OTA Commission Tax in Bali: A Hotel and Villa Guide

Main topic: Reviewing OTA commission tax according to the income recipient and platform contract.

Full background: Business Tax Administration in Bali: Bookkeeping, Reporting and Document Controls.

Continue according to your needs: PPh 23 for Hotel and Villa Vendors in Bali: A Finance Guide and Overseas Villa Management Fee Tax: Domestic PPh 26 or Treaty Treatment?.

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Online travel agents, or OTAs, have become a major sales channel for hotels, villas, resorts and accommodation businesses in Bali. However, OTA settlements often complicate tax records because the guest’s payment, platform commission and funds ultimately received in the company’s account can differ.

When analysing OTA commission tax for a hotel or villa, finance should avoid using the net bank settlement as the basis for all records. First establish which legal OTA entity receives the commission, the contract structure, gross guest bookings, platform fees and how the transaction is recorded in company reports.

OTA Commission Tax for Hotels and Villas: Start with the Commission Recipient

The platform’s trading name may not be enough to determine tax treatment. A global OTA may use different legal entities for particular countries or transactions.

Check the party named in:

the OTA agreement;
commission invoices;
settlement statements;
payment documents; and
tax documents provided by the platform.

The first question is whether the commission is paid or becomes payable to an Indonesian resident taxpayer or a nonresident taxpayer.

This distinction matters because the income tax analysis may differ.

Distinguish Gross Bookings, OTA Commission and Net Settlement

As a reconciliation illustration only, suppose a guest makes a booking worth IDR 10,000,000. The OTA deducts a service fee of IDR 1,500,000 and transfers IDR 8,500,000 to the hotel’s account.

Finance needs to distinguish at least three figures:

the guest transaction value of IDR 10,000,000;
the OTA fee or commission of IDR 1,500,000; and
the net settlement of IDR 8,500,000.

This example is not a universal accounting rule. Revenue and expense recognition must still follow the contract’s substance and the company’s applicable accounting policies.

A problem arises if the company records only IDR 8,500,000 without being able to explain its connection to the booking value and OTA fee.

Review the OTA Invoice, Settlement Statement and Contract

Before determining tax treatment, check whether the documents show the OTA acting as an agent, intermediary, marketing service provider, reservation provider or under another relationship structure.

Important information to identify includes:

the legal name of the commission recipient;
the recipient’s country of residence;
the service type under the contract;
the gross service fee;
the commission deduction method;
the transaction period;
refunds and cancellations; and
OTA adjustments or corrections.

Usman Tax discusses general reservation and settlement mechanisms in its article on OTAs in Bali’s hotel and villa businesses. This article focuses on the tax layer associated with commissions.

Domestic OTA Commissions and PPh Article 23

If the fee recipient is an Indonesian resident taxpayer or permanent establishment, PPh Article 23 may be one aspect to examine.

DJP’s official Article 23/26 guidance describes PPh Article 23 of 2% of the gross amount for certain service fees. However, do not apply that rate to every OTA transaction without checking the service type, income recipient, withholding party and any exemption or special treatment.

During a review, finance can check:

Whether the OTA entity issuing the invoice is an Indonesian resident taxpayer.
Whether the hotel or villa has a withholding obligation.
Whether the service falls within Article 23.
The actual gross service fee.
Whether withholding certificates and administrative documents are available.

Do not use the entire guest booking value as the withholding base if it is not the OTA’s service remuneration.

Overseas OTA Commissions and PPh Article 26

If a commission is received by an entity based outside Indonesia, an Article 26 analysis is needed.

DJP’s article on foreign OTA taxation in accommodation businesses explains that foreign OTA services supplied to accommodation businesses may have PPh Article 26 implications.

Under domestic rules, DJP describes 20% of the gross amount for certain income, including qualifying service remuneration received by nonresident taxpayers, unless different treatment under an applicable double tax agreement (P3B) is available.

