Buyers of higher-end luxury cars will soon face higher taxes via increased Additional Registration Fees (ARF), says Finance Minister Lawrence Wong in his Budget 2023 speech on Feb 14.
This will better differentiate between tiers of luxury vehicles, with the changes targeted at the top one-third of cars by open market value (OMV), he adds.
Buyers of cars with an open market value of $40,000 or less will not be affected, says Wong, who is also deputy prime minister.
Buyers of cars with OMV of more than $40,000 and up to $60,000, however, will have to pay higher ARF rates of 190% of the OMV.
Overall, buyers of cars in the first $20,000 OMV tier will pay an ARF of 100%. This goes up with every $20,000 in OMV to 140%, 190%, 250% and 320% in ARF.
The higher fees will begin from the second Certificate of Entitlement (COE) bidding in February, scheduled for Feb 22.
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Currently, the preferential ARF rebates are measured as a percentage of the payable ARF. Wong says he will cap preferential ARF rebates at $60,000 to avoid providing excessive rebates to more expensive cars when they are deregistered.
The ARF change is expected to generate about $200 million in additional revenue per year, says Wong, but the actual amount will depend on the state of the vehicle market.
