Quick Guide to Quit Rent (Cukai Tanah)

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You’ve just probably exhaled an air of relief after securing that housing loan, signing the deal, getting the keys, and making the necessary touch-up to finally settling in. Then, there comes a streak of taxes awaiting your newest asset. 

Tax, like in many other countries, is a fundamental revenue for a government to implement an array of national interest activities, or simply put, to keep the country running. While we understand property-related taxes vary in forms, functions and purposes, this article intends to walk you through and thoroughly the essentials of Quit Rent (Cukai Tanah). 

Do I Need to Know About Quit Rent?

That’s definitely a yes! Especially when either a piece of land or property becomes a possession of yours, the law of the country says: “Hey there, you gotta pay your Quit Rent, and remember we do come back every other year!” 

Let’s begin by pointing out the obvious that National Land Code (1965) and States’ Land Rules are the two primary laws empowering the state government over land-related issues, including quit rent. 

This means, quit rent is an annual commitment taxed upon your ownership over a piece of land or a house (properties). According to the National Land Code (1965), it is a legal obligation to ensure the quit rent is paid within the stipulated timeline. 

Is There a Due Date for Quit Rent?

Quit rent is an annual recurring payment charged once a year. The billing cycle is usually between 1 January to 31 May and the typical deadline of quit rent is the 31st May of each year as stated in Section 94(2) of the National Land Code (1965). Failing which, shall be considered an arrear.   

Can I just Buat Tak-Tau About My Quit Rent?

Well, it’s not suggested. In most circumstances, the number of days late is used to determine late payment penalties by the state government in accordance with the State’s Land Rules. 

According to the National Land Code (1965), quit rent defaulters will face harsh penalties or punishments in case of missed payments. Regretting much later is rather useless and even worse, costlier. The overview of the penalties or punishments is as follows. 

A notice and a fine are sent to first-time quit rent defaulters as a reminder and a cautionary measure. Unpaid tax arrears and outstanding fines (if any) will be carried on to the following bill cycle. This will certainly put you in a disadvantage position as quit rent defaulters will no longer be able to associate themselves with any transactions involving the land or property. The property cannot be subdivided, developed, transferred, leased or mortgaged by you even though it’s still under your name. 

A court can issue an arrest warrant that will result in your arrest if it is discovered that you have been consistently skipping payments or failing to pay the outstanding quit rent. In addition, the arrest warrant issued to the detainee would result in a 10% increase in the pending tax amount. 

It definitely doesn’t stop there. Sections 93 and 100 of the National Land Code (1965) grant state authorities the power to seize lands and any goods discovered in the building or property with overdue quit rents. The state agency has the authority to appoint an auctioneer and put up a property auction process if things went out of hand. 

Despite this, the act of seizing falls under the prerogatives of the state government and its related agencies where a number of factors are thoroughly assessed before such a significant step is taken. 

The Pahang state government issued a preliminary warning to Quit Rent defaulters in 2019, that their land might be seized if the property owners have been evading the tax for more than five (5) years. Those with proven difficulties and are unable to maintain a sustainable income are exempted from the possibilities of land forfeiture.  

I’m Bad at Maths, Do I Need to Self-Calculate my Quit Rent?

Lucky you! Practically a property owner is neither burdened nor compelled with self-calculation each and every time the due is around the corner. 

But the formula goes like this. The total quantity of your land is incorporated for chargeable taxation. Suppose your property is 1800 square feet and the current rate is RM0.035 psf. By multiplying both (1,800 square feet x RM0.035), RM63.00 shall be your payable quit rent. 

Let us also be clear that the rate varies according to several factors. This comprises the state, the type of property, and the location. Quit rent for land or properties in metropolitan cities like Klang Valley, Penang and Johor Bahru are naturally higher, while it is often cheaper if your property is located in semi-urban or rural localities. On the other hand, commercial property could command a greater rate of quit rent than residential property. 

A fun fact: In 2016, the Sarawak state government abolished the practice of quit rent. Quit rent would not also be applicable for property owners with residential and agricultural purposes if their total land size did not exceed 100 acres or 40.47 hectares. 

Is There a Website That Allows Me to Check My Quit Rent?

You can access it on the Pejabat Tanah dan Galian (PTG) or the Land and Mines Office’s official website but the website address differs according to the state. The majority of these state websites give detailed user instructions on how to handle features of these websites, payment channels and the status of their land. For quit rent, details such as account number or lot number are needed, available in the quit rent bills sent earlier. 

If you haven’t gotten any of the bills yet, don’t panic; you can complete an online registration on the state’s website to obtain the necessary information. Refer to Johor’s Land and Mine Office or Pahang’s as examples.  

