PENANG is lowering tax rates for certain First Grade lands with only temporary structures, such as depots and lorry yards, says Chief Minister Chow Kon Yeow.
He said landowners in this category will pay 70sen per sq metre (sqm) for urban land and 50sen per sqm for rural land.
Previously, some of these lots were assessed at higher commercial or industrial rates ranging from RM2.80 to RM3.25 per sqm.
Chow said the revised rates are now categorised as “building”, covering First Grade land without planning approval.
He added that the First Grade land under these categories would not receive the previously announced 50% rebate as the reclassification has already significantly reduced the tax payable.
He stated that to date, there were more than 800 cases involving land used for industrial purposes without planning approval.
“We hope this will help address concerns over rising land taxes.
“Land is valuable in Penang, and landowners who wish to contribute to the state’s development should develop their land through proper legal processes to generate economic activity,” he said at a press conference in Komtar.
First Grade land in Penang is a legacy of the Straits Settlement colonial period.
It granted freehold and legally flexible land title restricted to Penang and Melaka under the National Land Code (Penang and Malacca Titles) Act 1963.
Chow said the state had received 4,001 appeals on land tax charges as of March 31.
Of these, 2,885 were related to sharp increases, including cases involving First Grade land and land reclassified from rural to urban status.
Another 1,116 appeals involved technical issues, such as buildings spanning two lots, abandoned projects and applications from non-profit organisations.
He added that 163,262 land account holders – more than 54% of last year’s active taxpayers – had already paid their land tax as of March 31.
The state government previously said that land tax rates had not been reviewed for about 30 years, with the last revision done in 1994.
Under the Penang State Land Rules gazetted on Sept 11, 2025, industrial land is taxed at RM3.25 per sqm statewide, while commercial land is taxed at RM3.25 per sqm in urban areas and RM2.80 per sqm in rural areas.
Penang has about 230,000 plots with First Grade titles, including 126,516 residential lots, 35,624 agricultural, 28,015 commercial, 13,737 village housing and 3,499 industrial plots.
The revised rates had sparked concern among landowners, particularly those with older titles and temporary-use sites, after some saw sharp increases in payable amounts.
The issue has drawn widespread criticism in recent weeks.