However, the DJP OTA article was published in 2020, and some treaty procedures mentioned there have developed since then. Use the treaty procedures applicable when the transaction occurs.

Tax Treaty Benefits Must Not Be Applied Automatically

It is not enough to know that the OTA’s country of residence has a treaty with Indonesia.

DJP’s announcement on PMK 112 of 2025 confirms use of the Form DGT format under that regulation for treaty application by nonresident taxpayers. Information and related documents are submitted through Coretax DJP’s SKD WPLN menu. The announcement also preserves the validity, for their stated periods, of qualifying older-format forms issued before the regulation was promulgated.

Before applying treaty benefits, examine:

the income recipient’s country of residence;
the relevant treaty;
income classification under that treaty;
permanent establishment status and presence, where relevant;
Form DGT requirements;
treaty anti-abuse provisions; and
documents valid for the payment period.

The Article 26 treatment should therefore not be determined solely from the OTA’s country without reviewing the documents and treaty provisions.

Analyse Income Tax and VAT on Overseas Services Separately

A single foreign OTA transaction can have more than one tax aspect.

DJP explains that utilising taxable services from outside the customs area within the customs area can still be subject to VAT under the applicable provisions.

Completing the Article 26 or treaty analysis does not therefore automatically resolve all tax obligations on overseas services.

Income tax and VAT require separate analyses.

This article does not specify one universal VAT rate or payment mechanism because the rules, tax base, collection system and transaction characteristics must be checked for the actual period and circumstances.

How Do OTA Commissions Affect Hotel and Villa Revenue Reconciliation?

OTA commission tax issues often begin as accounting reconciliation issues.

A hotel may hold data from:

the property management system (PMS);
OTA dashboards;
settlement statements;
payment gateways;
bank accounts;
the general ledger;
revenue reports;
central tax reports; and
local tax reports.

The figures do not always have to appear identical because each system may show a different transaction stage. What is needed is a working paper explaining how the figures connect.

Reconcile PMS, OTA, Bank and General Ledger Data

A monthly workflow can be:

Extract all completed bookings for the relevant period.
Separate cancellations, refunds and adjustments.
Identify gross bookings for each OTA.
Match commissions with invoices or settlement statements.
Determine the legal OTA entity receiving the commission.
Separate domestic and overseas OTAs.
Review Article 23 or Article 26 where relevant.
Review VAT on overseas services where relevant.
Match net settlements with bank accounts.
Match transactions with the general ledger.
Reconcile revenue data with hotel or villa tax working papers.

For hospitality businesses needing more structured books, Usman Tax’s Bali accounting services page explains its hospitality accounting support.

Monthly OTA Commission Tax Checklist for Hotels and Villas

Before closing, check:

current OTA contracts;
OTA legal entity names;
invoices or commission statements;
gross bookings;
refunds and cancellations;
net settlements;
bank account movements;
income tax working papers, where relevant;
foreign OTA treaty documents, where used;
VAT review for overseas services, where relevant;
reconciliation with the general ledger; and
reconciliation with local tax reports.

This is an internal control recommendation, not a universal mandatory document list from DJP.

The Relationship between OTA Commissions and Hotel PBJT in Bali

OTA commissions must also be distinguished from the obligation to pay PBJT, the tax on certain goods and services, on hospitality services.

Income tax on OTA services is a central tax matter relating to remuneration paid to the service provider. Hospitality PBJT is a local tax on hospitality transactions under the applicable local regulatory framework.

Net settlement after the OTA deducts its commission should not automatically be treated as the sole PBJT reporting amount without reviewing the guest transaction and local provisions.

Bali has multiple regencies and a city, so actual PBJT rates, administration, deadlines and procedures must be verified with the local government where the hotel or villa operates.

For separate background on hotel local tax, see Usman Tax’s Bali hotel PBJT guide.

