balivillacareTax on the management fee: VAT, PPh 23, and which one applies to you
Key takeaways
- The guest's stay carries the regency hotel tax, not VAT: hotel services are outside VAT. The management fee is a different service and is not.
- A VAT-registered manager adds VAT to the fee, at an effective 11%. Registration is required above IDR 4,800,000,000 a year of supplies.
- An owner holding the villa through an Indonesian company withholds 2% of the gross fee for management services.
- A private individual owner withholds nothing unless designated by the tax office.
- On an IDR 20 million monthly fee: IDR 2.2 million of VAT if the manager is registered, and IDR 400,000 withheld if the owner is a company.
Most owners look at a management fee as a percentage. Indonesian tax law looks at it as a service invoice — and depending on who sends it and who pays it, that invoice can carry VAT on top, and income tax taken out.
Seven words on a management invoice
The terms that decide what the fee actually costs.
| Term | What it is | What it means for the fee |
|---|---|---|
| PPh 23 | Income tax withheld by the payer on service fees. | 2% of the gross fee, withheld by a company owner. |
| Jasa manajemen | Management services. | Named in Pasal 23 itself. |
| Pemotong pajak | Withholding agent. | A PT paying the fee is one; a private individual usually is not. |
| PPN | Value added tax. | Charged on the fee by a VAT-registered manager. |
| PKP | VAT-registered business. | Required above IDR 4,800,000,000 a year of supplies. |
| PBJT | The regency tax on the guest's stay. | Charged on the booking, not on the fee. |
| Bukti potong | The withholding slip. | What the manager receives for the 2% withheld. |
Two different services, two different taxes
The guest's stay: hotel tax
The VAT law lists services it does not tax. Since the 2021 amendment one of them is hotel services: renting rooms or space at hotels that are objects of regional tax (Pasal 4A(3)(l)). A villa booking carries the regency's hotel tax instead — the tax on the rent.
The manager's fee: VAT
Management services are not on that list. So the fee the manager charges the owner is an ordinary taxable service. A manager registered for VAT charges it; the statutory rate is 12%, applied to 11/12 of the price, an effective 11%.
Who has to register
A business whose taxable supplies exceed IDR 4,800,000,000 a year in a financial year must register as a PKP by the end of the following month (PMK 197/2013, Pasal 4). Below it, a manager is a small business and need not charge VAT. Whether yours does is on its invoice.
Four taxes along one booking
The confusion is understandable, because a single booking touches four different taxes, each on a different amount and each owed by a different party.
| Charged on | Who bears it | Rule | |
|---|---|---|---|
| Regency hotel tax (PBJT) | What the guest pays | Collected from the guest | At most 10%, UU 1/2022 Pasal 57-58 |
| Final income tax on the rent | The owner's gross rental income | The owner | 10%, PP 34/2017 |
| VAT on the management fee | The manager's fee | The owner, as a cost | 11% effective, if the manager is a PKP |
| PPh 23 on the management fee | The manager's fee | The manager, withheld by a company owner | 2%, UU PPh Pasal 23 |
Only the first is visible to the guest. The other three sit between the owner and the manager, and only one of them — VAT — makes the fee more expensive. What else comes off a booking.
Not sure what your manager's invoice should carry?
Tell us which part of Bali the villa is in. Five questions, and your details are the last step.
PPh 23: when the owner withholds
The rule
Pasal 23 of the income tax law requires certain payers to withhold 2% of the gross fee for technical, management, construction, consulting and other services paid to a resident taxpayer (Pasal 23(1)(c)(2)). If the recipient has no tax number, the rate doubles (Pasal 23(1a)). The 2021 amendment did not change Pasal 23.
Who withholds
Government bodies, resident corporate taxpayers, event organisers, permanent establishments and representatives of foreign companies. A resident individual withholds only if the Director General of Taxes designates them (Pasal 23(3)). In practice that splits owners in two:
- Owner through a PT PMA or other Indonesian company: withholds 2%, pays it over, and gives the manager a withholding slip. Owning through a PT PMA.
- Private individual owner: no withholding, unless designated.
Rent paid by a company
The same logic runs through rent. A company paying rent for land or a building withholds the 10% final tax on it; otherwise the landlord pays it (PP 34/2017, Pasal 3). What that means for a leasehold.
One month's fee, worked
An illustration of the arithmetic, not any manager's fee: a monthly management fee of IDR 20,000,000.
| Private owner, small manager | Company owner, VAT-registered manager | |
|---|---|---|
| Fee agreed | IDR 20,000,000 | IDR 20,000,000 |
| VAT, effective 11% | — | + IDR 2,200,000 |
| PPh 23 withheld, 2% | — | − IDR 400,000 |
| Cash paid to the manager | IDR 20,000,000 | IDR 21,800,000 |
| Paid to the tax office by the owner | — | IDR 400,000 |
How the withholding base treats VAT is set in the tax office's own regulations, not in the articles read here. For a company owner the VAT may be creditable, depending on its own VAT position. That is a question for its tax adviser, not a rule this page can state.
What to check on the contract
- Whether the fee is quoted before or after VAT.
- Whether the manager is a PKP, and its tax number, for the withholding slip.
- Who files what — every line on a statement and the contract clauses.
What this page does not cover
- A manager based outside Indonesia. Payments abroad are taxed under a different article, not read here.
- VAT crediting. Depends on the owner company's own position.
- Tax on the owner's rental income. A separate page.
Common questions
Is there VAT on a villa management fee in Indonesia?
A management fee is a service the VAT law does not exclude; hotel room rental is excluded because it carries the regional hotel tax instead (UU PPN, Pasal 4A(3)(l), as amended by UU 7/2021). A manager registered for VAT charges it on the fee, at an effective 11%. A manager below IDR 4.8 billion a year of supplies need not be registered (PMK 197/2013).
Do I have to withhold PPh 23 on the management fee?
If the villa is owned through an Indonesian company, yes: a resident corporate taxpayer withholds 2% of the gross fee for management services (UU PPh, Pasal 23(1)(c)). A private individual owner withholds only if designated by the Director General of Taxes.
What if the manager has no tax number?
The withholding rate is 100% higher — 4% instead of 2% (Pasal 23(1a)).
Is the guest charged VAT on the booking?
No. Room rental that is an object of the regional hotel tax is outside VAT; the guest's stay carries the hotel tax instead.
Does the 2% reduce the fee?
It is withheld from the payment and credited to the manager's own tax. The fee agreed is unchanged; the cash paid over is the fee less 2%, with a withholding slip.
Sources cited on this page
- UU No. 36 Tahun 2008 — income tax law, Pasal 23
- UU No. 7 Tahun 2021 (HPP) — VAT law, Pasal 4A
- PMK No. 197/PMK.03/2013 — the VAT small-business threshold
- PMK No. 131 Tahun 2024 — the effective VAT rate
Every figure above was read from the source it is attributed to on 20 September 2026. How we check this.