Before we start, one thing needs to be cleared up: the English translation for cukai petak is not ‘box tax’ but actually parcel rent. Trust us, we’ve Googled done our homework.

Alright, if you haven’t heard by now, a “new” tax system known as parcel rent (cukai petak) for stratified properties in Kuala Lumpur will take effect from Jan 1 next year. Kuala Lumpur will join Selangor, Melaka and Penang which have implemented a similar system.

What is parcel rent?

Parcel rent is the rent (or tax) for a strata title parcel or temporary block calculated based on the square meter of each parcel together with its accessory parcel (if any). Parcel rent is not a new tax; it is the replacement of a quit rent to property parcel owners with strata title.

It will replace quit rent (cukai tanah), and unit owners will have to pay directly to the Federal Territories Land and Mines Office (PPTGWP). Currently, unit owners pay quit rent annually to their respective management corporations (MC) and joint management bodies (JMB), which in turn pay PPTGWP under the master strata title. This is on top of the maintenance fees collected by the JMB and MC.

“Quit rent was designed to cater to landed properties. However, the system is unsuitable for stratified buildings that have become the norm in cities,” said Federal Territories Minister Khalid Abdul Samad, adding that the new system was to account for the changing population demographics which tended towards stratified living.

With parcel rent, property owners will no longer be held back by their errant neighbours who fail to pay up. The implementation of the parcel rent system is seen as a correctional mechanism and to rationalise taxation mechanism to a more systematic, transparent and fair strata development.

How is parcel rent calculated?

Under the new tax, the rate will be determined based on the unit size, property type such as residential, commercial or industrial, and tenure — either leasehold or freehold.

However, low-cost housing and Public Housing Project (PPR) owners will pay a flat rate of RM15 for leasehold and RM20 for freehold, irrespective of parcel size. For medium-end strata residential units measuring less than 1,030sq ft, the owners will pay a minimum rate of RM20 for leasehold and RM25 for freehold.

Check out the video below for a quick rundown, visit the official PTGWP website, or read the FAQs here.