UU 18/2025: Indonesia’s New Tourism Law Explained for Foreign Property Owners

Last updated: February 2026 · By Bali Property Rules Research Desk

Table of Contents

1. What Is UU 18/2025?
2. What Did UU 18/2025 Change from the Original Tourism Law?
3. Does UU 18/2025 Apply to Foreign Villa Owners in Bali?
4. What Is the Connection Between UU 18/2025 and PP 28/2025?
5. What Are the Penalties for Operating Without a License Under UU 18/2025?
6. What Is the March 2026 Compliance Deadline?
7. How Does UU 18/2025 Affect Property Investment Decisions in Bali?
8. Frequently Asked Questions
9. Sources and References

What Is UU 18/2025?

UU 18/2025 is the Third Amendment to Indonesia’s Tourism Law (Undang-Undang Nomor 18 Tahun 2025 tentang Perubahan Ketiga atas Undang-Undang Nomor 10 Tahun 2009 tentang Kepariwisataan). Passed by the DPR on 2 October 2025 and enacted on 29 October 2025, it is the most significant restructuring of Indonesian tourism regulation in over a decade. For foreign property owners in Bali, it is the law that gives teeth to the enforcement actions already underway.

The law amends UU 10/2009, Indonesia’s original post-reform Tourism Law that replaced UU 9/1990. This is the third amendment — previous amendments occurred through the Omnibus Law (UU 6/2023, formerly Perppu 2/2022 / UU 11/2020). The scope of UU 18/2025 is broad: it restructures how tourism is developed, regulated, and financed at the national level.

One of the most consequential changes is conceptual. Pasal 1 (full law text in Bahasa Indonesia — PDF) introduces “Tourism Ecosystem” (Ekosistem Kepariwisataan) as a new legal concept — defined as “the interconnected system supporting the orchestration of national tourism governance to ensure the quality of activities, facilities, and services in creating tourism experiences and value benefits.” This is not just a policy buzzword. It is a legal definition that shapes how every subsequent provision of the law is interpreted and enforced.

The law also expands the principles governing tourism. The original UU 10/2009 established a set of guiding principles for tourism governance. Under Pasal 2 of UU 18/2025, that list grows to 14 principles, adding “locality” (kelokalan), “renewal” (keterbaruan), “integration” (keterpaduan), and “reliability” (keandalan). These additions reflect the new emphasis on coordinated, data-driven governance rather than the ad-hoc approach that characterized tourism oversight for over a decade.

Pasal 4 adds new objectives including making tourism “higher quality through innovation and digital transformation” and utilizing tourism potential to “protect Cultural Heritage and nature and support communities economically and socially.” Together, these provisions signal that the Indonesian government views tourism regulation not merely as business licensing but as comprehensive ecosystem management.

Two important clarifications. First, the law does NOT specifically mention “villas” or “Airbnb” — it sets the broad legal framework. Specific accommodation licensing requirements come through PP 28/2025 and provincial regulations. Second, the law does NOT provide specific penalty amounts — administrative sanctions are referenced but detailed penalty schedules require implementing regulations that are still being drafted.

What Did UU 18/2025 Change from the Original Tourism Law?

UU 18/2025 introduces six major changes to Indonesia’s tourism regulatory framework: an ecosystem-based development model with 12 defined elements, a mandated national tourism data system, strengthened tour guide certification requirements, expanded obligations for all tourism businesses, a national legal basis for foreign tourist levies, and evidence-based policy requirements for government planning and budget allocation.

Each change has direct or indirect implications for anyone who owns or operates tourism property in Bali.

1. Ecosystem-Based Tourism Development (Pasal 8)

For the first time, Indonesian tourism law requires development to be structured around “Tourism Ecosystems” rather than standalone projects. This is arguably the most important structural change in the law. Under the previous framework, tourism businesses could operate relatively independently — obtain a license, pay taxes, and largely manage themselves. UU 18/2025 replaces this model with an integrated ecosystem approach.

Pasal 8(2) defines 12 core ecosystem elements:

1. Tourism development planning
2. Human resource quality improvement
3. Destination management
4. Tourism industry strengthening
5. Tourism attraction development
6. Facilities and infrastructure provision
7. Tourism marketing development
8. Information and communication technology use
9. Local community empowerment
10. Tourism association involvement
11. Culture-based promotion
12. Creative activities

Pasal 8(3) further requires that implementation of tourism development be supported by “research, data analysis, or policy analysis.” The practical implication for property owners is significant: the era of ad-hoc development, speculative villa projects, and short-term licensing strategies is giving way to a coordinated regulatory framework where every tourism business is expected to function as part of a larger system.