Or else, mobile applications of many of these state offices are now available for download through Google Playstore, Apple App Store and Huawei AppGallery. PgGov Cukai by Pulau Pinang is available in Google Playstore. 

Do I Need to Walk in to Pay My Ruit Rent?

Not necessarily. Most of the state authorities operate a workable website or mobile applications which allow property owners to make online transactions but are subject to the availability of such services. 

For instance, the Selangor Land and Mining Office allows several payment methods, including cash or money orders, postal orders, bank drafts, credit cards, and debit cards exclusively made payable to BENDAHARI NEGERI SELANGOR; crossed account payee only. Details of yourself range from name, identification card number, address of the payee, information about the land title (title or lot number) and the district of the title if you are paying via money order, postal order or a Bank Draft. 

Ensure that Popup Blocker is disabled when you are making a payment through a web browser and do not close the “pop-up page” if it’s an FPX transaction as the Land and Mining Office bears no responsibility if you are unable to access, view or retrieve the payment receipt.

It is advised to retain the receipt as a verification of your payment. You can also visit the state Land office to print the payment receipt if you’ve encountered any problems.

Pos Online,  FPX bank transfers and Credit Cards are legitimate payment methods too. Alternatively, one could also walk in to Pos Malaysia, Local District Council or Land Office to make payments. 

Land Offices in different states may use specific banks to process the payments, so property owners are suggested to do a prior check on their website for further information or dial up the Land Office’s hotline. 

Who Has to Pay Quit Rent?

Owners of both freehold and leasehold landed properties in Malaysia irrespective of states (except Sarawak) are obliged to pay quit rent to the respective state authority. If your property is in Perak, it goes without saying that the payment should be directed to Perak Land’s Office. These land offices are typically set up in each and every district of a state.

Quit Rent and Parcel Rent, Aren’t they the Same?

A misconception about quit rent and parcel rent (Cukai Petak) is a common scenario. The latter was formulated for those who own units in stratified properties featuring shared facilities, referring to apartments, flats, guarded landed property and condos including specific landed properties (e.g. townhouses) to their name. 

Initially, the Management Corporations (MC) or Joint Management Body (JMB) were the bodies responsible for quit rent of strata properties. The mechanism was for either MC or JMB to upfront the annual quit rent and the reimbursement comes in the form of maintenance fees by unit owners. It was a recurring cost split equally between the unit owners. There were concerns about the system and recurring defaulters were identified.

With the adoption of the Strata Management (Amendment) Act 2013, quit rent for strata properties was replaced and parcel rent was established, allowing for direct transactions between the owners and state authorities. The modification has resulted in a higher parcel rent for people who previously paid a lower amount while it was still a quit rent. Since the prior approach evenly distributes the tax rate across the unit owners, this additional payment was to be expected. 

Let’s assume that a condominium has 12 similar-sized lots totalling 15,000 square feet in total. Under the original calculation (RM0.005 psf x 15,000sq ft), the quit rent adds up to RM750. One must only pay RM62.50 when it is distributed among 12 unit owners (RM750/12). 

Since the idea of a collective tax rate divided equally has been substituted, each parcel owner is now obliged to pay RM 750 which is the total square footage of the entire building. We can only imagine the dissatisfaction amongst the parcel owner although the measure was deemed beneficial to the state authorities. 

Because of the power granted to the Land offices, it is believed that this modification to the payment mechanism would decrease the number of defaulters, easing the process of selling or transferring strata units. Most of the states who have shifted to parcel rent for stratified properties are experiencing significant benefits since then. 

Conclusion

As we conclude, let us quickly summarise the key takeaways from the above article. 

• A property owner (indifferent of type) is lawfully obligated to pay the quit rent imposed on a yearly basis. 
• Bill cycle begins on January 1st and ends on 31st May of each year. 
• Any attempts to deceive or unreasonably delay would not be entertained by the authorities. 
• Hefty fines and/or incarceration could be a result of such delinquency. Including land and goods to be seized.
• Payment methods and channels vary by state.
• Payments can be done online, with cash, mobile apps, money order etc. 
• Each state has their own website with comprehensive guidelines. 

Now, we believe that understanding a tax structure such as a quit rent is no longer that difficult. As a property or land owner, one has the responsibility and legal obligation to be well versed in the dynamics of a tax system, particularly those pertaining to land and property. 

Hopefully, this article was able to give you, the readers, who were made up of property or land owners and future owners, answers to the most often voiced queries and concerns about quit rent. Detailed information may be found on the websites of these state authorities, and keep an eye out for any new developments. If you know any of your friends or families puzzled by the jargon and calculations around quit rent, the share button is right above!