GEORGE TOWN, 19 Sept — The Penang state government has gazetted new land tax rates effective from January 1 next year, involving nearly 370,000 land titles across the state, said Chief Minister Chow Kon Yeow.
The new land tax rate was approved by the National Land Council in 2024, with the review only conducted every 10 years, and the new rate remains unchanged without any increase during that period until a new review is carried out.
He said the percentage increase for the rural housing category was 127.27 per cent and for urban areas 29.63 per cent, while for the industrial category, the increase for urban areas was 151.94 per cent and for rural areas 200.93 per cent.
The announcement was made under Section 101 of the National Land Code via the Penang State Government Gazette No. 37 dated September 11; however, the land tax review does not involve 300,000 strata parcel tax accounts, and they will continue to pay strata parcel tax at the existing rate.
"The residential tax rate will be increased from RM0.54 to RM0.70 per square metre (sq m) with a minimum payment of RM70 per lot for all land in the city, for example, in Jelutong, Tanjong Bungah, Bayan Lepas, Bayan Baru, Balik Pulau, Seberang Jaya, Bukit Mertajam, Bertam, Batu Kawan, and others," Chow said at a press conference at Komtar today.
For rural land, the tax rate for residential properties will be increased from RM0.22 to RM0.50 per sq m, with a minimum payment of RM50.00 per lot. Owners of residential land less than 100 sq m in size will pay a minimum tax rate of RM7 per year in urban areas or RM50 per year in rural areas.
He said the minimum rate includes low-cost homes, low-medium-cost homes, and some of the Rumah Mampu Milik or Rumah Mutiaraku schemes in Penang that are less than 100 sq m in size.
For industrial land, the new land tax rate has been increased from RM1.29 to RM3.25 per sq m, regardless of whether it is urban or rural, while the rate for businesses has been increased to RM3.25 per sq m in urban areas and RM2.80 per sq m in rural areas, with a minimum payment ranging from RM280 to RM325 for land areas less than 100 sq m.
For agricultural land categories, the land tax rate for padi crops, for example, will be increased to RM15 per hectare (ha), oil palm crops (RM99), rubber (RM75), fruits (RM80), and cash crops such as sweet potatoes, corn, and vegetables will be increased to RM40 per ha.
"This means that agricultural land owners, except for durian, will pay a minimum tax rate as low as RM15 per ha starting in 2026," Chow said.
The state government has also introduced new rates for durian crops, which is RM800 for each ha or part thereof, while for pig, poultry, ruminant and aquaculture farming, the new increase is between RM250 and RM750 for the same area.
Several new categories were also introduced under special rates, including golf courses at RM2,500 per ha, RM3.25 per sq m for quarries, RM0.54 per sq m for all Federal government land under the custody of the Federal Land Commissioner, and a nominal rate of RM50 per lot for mosque lands, non-Islamic places of worship (RIBI), and cemeteries.
A new rate for village houses has also been introduced at RM50 per lot, and this rate was introduced to help homeowners in that category pay a minimum rate and not be burdened even if their land area exceeds 100 sq m.
For "first grade, Condition A, B, and C" lands that do not have a stated category and specific conditions, the tax rate to be imposed will be based on current use, and this decision will result in over 200,000 land titles needing to pay tax at the rate based on the current use of the land.
"The decision will also resolve the issue of state government tax revenue leakage for nearly 60 years, in addition to ensuring justice and equality for all land owners and taxpayers in Penang," he said.
Chow noted that to reduce the impact and financial burden on all landowners, a mechanism for tax payment rebates to all landowners of 32.5 per cent will be implemented in 2026, followed by a 20 per cent rebate in 2027 and a 20 per cent rebate in 2028.
The rebate would cause the state government to lose RM80-RM100 million in tax revenue annually from 2026 to 2028. It currently receives RM140 million to RM145 million in land tax revenue, while next year it is expected to receive over RM200 million and over RM400 million after the rebate is no longer available, starting in 2029.
In addition, other incentives include a 100 per cent waiver of fines on outstanding land tax and parcel tax arrears from January 1, 2026, until December 31, 2026, involving RM25 million in fines.