2. National Tourism Data System

The law mandates creation of an integrated national tourism data and information system. This system will consolidate data on destinations, strategic tourism areas, types of tourism activities, tourism businesses and their workforce, and visitor numbers and behavior. While the system is still being developed, its implications are far-reaching: over time, it will make operating outside formal licensing, zoning, and reporting frameworks increasingly difficult. Unlicensed villas that currently fly under the radar will become visible to authorities as data integration improves.

3. Tour Guide Certification (Strengthened)

UU 18/2025 strengthens requirements for tour guide certification. Tourists must be guided by certified Indonesian tour guides, and certified guides must work in coordination with local guides at specific destinations. Foreign tour guides may operate only when accompanied by certified Indonesian guides. While this primarily affects tour operators rather than villa owners, it reflects the broader policy direction: Indonesia is systematically protecting local workforce participation in every segment of the tourism industry.

4. Expanded Obligations for Tourism Businesses

Tourism businesses now face legally mandated obligations beyond basic licensing. These include maintaining non-discriminatory services and implementing local empowerment and community-based programs. For villa operators, this means compliance expectations are expanding. It is no longer sufficient to simply hold a business license and pay taxes. The law envisions tourism businesses as active participants in community development — and future implementing regulations may translate these obligations into specific requirements with measurable compliance standards.

5. Foreign Tourist Levy — National Legal Basis

The government may now impose levies on foreign tourists at the national level. Funds collected are earmarked for tourism sector development, destination management, and sustainability initiatives. Specific rates and collection mechanisms will be set in a forthcoming Government Regulation (Peraturan Pemerintah). Bali already charges IDR 150,000 per foreign tourist under its provincial Love Bali program — UU 18/2025 gives that approach national legal grounding and extends the authority to any Indonesian destination. This is no longer a Bali-only experiment; it is now a nationally authorized revenue mechanism.

6. Evidence-Based Policy (Pasal 9)

Pasal 9 requires that research, data analysis, and policy analysis results must support government policy formulation and budget allocation for tourism governance. These results must contain at minimum: economic potential assessments, cultural utilization evaluations, and nature preservation analyses. This provision ensures that future tourism regulations — including those affecting villa licensing and zoning — will be grounded in data rather than political expediency alone.

Does UU 18/2025 Apply to Foreign Villa Owners in Bali?

Yes. If you operate any form of tourist accommodation — including renting a private villa on Airbnb or Booking.com — UU 18/2025’s framework applies to you. The law defines “Tourism Business” (Usaha Pariwisata) in Pasal 1 as “a business providing goods and/or services to meet the needs of tourists and for the operation of tourism.” A villa that hosts paying guests falls squarely within this definition.

The law does not mention “villas” by name — it operates at the framework level, establishing definitions and principles rather than listing specific business types. The law also defines “Tourism Business Operator” (Pelaku Usaha Pariwisata) broadly to cover any individual or business entity conducting commercial activities in the tourism sector. If you receive payment from tourists for accommodation, you are a tourism business operator under this law.

Combined with PP 28/2025 (the OSS/NIB licensing regulation), the practical effect is unambiguous: all tourist accommodation must be licensed. The ecosystem framework means villa operators face expanding obligations — not just licensing, but community empowerment, data reporting, and coordination with local tourism governance structures. Whether you own one villa or ten, whether your operation is large-scale or a modest two-bedroom rental, the same legal framework applies.

This applies regardless of your ownership structure — PT PMA, leasehold, or Hak Pakai. A foreign owner operating through a PT PMA has the corporate vehicle required for business licensing, but the ecosystem obligations apply to the business itself. A foreign owner with a leasehold who rents to tourists still needs the same licensing — and faces the additional complexity of ensuring the leasehold contract permits commercial subletting. Not sure which structure fits your situation? Our ownership comparison guide maps the differences across cost, duration, and risk.

What Is the Connection Between UU 18/2025 and PP 28/2025?

UU 18/2025 is the law — it sets the legal framework, defines tourism businesses, and establishes the ecosystem model. PP 28/2025 is the implementing regulation — it provides the OSS/NIB licensing mechanism that translates the law’s requirements into specific permits, registrations, and compliance procedures. Together they create the regulatory infrastructure that provincial governments use to enforce compliance.

Understanding the hierarchy of Indonesian law is essential for anyone investing in Bali property. The system works in layers:

• UU (Undang-Undang) = national law passed by the DPR (parliament). This is the highest level of regulation below the constitution.
• PP (Peraturan Pemerintah) = government regulation implementing the law. Issued by the President to provide operational detail.
• Provincial regulations (Pergub/Perda) = local regulations that enforce the national framework within a specific region.

