Parf rebate reduction not expected to change COE renewal behaviour: MOT
Fewer than 2,000 car buyers were affected by the changes, says Acting Minister for Transport Jeffrey Siow in Parliament
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[SINGAPORE] The reduction in the Preferential Additional Registration Fee (Parf) rebate is not expected to change Certificate of Entitlement (COE) renewal behaviour, said Acting Minister for Transport Jeffrey Siow in Parliament on Wednesday (Mar 4).
He was responding to a question from Victor Lye, MP for the Buangkok-Fernvale South division of Ang Mo Kio GRC, on whether the studies were conducted to research the impact of the change on car depreciation rates, new car demand and COE renewal behaviour.
Siow said that the Parf rebate was designed to encourage the renewal of the vehicle population to keep the fleet younger, and therefore safer and less pollutive.
“With electric vehicles becoming more commonplace, there is now less of a need to encourage early deregistration through the Parf rebate. This is why we lowered the Parf rebate, and also reduced the rebate cap from S$60,000 to S$30,000. We do not expect the changes to affect COE renewal behaviour significantly,” he explained. Siow also revealed that fewer than 2,000 car buyers had been affected by the change, most of which were buyers of higher-end internal combustion engine cars.
The Parf rebate reduction was announced on Feb 12 at Budget 2026, and took effect on all cars registered from Feb 20 onwards. The Parf rebate was lowered by 45 percentage points and the rebate cap changed to S$30,000 from S$60,000. Industry observers said that it may spur more COE renewals and increase the cost of ownership of cars as well as other related costs.
“The recent changes to vehicle taxes were implemented with immediate effect, in line with our general approach on market-sensitive tax changes. In this case, it was to avoid bidders rushing to market, or distorting the COE market,” said Siow.
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Lye had asked if transitional measures were considered to mitigate unintended financial impact on car buyers who had planned their purchases based on the previous depreciation framework.
Poh Li San, MP for Sembawang West SMC, had asked what recourse there is for buyers who have purchased new cars but have not yet registered their Certificates of Entitlement before Feb 6.
“Buyers with existing purchase agreements who have yet to secure a COE may wish to discuss with their dealers to come to a mutually acceptable agreement. We understand some dealers have already made alternative arrangements with affected buyers,” added Siow.
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