Rating or assessment is a local government tax imposed on holdings (real property) within a local authority area for the services rendered by the Local Authority. The power to impose rates are provided for in the:
- Local Government Act 1976 (Act 171) for Peninsular Malaysia;
- Local Government Ordinance 1961 (Sabah No. 11 of 1991); and
- Local Authorities Ordinance 1996 for the State of Sarawak
BASIS OF TAX
Rates imposed by Local Authorities are based on the Annual Value of the property with the exception of the State of Johor which adopts Improved Value.
Annual Value means the estimated gross annual rent at which the holding might reasonably be expected to let from year to year with the landlord paying the expenses of repair, insurance, maintenance or upkeep and all public rates and taxes.
Improved Value means the price that an owner willing and not obliged to sell might reasonably expect to obtain from a willing purchaser with whom he was bargaining for the sale and purchase of the holding.
TYPE OF RATES
Under the Local Government Act 1976, Local Authorities may impose the following rates:
- Consolidated rate or annual rate in accordance with Section 127; and
- Drainage rate in accordance with Section 132
RATE OF TAX
Rates charged are based on a certain percentage of the Annual Value or the Improved Value. This percentage may be varied from year to year by the Local Authority with the State Authority’s approval and is subject to the following maximum percentage rates :
|Type of Rates||
Basis of Valuation
|Annual Value||Improved Value|
|Consolidated Rate or Annual Rate||35%||5%|
The Local Government Act also provides for the use of different rates based on the location or use of the property.
The responsibility for the determination of Annual Value/ Improved Value, percentage rate and the collection of rates lies with the respective Local Authority.
Revaluation of all holdings is done once every five (5) years or within such extended period as determined by the State Authority.
ROLE OF THE VALUATION AND PROPERTY SERVICES DEPARTMENT (JPPH)
Upon request by the Local Authority, JPPH provides the following services:
- Setting Up Of A Valuation Unit;
- Update The Valuation List;
- Valuation Of Property;
- Attend Objection Hearings; and/or
- Attend Court Proceedings As An Expert Witness