Buying a car may not be as straightforward as it seems. Other than choosing a car that fits your rental needs, of which one has to deliberate on the model, make and type of car, financial constraints also come into play. When one registers for a new vehicle, there comes many other types of costs incurred for the purchase of the vehicle.
This includes:
- Registration Fee – $200
- Additional Registration Fee (ARF)
- Certificate of Entitlement (COE)
- Road Tax
- Excise Duty – 20% of OMV
With the changes in ARF in the most recent Budget announcement to allow for a more progressive vehicle tax scheme, it has again thrown an additional spanner especially for aspiring luxury car owners. While one deliberates on whether to buy or to rent a vehicle, here are some pointers on how the changes made in the Budget 2022 affects purchasing of luxury cars.
Introduction of New ARF Tier for Luxurious Cars
On Friday (Feb 18), Finance Minister Lawrence Wong delivered the Budget and announced a new additional registration fee (ARF) tier for cars, taxis and goods-cum-passenger vehicles with open market values (OMV) exceeding $80,000.
- Additional Registration Fee (ARF) – Tax imposed when you first purchase a vehicle, calculated based on a percentage (the ARF rate) of your vehicle’s Open Market Value (OMV).
- Open Market Value (OMV) – cost of a vehicle that is imported into Singapore, assessed by the Singapore Customs.
Car owners of such cars will be charged with a tax equivalent to 220% of their OMV for the portion of the value exceeding $80,000 to achieve a more progressive vehicle tax model. In addition, higher Additional Registration Fees (ARF) are also charged for cars with open market value (OMV) above $80,000.This model applies to all cars, including imported used vehicles, registered with COE from February 2022 onwards.
Current ARF Tax
| OMV | ARF Rate |
| First $20,000 | 100% of OMV |
| Next $30,000 | 140% of OMV |
| In excess of $50,000 | 180% of OMV |
New Tax Treatment
The portion of OMV in Excess of $80,000 for cars will be taxed at 220%.
| OMV | ARF Rate |
| First $20,000 | 100% of OMV |
| Next $30,000 | 140% of OMV |
| Next $50,000 | 180% of OMV |
| [NEW] In excess of $80,000 | 220% of OMV |
This rate is applied to all imported vehicles (new and used) registered from the 2nd COE bidding exercise in February 2022 onwards, where all cars are required to bid for COE before vehicle registration.
How Does Changes in Tax Systems Affect Car Rental Customers?
For one, car rental customers need not be too concerned about the cost of OMV and ARFs and other policies that affect the price of a car purchase, especially that of the luxury cars, as the cost is shared over more consumers. With a flat rental rate, car rental customers can also obtain a car that is able to meet their commuting needs. Rather than fretting about the nitty gritty of various pay structures that affect the car’s total upfront costs, renters pay a flat rental fee, while the car rental companies handle the rest. The rented car still meets the needs of the renter nonetheless.
Be it a long-term car rental or a short-term car rental, BizLink Rent-A-Car would like to extend our support in helping you find the most suitable car rental package that best suits your specific needs. Speak to our friendly sales associates at 6285 6616 to get a quote or enquire today.
