Budget 2023: Higher marginal ARF rates for cars with OMV of more than S$40,000

RATES of the Additional Registration Fee (ARF) – a tax imposed when a vehicle is being registered – will be adjusted by up to 100 percentage points to better differentiate between higher-end cars.

For the portion of open market value (OMV) in excess of S$80,000, the rate will be adjusted to 320 per cent of the OMV, from 220 per cent currently.

On the lower end of the impact, the portion of OMV between S$40,001 and S$60,000 will now be subject to an ARF rate that is 190 per cent of the OMV.

Currently, the rate for the portion of OMV between S$50,001 and S$80,000 is 180 per cent of the OMV, while the rate for the portion of OMV between S$20,001 and S$50,000 is 140 per cent of the OMV. (*see amendment note)

All in all, the changes are expected to affect the top one-third of cars by OMV. Buyers of cars with an OMV of S$40,000 or less will not be affected.

Finance Minister Lawrence Wong announced this in his Budget speech on Tuesday (Feb 14) as part of adjustments to Singapore’s tax regime in addition to last year’s “major enhancements”.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

In Budget 2022, the Government had moved to impose an additional levy on luxury cars, on top of raising the personal income tax rate for top income earners and adjusting property taxes.

Wong, meanwhile, said preferential ARF rebates will be capped at S$60,000 to avoid providing excessive rebates to more expensive cars when they are deregistered.

Today, the preferential ARF rebates are sized as a percentage of the payable ARF. 

The new ARF structure and the preferential ARF cap will apply to all cars registered with COEs obtained from the second round of COE bidding later this month.

For vehicles that do not need to bid for COEs, such as taxis, the new ARF structure and preferential ARF cap will apply to those that are registered on or after Feb 15.

The ARF change is expected to generate about S$200 million in additional revenue per year, but the actual amount will depend on the state of the vehicle market, Wong said.

*Amendment note: An earlier version of this story misstated the adjustments to ARF. The rate hikes are for OMV bands, and does not apply to the entire value of the vehicle, as pre An earlier version of this story misstated the adjustments to ARF. The rate hikes are for OMV bands, and does not apply to the entire value of the vehicle, as previously implied.