Bali Intensifies Crackdown on Unlicensed Tourist Accommodations

Bali authorities are intensifying efforts to regulate the island’s hospitality sector by cracking down on unlicensed tourist accommodations to curb tax evasion [1]. While the government is increasing oversight of online travel agencies, officials have clarified that there is no ban on these platforms operating in the region [1].

Key takeaways

• Only about 31,000 of the 470,000 accommodations listed across nine online travel platforms currently possess a verified business registration number [1].
• Bali Governor I Wayan Koster has urged platforms like Airbnb, Agoda, Booking.com, and Traveloka to promote only legal, tax-paying properties [1].
• The local administration estimates that hotel and restaurant taxes could reach Rp 17 trillion, yet the current annual revenue target is set at only Rp 8.5 trillion [1].
• Authorities intend to use increased tax revenue from the hospitality sector to fund regional infrastructure development [1].

Addressing the Tax Gap in Bali’s Rental Market

The push for stricter oversight follows concerns from local officials regarding the massive number of villas and houses being converted into rentals without proper tax contributions [1]. Governor Koster noted that while Bali generated Rp 176 trillion in foreign exchange earnings last year, the potential for tax collection remains largely untapped [1]. By requiring online travel agencies to verify the legal status of the properties they list, the government aims to create a more equitable environment for the tourism industry [1].

Industry stakeholders have expressed support for these measures, arguing that a crackdown on unlicensed rentals is necessary to ensure a level playing field and maintain high tourism standards [1]. In areas such as Denpasar and Badung regency, officials are particularly focused on closing revenue leaks [1]. For instance, Badung has set a goal to increase its hotel and restaurant tax revenue to over Rp 10 trillion in the future, a significant jump from its current target of Rp 6.5 trillion [1].

Why it matters

The initiative reflects a broader effort by the Indonesian government to formalize the rapidly expanding short-term rental market, which has faced criticism in various global tourism hubs for its impact on housing and local infrastructure [1]. By linking the legality of accommodations to their visibility on major travel platforms, Bali hopes to secure the financial resources necessary for infrastructure improvements [1]. While the move is designed to boost public revenue, it also signals a shift toward more rigorous digital oversight of the tourism economy, ensuring that property owners contribute to the local tax base as the sector continues to grow [1].