Budget 2023’s Car Tax Announcements Doesn’t Make For Pleasant Reading For Luxury Car Buyers

It’s the time of the year again when Singaporeans keep their eyes glued on any news related to Budget announcements. For aspiring car owners, not only do they have to contend with sky high COE premiums, varied Additional Registration Fees (ARF) tiers introduced during last year’s Budget announcement steered steadily towards the tax the rich movement. The ship has shown no signs of changing its course of direction - in fact, luxury car buyers will be paying even more ARF-derived taxes for their new whip.

ARF rates will be adjusted by up to 100%. For a start, cars with an Open Market Value (OMV) of more than S$40,000 (and less than S$60,000) will have to stomach an ARF that’s 190% of its OMV. Previously, the ARF rate was 140% if your vehicle’s OMV was valued from S$40,001 to S$50,000, and 180% of ARF would be levied if your car’s OMV fell between S$50,001 and S$80,000.

This is where new car buyers start to feel more “burn” in their pockets - for OMV that’s worth between S$60,001 and S$80,000, they’ll have to fork out a mouthwatering 70% more ARF (250% vs 180%). And for the icing on the cake, cars with OMV above S$80,000 will have to pay 320% of OMV, a staggering increase of 100% from the previous Budget.

That’s not all - for cars with OMVs valued at more than S$40,000, there will be a S$60,000 cap on Preferential Additional Registration Fee (PARF) rebate. For example, if your BMW iX’s OMV is valued at $92,000, you’ll only be able to receive S$60,000 once you deregister it on the 10th year. $3,200 worth of annual depreciation over a period of 10 years has to be factored in now.

We have to point out though, that OMVs can differ quite drastically depending on specification levels on each vehicle - even more so in the superluxury sphere where options lists treated in trigger happy fashion can even cause OMVs to double their “base-spec” equivalent. Further down the spectrum, for brands with fleets that have OMVs hovering dangerously close to the S$40k mark, we reckon that they’ll also be tinkering with specifications to ensure their cars don't get slapped with the 3rd tier of ARF classification (190% of OMV, 50% more than before). All of a sudden, lack of dual climate control options due to microchip shortages doesn't sound too ridiculous after all, eh?

It’s pretty obvious which tiers of car buyers the government is targetting now. But given that a chunk of most anticipated cars this year will be affected by this announcement, do dealers have a secret to retain this exclusive pool of uber-wealthy customers? Only time will tell…

---

Selling your car? Whatever the reason, car you sell Carousell.