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You Could Go to Jail if You Fail to Pay This ONE Cukai!

Updated 22 Oct 2018 – By Caitlyn Ng


When it comes to purchasing a property, you might think you’ve got all the necessary entry costs covered: from the down payment and the Sales & Purchase Agreement (SPA), to the valuation fees and the loan agreement.

Well, not quite! There’s one hidden cost you may not have known about, and that’s the cukai pintu. We’re here to answer some of the frequently asked questions about it, which is also known as the property assessment tax.
 

First, take a good look at a sample of the bill (which would be a distinctive blue in colour):

1) What is this tax about?

It’s a form of compulsory payment that the local authority charges on every home and land owner. The money that’s collected from this tax will be used for the construction and maintenance of all public infrastructure such as buildings, roads and parks. 

It will also be used for cleaning and clearing services (the trash isn’t going to take itself out you know), as well as upgrading works in the area under each city’s/district’s jurisdiction.
 

2) Who will have to pay for it?

All those who privately own one or more of the following will be responsible for the payments:
  • Residential building
  • Commercial building
  • Industrial building
  • Agricultural land
  • Vacant land / plot of land that has yet to be developed

 

3) How is the tax calculated?

This is the part everyone’s probably been looking for. An important thing to note is that the annual value of your tax might be very different from that of your neighbour’s. It’s calculated based on the estimated annual rental value of the property multiplied by a set rate

For the former, it’s the amount that the property can be reasonably rented out for, multiplied by 12 months. For the latter, it’s a figure that’s determined by the local authorities, so it varies.

Here’s a real life example of cukai pintu for a residential building under the jurisdiction of the Kuala Lumpur City Hall (DBKL):



As can be seen, the estimated annual rental value of the property is RM19,200 (RM1,600 x 12) whereas the set rate is 4%. Thus, the amount that needs to be paid for the tax is RM768!

Did you know: If you made any renovations on your property which increased the livable space (sq ft), your cukai pintu will also increase? This is because the estimated annual rental value of the property is based on the built-up and usability of the building.

 

4) How to make a payment?

You can opt to make a single payment, or in two instalments annually. The instalments need to be paid starting from January 1 till before February 28 or 29 (for the period of January to June), and starting from July 1 till before August 31 (for the period of July to December).

The bill will be sent to the registered address of your property. However, if you didn’t get it, then it’s still your responsibility to remember and make the payments on time. “Postman lost/didn’t bring my bill” is not generally considered a valid excuse.

You can make a payment via any of the following methods:
  • In person at the payment counter of your respective city/district council’s office
  • Online banking
  • At the payment counter of either Ambank or Bank Rakyat

 

5) Will I go to jail if  payment is not on time?


Well first, there'll be a notice (Form E) issued to the home or land owner – basically a “gentle” reminder. He/she will then be required to make a payment of the outstanding amount within 15 days from the date of issuance. A penalty fee of RM5 will be charged as well.

And if that STILL fails to get you to pay up, then yes, the local authority will be allowed to issue an arrest warrant to the home/land owner. When that happens, they can also carry out the following actions:
  • Confiscating loose items that are available in the building.
  • Auction the building or land by an auctioneer appointed by the local authority.

 

6) How to be exempted from this tax?

The good news is, this is possible. The bad news is, the exemption is ONLY applicable for the following places:
  • Public place for prayers (house of worship)
  • Cemetery or licensed public crematorium
  • Public school
  • Public place for the purpose of charity or for the purpose of science, literature or fine art
  • For recreation, social or welfare purposes; and not for profit generation


Cukai pintu is a necessary evil

The very process of owning a property isn’t easy, and hidden costs would most likely only complicate your budgeting process. That’s why this article is here to help you get a more accurate amount of the expenses you’ll be taking on. As you can see, cukai pintu is something that’s very straightforward, and it’s beneficial in helping maintain a safe and livable community not just for you, but for everyone.

If you need more help on figuring out some of the other calculations, here’s a handy tool that can help you out!
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