Are Bali hotels charged 20% VAT? Guide for guests and owners

Travelling to Bali or managing accommodation there often raises the same question: do hotels charge a single 20% tax on top of the listed price? The short answer is no — what guests typically see at checkout is a combination of central and local taxes plus any service charges. This guide explains how VAT (value added tax) works in Indonesia, how regional levies intersect with hotel billing, and what owners and guests should expect on invoices so there are no surprises at checkout.

Hospitality tax obligations for hotels in Bali

Running a hotel in Bali involves multiple tax duties that affect pricing, bookkeeping and cash flow. Owners must manage central VAT (value added tax), local accommodation levies and routine reporting obligations to remain compliant and avoid penalties. Clear billing and structured record keeping are essential to keep operations smooth.

Value added tax and what is taxable

Accommodation charges, food and beverage and most guest services are subject to VAT (value added tax) at the national standard rate, which is currently 11 percent and scheduled to rise to 12 percent in 2025. Any mandatory service charge billed to guests forms part of the VAT base, so VAT is calculated on the total amount collected from the guest.

Hotels must issue a tax invoice showing the VAT amount separately when VAT is charged. Explicit exemptions are uncommon for accommodation businesses, so treat ancillary services as taxable unless a tax advisor confirms otherwise.

Local hotel tax and other regional levies

On top of central VAT many regencies impose a local hotel or lodging tax collected at the point of sale. These rates vary by location and are typically set as a percentage of the room rate. Local levies are distinct from VAT and are remitted to the regional treasury under separate rules.

Registration, filing and record keeping

Hotels must register as taxable entrepreneurs, file monthly VAT returns and remit payments by statutory due dates to avoid interest and penalties. Maintain detailed sales records, signed invoices and receipts for audit purposes, and reconcile how service charges are treated across accounting and front-desk systems.

Transparent invoices, clear breakdowns and timely filings reduce guest disputes and enforcement risk. For operational support, property owners commonly seek professional guidance to align billing systems with both central and local tax rules.

Current VAT rates in Indonesia and how they apply to hotels

Indonesia’s standard VAT (value added tax) rate is 11 percent, effective since April 2022, and it applies to most domestic supplies and imports. Suppliers act as tax agents by collecting VAT at the point of sale and remitting it to the tax office.

For hotels, VAT treatment is generally straightforward: room rates, food and beverage, spa services and other guest services are taxable and must be reflected in pricing and invoices.

• Standard rate applies to accommodation The 11 percent standard rate covers nightly room charges and packaged stays. When VAT is charged, show it as a separate line on the bill so the tax element is transparent to guests.
• Food, beverage and ancillary services Restaurant bills, minibar items, laundry, transfers and spa services provided to guests are typically subject to the same VAT rate and must be included in hotel VAT calculations.
• Service charge treatment Mandatory service charges added by the property form part of the VAT base and are therefore taxable. Voluntary tips that are directly distributed to staff may be treated differently depending on accounting practice and guidance.
• Input VAT recovery Hotels may claim input VAT credits for business purchases when supported by a valid Faktur Pajak and proper records, reducing net VAT payable.
• Upcoming rate change A planned increase to 12 percent is scheduled for 2025, requiring hotels to update price lists, systems and invoice templates before the change takes effect.

Operationally, update point of sale systems, issue clear invoices and keep purchase documentation so VAT is tracked correctly. When in doubt, consult a local tax professional to confirm treatment for mixed supplies or exemptions.

How daily rental taxes affect villas and short-stay accommodations

Daily rentals such as villas and short-stay units are subject to the same central consumption rules that apply to hotels. VAT (value added tax) is levied on accommodation fees, ancillary services and mandatory service charges at the national rate of 11 percent, rising to 12 percent in 2025. When VAT applies, hosts must issue a proper Faktur Pajak on request and retain sales documentation so the tax authority can trace taxable supplies.

