SINGAPORE - Buyers of high-end cars will have to fork out more when a new tiered tax structure kicks in later this month.
In his Budget delivery on Friday (Feb 18), Finance Minister Lawrence Wong announced a new additional registration fee (ARF) tier for cars, taxis and goods-cum-passenger vehicles with open market values (OMV) exceeding $80,000.
ARF is the main tax for vehicles and OMV is the approximate cost of a vehicle before taxes.
The change, however, is expected to affect only passenger cars as no taxi or goods-cum-passenger vehicle currently has an OMV exceeding $80,000.
Buyers of such cars will be slapped with a tax equivalent to 220 per cent of their OMV for the portion of the value exceeding $80,000.
Mr Wong said the change was to achieve a more progressive vehicle tax system.
The new tiered ARF comes nine years after a similar system - which levied taxes of up to 180 per cent of a car's OMV - was introduced to target higher-end cars.
Examples of cars affected by the new tiered ARF include the Porsche Cayenne, Lamborghini Urus and Bentley Continental GT, and it will also affect several other makes such as Ferrari, McLaren, Aston Martin, Rolls-Royce and Mercedes-Maybach as well as top-end models in a number of other brands.
The new ARF structure will apply to all cars, including imported used vehicles, registered with certificate of entitlements (COEs) obtained from the second bidding exercise in February 2022 onwards.
The second COE bidding exercise in February 2022 will take place from next Monday to Wednesday.
As an example, a car with an OMV of $100,000 will now be subject to a total ARF of $160,000 - versus $152,000 previously, or an increase of 5.3 per cent.
But one with a much higher OMV will face a more punitive increase. The Ferrari Roma, which has an OMV of around $311,000, for instance, will see its ARF rise by 17.4 per cent to $624,200, from $531,800 previously.
For taxis, classic cars and COE-exempt cars, the new ARF structure will apply for those registered on or after Saturday.
The call for higher taxes for luxury cars came from motor trader Neo Nam Heng, who is adviser to the Automobile Importer & Exporter Association.
Mr Neo submitted a formal proposal to the Ministry of Finance recently to levy additional taxes for high-end cars.
Mr Neo, who is also chairman of diversified motor group Prime, says the tiered ARF introduced in 2013 is no longer enough to level the playing field for buyers of million-dollar cars and those paying for a $150,000 Japanese car.
“I am a bit disappointed,” he told The Straits Times on Friday after the Budget announcement.“The increase is very mild, and is nothing to the very rich.
“There should have been a straightforward surcharge instead of an increase in ARF, which owners can recover when they scrap the car.”
Mr Neo said for “super luxury models”, the surcharge should be up to 300 per cent of the car’s OMV. He said buyers of such cars should also pay “double the COE premium”.
Mr Teo Hock Seng, executive chairman of Komoco Holdings, which sells Ferrari and Maserati cars, said “existing contracts with customers will have to be recalculated” to take into account the new tax structure.
Mr Teo said there is unlikely to be a rush by customers, like when the first tiered ARF was introduced in 2013, because deliveries have already been delayed by the chip shortage.
After the initial rush, sales of high-end cars screeched to a virtual halt when the first tiered ARF was implemented in 2013.
This article has been edited for clarity.