasn't much of a drama. The first time we renewed ours, we discovered it was still in the previous owner's name, so that had to be changed. We then added some more rooms so had to change to a melati licence.

4. Would they still issue a PW to a villa which is currently in no fit state for rental? I ask this because I hesitate at purchasing a property for rental purposes which has no, or has an expired, PW. Especially when this villa is very run down.

I am not sure exactly. There are many hotels in Bali that would be considered 'run down' but they still have a licence. The government does come and check your property. About 20 people in 2 kijangs will show up and you need to cook them lunch.

5. If the villa already has a valid IMB, how long does the application for PW usually take? I understand there is some greasing of hands involved to make it shorter, so what outcome could I expect in both scenarios - 1. no greasing and 2. greasing.

I live in north Bali where getting licences like this seems very easy. But you mentioned Seminyak, where I have seen people complaining on FB that it is taking years.

Unfortunately there are some scammers who take your money to get the licence and just keep your money and when you ask after the licence they say it is still processing.

6. From research I've uncovered PW prices estimated anywhere from 20Bil IDR to 120Bil IDR. What is a more accurate price for a Seminyak 5 brm villa (I am not sure if the size matters. Does it?)

You mean 20 million?

I have a friend here in north Bali who does nothing but licences, hotels, convenience stores etc. I don't know if he would do it for Seminyak but could ask if you are interested.

 

[Markit]

I didn't expect to be criticised straight off the bat on my very first post.....a tad unwelcoming Markit but I'll take it on the chin.

Is it me or does social media seem to be growing a group of people that think they are intrinsically entitled to anything they want to have just by their pure presence online?

I thought I was being incredibly "caring" and "feeling" (for me) when I mentioned politely "It's not uncommon here to first introduce yourself". Yet you found that rude. Why?

Don't you usually introduce yourself when you meet new people on the street or in business? Or are you always "just an efficient individual"?

Well, good luck with your search for information.

 

[insectsonline]

Thank you very much for your help Spicyayam.

Wow, I wasn't aware the land owner is essentially in the rental business with you. This worries me as we have no relationship with the land owner and have no idea what we are potentially getting ourselves into. I know they can just refuse to sign the PW and then you are stuck. Do they also ask for a cut of rental profits?

No, I don't wish to set up a business. I wish to buy the villa now and run it as a holiday rental until I move over with my family - 2-4 years away. So I won't have residency until that time.
I had just read that non residents are taxed at 20%, and residents at 10%. If in fact the PW is in the resident's name (land owner), then I assume the tax is 10%. Is that right? Doesn't seem right.
RENTAL INCOME
The rental income of nonresidents is taxed at a final withholding rate of 20% of gross income.

Ideally before I buy this property I would prefer to 'know' that I can get a PW. The current owners mentioned they had some kind of issue at renewal time, then the partners fell out, so they let the villa fall into disrepair as none of them were willing to upkeep. However, you never get the true story of why someone is selling. Does anyone know of a creative solution to my dilemma?

Yes, I did mean millions and not billions (I am watching 'Billions' at the moment!) and I do find all the frekking zeros of IDR a tad mind boggling. So what is a more realistic price for Seminyak - as I said I had read on various sites it could be 20 mil - 120 mil? That's a huge bracket.
I guess time frame is impossible to indicate and varies from villa to villa.

Would anyone here have a good accountant I could chat to?

Thank you getting me a little closer to clarity Balipod.

 

[spicyayam]

I believe it is just the holder of the PW licence who will be taxed. They (or someone on their behalf) need to go to the tax office every month to submit the income reports and pay the tax. I am sure they would expect some kind of salary for doing this. My wife does it and it can be a bit of a headache at times, lining up, sometimes it is closed and you have to go back again etc.

They do have a place where you can go and ask questions though.

Does anyone know of a creative solution to my dilemma?

Not really. Maybe you can apply for a new licence before buying the villa?

I could not imagine ever wanting to run a business in Seminyak. Unfortunately many clueless foreigners paid any amount of money for licences which has lead to extortionate rates and various scams.

I also enjoy the show Billions also and was sad when the season ended.

Are you taking over someone else's lease or leasing it directly from the owner?

 

[insectsonline]

Billions ended??.....nuh uh....Season 3 confirmed recently.

We would take over someone else's lease.

I believe I can get a great deal on this villa otherwise I wouldn't touch Seminyak. However now I see 'getting a great deal' is probably not even enough to compensate for the land mine along the entire journey. It's just so convoluted. I am trying very hard not to be that clueless foreigner you speak of!