The government has recently announced revisions to the ARF system in Singapore, and it’s not looking good for luxury car owners.
The Budget 2023 speech just concluded earlier this week, and this presents some new changes to the Additional Registration Fee (ARF) system we are currently adopting. Deputy Prime Minister Lawrence Wong has since announced the Land Transport Authority (LTA) will increase the ARF values for new and used cars with an Open Market Value (OMV) of more than S$40,000.
OMV refers to the cost of the vehicle when it reached our shores, and before any COE, import levies, or other taxes are applied to the car.
Now, before everyone grabs their pitchforks and rallies on social media for yet another “give chicken wing, take whole chicken back” debate, if you’re not a luxury car buyer, there is no need to panic. Mainstream cars that make up the majority of car purchases in Singapore will remain fairly unaffected, as your run-of-the-mill Toyota or Honda typically has an OMV of S$20,000 or less.
Conveniently, LTA has already curated a handy chart to document the changes.
If you don’t want to reference the chart, basically with this new scheme, the more expensive your car is, the more you will have to fork out. And don’t think you can escape this either, and this new ARF law is already in effect.
The PARF (Preferential Additional Registration Fee) rebate has also seen some change, and existing car owners can only get up to a maximum of S$60,000 with the new rules. This may or not be a huge factor to you, as in the past, you could get back up to 75 per cent of the vehicle’s PARF if you de-registered your vehicle within five years.
The biggest hitters will be the luxury car market, where most of their stock (even the base products) has an OMV of at least S$30,000. While you won’t see much of a change for a new 2 series, prepare to stomach a lot more for that gleaming 7 series at the back.
For example, if you were to walk in and purchase a Ferrari now, you would have to pay an additional 100% ARF tax, as the car’s OMV exceeds SGD$ 80,000. This translates to roughly another SGD$ 300-450k out of your precious bank account.
Would this shun people away from the ultra-luxury segment of the market? Perhaps, but to some of these owners, forking out another 200k or so isn’t something that is detrimental for them. Singapore has also seen a record number of luxury car sales in recent years, and that trend is set to only head skywards.
The best piece of advice we can give at this point is to prepare your wallets.
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