Buyers of high-end cars will soon have to contend with higher taxes and fees.
This announcement during Finance Minister and Deputy Prime Minister Lawrence Wong's Feb. 14 Budget speech comes on the back of the new tax structure announced at last year's Budget, which saw a new additional registration fee (ARF) tier for vehicles with open market values (OMVs) of above S$80,000.
The OMV refers to the approximate cost of a vehicle before taxes.
Still scope to be more progressive
Wong said that despite last year's adjustments to vehicle taxes, "there is still scope to make them more progressive".
As such, ARF rates will be further tiered to differentiate between higher-end cars.
"Buyers of cars with Open Market Value, or OMV, of more than S$40,000 will pay higher marginal ARF rates than they do today, and in particular, for the highest OMV tier, the revised ARF rates will be 320 per cent — up from 220 per cent today," said Wong.
The changes will apply to all cars registered with Certificate of Entitlements (COE) obtained from the next COE bidding exercise from Feb. 20 to 22, 2023.
For cars that do not need to bid for COEs, the revised structure will apply for those registered from Feb. 15, 2023.
Currently, users of eligible cars and taxis may enjoy a Preferential ARF rebate when deregistering their vehicle.
Calculated as a percentage of the payable ARF, this rebate may be encashed, used to offset taxes and fees for a new vehicle, or transferred to another party.
To "avoid providing excessive rebates to more expensive cars when they are deregistered", the government will cap these rebates at S$60,000, Wong said.
It will kick in at the same time as the new ARF rates.
Will generate S$200 million in tax
These changes are expected to affect the top one-third of cars by OMV, with cars with lower OMVs of S$40,000 or less remaining unaffected.
Wong added that the ARF change is expected to generate about $200 million in additional revenue per year, although the actual amount will depend on the state of the vehicle market.
Top photo by Emanuel Ekström via Unsplash