Mistakes to Avoid

Mistakes that can create OTA accounting and tax problems include:

recording only the net bank settlement;
not separating gross bookings and commissions;
assuming every OTA uses an Indonesian entity;
automatically applying Article 23 to a foreign OTA;
using treaty benefits without suitable documentation;
ignoring VAT analysis for overseas services;
mixing guest refunds with OTA commission expenses;
not updating OTA legal entity information in contracts;
not reconciling the PMS with settlements; and
using net settlements as the basis for all reports without analysis.

The most fundamental problem is often not the formula but the company’s inability to show the transaction flow from a guest booking to the bank account and general ledger.

Conclusion

OTA commission tax for hotels and villas in Bali cannot be determined solely from a platform name or the amount received in the bank. First establish the legal entity receiving the commission, whether it is domestic or overseas, the actual service fee and the supporting documents.

For domestic OTAs, Article 23 may need analysing. For overseas OTAs, review Article 26, possible treaty application under current procedures, and VAT on overseas services separately.

Reconciling gross bookings, commissions, refunds, net settlements, bank accounts and the general ledger provides the foundation for traceable and supportable tax treatment.

Need an OTA Commission Tax and Reconciliation Review for a Hotel or Villa in Bali?

If gross bookings, platform commissions, OTA settlements, bank accounts and the general ledger cannot be reconciled clearly, a review before the next reporting period can identify where accounting corrections or further tax analysis are needed.

Usman Tax provides tax reporting and accounting services for hotels and villas in Bali. A consultation can address OTA transaction structures, documentation, reconciliation and tax treatment requiring evaluation according to the company’s circumstances.

Read Also: Hotel Tax Reporting Services in Bali: Professional Support for Hospitality Tax Compliance

FAQ OTA Commission Tax

What is OTA commission tax for hotels and villas?

It refers to tax aspects of the remuneration or service fee an OTA receives from a hotel or villa. Treatment depends on the recipient, tax residence, contract, service type and transaction structure.

Are domestic OTA commissions subject to Article 23?

Article 23 may apply when the recipient is an Indonesian resident taxpayer or permanent establishment and the service meets the Article 23 criteria. Check the withholding party, service type and gross amount first.

What is the general Article 23 rate for certain services?

DJP describes 2% of the gross amount for services within Article 23. Applying it to OTA commissions still requires examining the service, recipient, withholding party and possible exemptions.

What if OTA commission is paid to an overseas company?

Analyse Article 26. Under domestic rules, certain service remuneration to nonresident taxpayers can be subject to 20% of the gross amount, but the result can differ if a treaty applies and all conditions are met.

Does a treaty automatically reduce Article 26?

No. Check the relevant treaty and satisfy its application requirements. Current procedures involve Form DGT under PMK 112 of 2025 and the Coretax SKD WPLN service, including the transitional validity rules for qualifying older forms.

Can overseas OTA services also be subject to VAT?

Yes. Utilising taxable services from outside the customs area within it can create VAT obligations. Analyse VAT separately from Article 26 using the provisions applicable to the transaction period.

Is recording the OTA’s net settlement enough?

It is not a sufficient approach. Finance needs to explain gross bookings, commissions, refunds or adjustments and net settlements. Net settlement only shows the funds transferred and does not always represent the entire transaction.

Should OTA reports be reconciled with bank accounts?

Yes. As an internal control, reconcile settlements with bank accounts and the general ledger so differences can be explained and transactions are neither omitted nor duplicated.

Is net OTA settlement the hotel PBJT base in Bali?

Do not assume this automatically. Hospitality PBJT is a local tax, and its reporting basis requires analysis of consumer transactions and the regulations applicable in the business’s regency or city.

When should a hotel or villa request a professional OTA transaction review?

Consider a review when using multiple OTAs, dealing with foreign platforms, struggling to reconcile bookings with bank receipts, paying material commissions, using treaty benefits, or facing uncertainty over income tax and VAT on platform fees.

Sources and References

Usman Tax