In practice, this hierarchy works as follows: UU 18/2025 says tourism businesses must operate within the ecosystem framework. PP 28/2025 classifies tourism accommodation as medium-risk and requires NIB (Nomor Induk Berusaha — business identification number) plus sector-specific permits through the OSS (Online Single Submission) system. Bali’s provincial government then enforces these requirements through specific deadlines and enforcement actions — including the March 31, 2026 compliance deadline.

Level	Instrument	What It Does	Key Reference
National law	UU 18/2025	Sets framework, definitions, principles, ecosystem model	Pasal 1, 2, 4, 8
Implementing regulation	PP 28/2025	OSS system, NIB registration, risk-based licensing	Risk classification for tourism accommodation
Provincial enforcement	Bali Pergub / Governor decrees	March 31, 2026 deadline, enforcement actions	Specific to Bali

For villa owners, the practical question is always “what do I need to do?” — and that answer comes from PP 28/2025 and provincial regulations, not directly from UU 18/2025. You will never need to cite Pasal 8’s ecosystem elements in a licensing application. But UU 18/2025 is the legal authority behind everything. If you are wondering WHY the government can require licensing, shut down unlicensed operations, and impose levies on foreign tourists, this is the law that says they can.

The relationship also matters for legal disputes. If a villa owner challenges an enforcement action — a sealing order, a delisting demand, a permit revocation — the government’s legal authority traces back through the hierarchy: provincial decree references PP 28/2025, which references UU 18/2025. Understanding this chain helps you assess both the legitimacy and the likely durability of enforcement actions.

What Are the Penalties for Operating Without a License Under UU 18/2025?

UU 18/2025 provides for administrative sanctions against non-compliant tourism businesses, and provincial enforcement is already resulting in property seizures, sealing orders, and demolitions. While the law itself references sanctions in general terms — with detailed penalty schedules to come through implementing regulations — the real enforcement is happening now at the provincial level in Bali.

The law provides for administrative sanctions but delegates specific penalty schedules to implementing regulations (Peraturan Pemerintah) that have not all been issued yet. This is standard practice in Indonesian legislative drafting — the national law establishes the authority to sanction, and subsequent regulations define the details. However, waiting for those regulations to be finalized would be a serious miscalculation. Provincial enforcement under the existing framework is already aggressive and escalating.

Enforcement Already Happening

Bingin Beach demolitions (July 2025): 48 illegal villas, homestays, and restaurants were demolished at Bingin Beach in Badung Regency. The operation was led by Governor Wayan Koster, supported by Satpol PP (civil service police), military, and police personnel. This was not a paper exercise — structures were physically torn down.

Satpol PP sealing operations: Civil service police have been actively sealing unlicensed villas with “disegel” (sealed) notices across Canggu, Uluwatu, and Ubud. Sealed properties cannot operate until they obtain proper licensing. In some cases, seals have been applied to properties mid-stay, requiring guests to relocate.

Governor’s task force: Governor Koster created a special task force to audit tourism business permits, announced in June 2025. The task force coordinates between provincial agencies, Satpol PP, the tax authority, and immigration — enabling cross-agency enforcement that addresses licensing, tax compliance, and immigration violations simultaneously.

Hotel association pressure: Indonesia’s hotel association (PHRI) reported hotel occupancy down 10-20% in early 2025, attributed partly to unlicensed villas operating outside the tax and regulatory system. This created significant political pressure for enforcement — the hotel industry is a major employer and taxpayer, and its lobbying power should not be underestimated.

Tax audits: High-end villas suspected of avoiding the 10% hotel tax face increasing scrutiny. Some villa owners have been found to have never obtained NPWPD (Nomor Pokok Wajib Pajak Daerah — local tax identification), making their entire revenue history subject to back-tax assessment.

For Foreigners Specifically

Operating a villa rental business without a PT PMA or proper work permit constitutes unauthorized business activity under Indonesian immigration law. The consequences are severe: deportation, entry bans (typically five years), and potential criminal prosecution. This is not theoretical — immigration authorities actively investigate foreigners reported for unauthorized commercial activity, and reports frequently originate from competitors, neighbors, or disgruntled employees.

The intersection of tourism law and immigration law creates a double exposure for foreign villa operators. Even if the tourism licensing penalty is “only” administrative, the immigration violation is a separate matter entirely — one that can result in detention and forced departure. See our guide on nominee ownership risks for why using a nominee to hold licensing in an Indonesian name does not protect the foreign operator.

What Is the March 2026 Compliance Deadline?

By March 31, 2026, every accommodation property listed on online travel platforms — including Airbnb, Booking.com, and similar services — must hold a valid Indonesian business license. Properties that cannot demonstrate valid permits (NIB + TDUP or Pondok Wisata license) face delisting from platforms. This is a Bali provincial enforcement deadline operating within the national legal framework of UU 18/2025 and PP 28/2025.