Local levies add a second layer of cost. Many regencies in Bali impose a hotel or lodging tax commonly set at around 10 percent of the room rate and collected at the point of sale. Some districts also apply fixed tourist levies or environmental fees per night depending on local regulation. These charges are separate from VAT and must be remitted to the regional treasury under local rules.

Practically, this affects pricing, invoicing and cash flow. Owners should calculate the taxable base to include mandatory service charges and packaged services, then show VAT and local levies as distinct line items on the guest bill. Properly recorded input VAT on business purchases can be credited against output VAT, so maintaining valid supplier invoices is essential. If you rent through online travel agents, confirm who is responsible for collecting VAT and local taxes and adjust contracts and pricing accordingly to avoid double charging or shortfalls.

Clear billing, consistent record keeping and timely remittance reduce audit risk and guest disputes. For tailored operational advice, a local specialist can help align billing systems and templates to meet both central and regional tax obligations.

Reporting, invoicing and compliance requirements for Bali accommodation providers

To stay compliant, accommodation providers must align billing and tax reporting with national and local rules so operations remain predictable. The core obligations are proper registration, correct tax invoice issuance, accurate monthly reporting and robust record keeping to support input tax credits and withstand inspections.

Registration and tax invoice issuance

Register as a taxable entrepreneur when supplying taxable accommodation and related services. Issue a formal Faktur Pajak when VAT is charged and include the hotel or villa name, the NPWP (Nomor Pokok Wajib Pajak), the invoice number, the taxable amount, the VAT percentage and the VAT amount. If a corporate guest provides an NPWP, include it on the invoice to help them claim input credits.

Monthly reporting, payments and input tax credits

File VAT returns monthly and calculate the net liability by deducting allowable input VAT from output VAT. Make payments by the statutory due dates to avoid interest and penalties. Keep supplier invoices and customs documents that support input VAT claims and reconcile purchase records with accounting entries so net VAT is accurate and defensible in an audit.

Record keeping, internal controls and audits

Retain sales records, reservation reports, issued invoices and supporting receipts for the period required by law. Use integrated billing systems to match point of sale entries with Faktur Pajak numbers and document the treatment of service charges and voluntary tips. Regular reconciliations and an internal checklist reduce errors and speed responses to tax office queries.

Consistent invoicing, clear documentation and timely filings keep guest relations smooth and minimise enforcement risk. If you need hands-on support with templates, system setup or compliance checks, consider working with experienced local providers such as https://www.balivillahub.com/en to streamline your processes.

Impact of Indonesia's planned 12% VAT increase on hotel pricing and invoices

The arithmetic effect of a rise from 11% to 12% is straightforward, but the practical impact varies by property. For example, if a room rate is quoted exclusive of tax at 100 USD (United States dollar) and no service charge is added, the VAT element increases from 11 USD to 12 USD, so the guest pays 111 USD before and 112 USD after the change. When mandatory service charges are added they form part of the taxable base: a 100 USD room plus a 10 percent service charge creates a taxable amount of 110 USD. VAT at 11 percent equals 12.10 USD and at 12 percent equals 13.20 USD, changing the gross payable from 122.10 USD to 123.20 USD. Smaller independent properties with thin margins may pass the full increase to guests, while larger groups might absorb some of the difference or reprice packages to remain competitive.

On the invoicing and compliance side, hotels must update invoice templates, accounting codes and point of sale settings so the Faktur Pajak shows the new 12 percent rate and the numeric VAT amount separately. Reconcile outputs and inputs in monthly VAT returns and keep supplier invoices to support input credits. Review contracts with online travel agents to confirm who collects taxes and test checkout workflows to avoid unexpected totals for guests. Decide and document a rounding policy for cents and communicate the change to staff and customers in advance. If you prefer practical assistance with templates, system checks or staff training to ensure a smooth transition, <a>https://www.balivillahub.com/en</a> can provide local support to help implement these updates.