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To make vehicle taxes 'more progressive', cars with an OMV upwards of $40,000 are set to be saddled with substantially higher additional registration fees.

14 Feb 2023 | Local News : Singapore

Luxury cars are set to become more expensive in Singapore. 

Last year's annual Budget brought with it the shocking news that a record 220% Additional Registration Fee (ARF) rate would be imposed on cars with an open market value (OMV) upwards of $80,000. Still, that appeared to have made minimal impact on ultra-luxury and supercars, for which demand appeared to hold relatively steady against a market-wide slump in 2022

Supercars were most affected with last year's change, but the changes now appear to be targeting 'mid-range' luxury cars more acutely too
Nonetheless, it seems that this has not been lost on the authorities. On 14 February 2023, as part of a slew of policy amendments under the 2023 Budget, an even more drastic revision of the ARF system - with an additional tier in the mid-upper range - was announced. The changes are already set to impact the next COE bidding round, which is on 22 February 2023. 

On the furthest end of the spectrum, cars with an OMV of above $80,000 will be hit with an even harsher incremental ARF rate of 320% on the final tier, or 100% more than the outgoing rate.

Crucially, however, the new measures now include a previously untouched group - 'mid-to-upper tier' luxury cars, whose OMVs fall within the $40,001 to $80,000 range. 

The updated ARF system is reflected in the table below:

Outgoing ARF Banding Outgoing rate
First $20,000 of OMV 100% of OMV
Next $30,000 of OMV
(i.e. $20,001 to $50,000)
140% of OMV
Next $30,000 of OMV
(i.e. $50,001 to $80,000)
180% of OMV
Above $80,000 of OMV
(i.e. $80,001 and above)
220% of OMV
New ARF Banding New rate
First $20,000 of OMV 100% of OMV
[NEW] Next $20,000 of OMV
(i.e. $20,001 to $40,000)
140% of OMV
[NEW] Next $20,000 of OMV
(i.e. $40,001 to $60,000)
190% of OMV
[NEW] Next $20,000 of OMV
(i.e. $60,001 to $80,000)
250% of OMV
[NEW] Above $80,000 of OMV
(i.e. $80,001 and above)
320% of OMV

Buyers of mass market models - like the Kia Cerato - will not be affected by the changes 
If all this sounds extremely confusing to you at the moment, fret not - you're probably not alone. So let's break it down in terms of cars. 

Most of our mass market models, like the Toyota Corolla Altis Elegance (OMV of $21,508) and Hyundai Avante Elite (OMV of $21,741) are unaffected. Even slightly more expensive cars, like the Honda CR-V 7-Seater (OMV of $34,723) and BMW 2 Series Gran Coupe (OMV of $33,581) elude the changes. 

Move up the mid-tier, however, and things start to change. Merc's E-Class sedan, in E200 Exclusive trim (OMV of $55,314), will now see its ARF rise by nearly $6,000 thanks to the new tiers. 

Mid-range EVs, such as Tesla's Model 3, will also be affected. The AWD Performance variant of the electric sedan (OMV of $73,984) should see its ARF shoot up nearly $16,000 with the new system, ceteris paribus. 

Expect yet another six-figure rise in the ARFs of ultra-luxury and supercars/super SUVs
The story continues the further along one moves in the price range. The 3.0-litre variant of Audi's flagship A8 sedan (OMV of $79,392) will see its ARF shoot up nearly $20,000. BMW's latest 7 Series (OMV of $103,000)? A more-than $40,000 increase. 

Finally, Sgcarmart doesn't have access to the OMVs of most supercars listed on our site, but following the USD$190,000 estimated retail price of the Aston Martin DBX707 (Source: Car and Driver) would put the super-SUV's OMV in Singapore at around $252,000. Using this figure as the rough gauge, its ARF would jump a whopping $192,000 under the new system.

Apart from raising the ARF rates for new cars, rebates are also set to be slashed for cars when owners decide to de-register them. Whereas rebates previously could go up to 75% of a car's paid ARF, they will now be capped at a ceiling of $60,000.

In effect, this means that $60,000 is as much as one can expect to get back from the de-registration of their vehicle, no matter how much one paid for its ARF.

The changes are reflected in the table below: 

Age of vehicle at deregistration PARF rebate amount (old) PARF rebate amount [NEW]
No more than 5 years 75% of ARF paid 75% of ARF paid or $60,000 (whichever is lower)
Above 5 but not more than 6 years 70% of ARF paid 70% of ARF paid or $60,000 (whichever is lower)
Above 6 but not more than 7 years 65% of ARF paid 65% of ARF paid or $60,000 (whichever is lower)
Above 7 but not more than 8 years 60% of ARF paid 60% of ARF paid or $60,000 (whichever is lower)
Above 8 but not more than 9 years 55% of ARF paid 55% of ARF paid or $60,000 (whichever is lower)
Above 9 but not more than 10 years 50% of ARF paid 50% of ARF paid or $60,000 (whichever is lower)
More than 10 years NIL NIL
The moves come as part of a larger effort to implement what the authorities have called a 'progressive vehicle tax system' to Singapore's car market.

Broadly aimed at tackling inequality, progressive tax systems set out to shift the incidence of taxes to those with a higher ability to pay.

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