The deadline is set by Bali’s provincial government, not directly by UU 18/2025. But UU 18/2025 provides the legal authority that makes the provincial requirement enforceable. Without the national law establishing tourism business licensing as a legal obligation, the provincial deadline would lack legal foundation.

After March 31, 2026, online travel platforms will be required to verify license status and remove unlicensed listings. The practical consequence is stark: no license means no visibility on the platforms that generate the vast majority of villa bookings. For operators who depend on Airbnb and Booking.com for occupancy — which describes most foreign-owned villas in Bali — delisting is effectively a business shutdown.

The compliance process involves multiple steps, and practitioners report the full sequence typically takes 3 to 6 months:

• PT PMA formation — Required for foreigners to legally conduct business in Indonesia (2-4 weeks through a reputable agent)
• OSS registration and NIB — Online Single Submission system registration and business identification number (1-2 weeks)
• Pondok Wisata / TDUP application — The specific tourism accommodation license for your property type (2-4 weeks, varies by regency)
• PBG/SLF building permits — Building Approval Certificate and Functional Worthiness Certificate (4-8 weeks; longer if the building has compliance issues)
• Tax registrations — NPWP (national), NPWPD (local), hotel tax registration (1-2 weeks)

Starting the compliance process now is not early — for properties with building permit complications or corporate restructuring needs, it may already be tight. For the step-by-step compliance process, see our short-term rental compliance guide. For cost estimates covering all licensing and setup fees, see our property costs breakdown. For ongoing annual tax obligations — PBB, rental income tax, and hotel tax — see our property tax guide.

How Does UU 18/2025 Affect Property Investment Decisions in Bali?

UU 18/2025 signals a permanent shift in Bali’s regulatory environment for tourism property. The national data system will make it harder for unlicensed operations to go undetected. Compliance costs — licensing, corporate structure, tax registration — must now be factored into any investment analysis. The era of buying a villa and renting it informally on Airbnb without permits is ending.

For prospective investors evaluating Bali property in 2026 and beyond, UU 18/2025 changes the calculus in several important ways.

The Data System Changes the Risk Profile

As the national tourism information system consolidates data on tourism businesses and visitor patterns, operating outside formal licensing becomes increasingly risky — not just legally but practically. When platform data, tax records, immigration data, and tourism business registrations are cross-referenced in a single system, unregistered operations become visible anomalies. The historical reality of Bali — where thousands of unlicensed villas operated openly because enforcement was fragmented and under-resourced — is being replaced by a data-integrated enforcement infrastructure.

Compliance Costs Are Now Mandatory Line Items

PT PMA setup, OSS registration, Pondok Wisata licensing, PBG/SLF building certificates, and tax registrations are now non-optional expenses that must be factored into investment return calculations. An investor who models villa returns without these costs is building on a foundation that no longer exists. See our cost breakdown for detailed figures across different ownership structures. For investors considering development projects, Bali’s construction moratorium introduces additional restrictions on where and when you can build.

Foreign Tourist Levy

The national legal basis for foreign tourist levies creates a government revenue stream from tourism. The levy is charged to tourists, not operators, so it does not directly add to villa operating costs. However, it may affect pricing competitiveness — particularly for budget-conscious travelers who now pay the levy on top of accommodation costs. Villa operators should factor this into their pricing strategy and guest communication.

Incentives for Compliant Businesses

UU 18/2025 provides for fiscal incentives (tax facilities) and non-fiscal incentives (simplified licensing, immigration facilitation, infrastructure support) for compliant tourism businesses. However, no clear procedures or eligibility criteria have been issued yet. Legal practitioners note that businesses need “active regulatory engagement” to access these incentives in practice — meaning regular consultation with licensing authorities and participation in industry associations. The incentives exist on paper but require effort to access.

Tourism Financing

The law expands access to tourism financing for medium-scale enterprises and cooperatives. This is potentially relevant for PT PMA structures operating villa businesses — particularly those looking to expand from one property to a portfolio. The details of how this financing will be structured and accessed remain to be seen in implementing regulations.

The Strategic Takeaway

The overall direction is unmistakable: Bali is moving from a permissive environment to a regulated one, and UU 18/2025 makes that transition legally irreversible. This is not a temporary enforcement campaign that will fade after an election cycle — it is a structural change in how Indonesia governs its most important tourism market. Early compliance creates competitive advantage as enforcement intensifies. Properties with full licensing, transparent tax compliance, and proper corporate structures will not only avoid penalties but will be the ones still listed on platforms, still attracting bookings, and still generating returns when unlicensed competitors have been removed from the market.

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