We already know that Singapore is the most expensive country in the world to purchase a car. This is largely due to the various taxes that are applied to each car that is registered in Singapore.
Even still, it comes as a surprise for me when I realise that the new BMW 7 Series Sedan, a luxury continental sedan but by no means a supercar, is currently being sold for $636,888.
A BMW 7 Series is a great car, but even then, it’s not worth $636,888. In Germany where the car is built, a similar model is retailing for about USD93,920, or about S$127,000.
While it’s fair to assume a healthy margin can be made by the car distributors in Singapore, it’s actually the taxes on the car that jacks up its price. Using the new BMW 7 Series in Singapore, we calculate how much in taxes the government will collect on each car sold.
Additional Registration Fee (ARF)
The Additional Registration Fee (ARF) is a tax imposed on all cars during registration in Singapore. The ARF payable is based on the Open Market Value (OMV) of the car. The higher the OMV, the higher the ARF would be.
|Vehicle OMV||ARF Rate (% of OMV to pay)|
|Next $20,000 ($20,001 to $40,000)||140%|
|Next $20,000 ($40,001 to $60,000)||190%|
|Next $20,000 ($60,001 to $80,000)||250%|
|Above $80,000 ($80,001 and above)||320%|
Based on information on Sgcarmart, the OMV of the BMW 735i sDrive Pure Excellence (A) is $102,460. So this means it would incur an ARF of $20,000 (Tier 1) + $28,000 (Tier 2) + $38,000 (Tier 3) + $50,000 (Tier 4) + $71,872 (Tier 5) for a total of $207,872.
For cars in Singapore, there is an excise duty payable of 20% of the OMV. For a car that has an OMV of $102,460, the excise duty would be $20,492.
Currently 8% as of 2023, GST is payable on the OMV and the excise duty.
For a BMW 7 Series with an OMV of $102,460 and an excise duty of $20,492, the total GST payable would be $9,836 (8% of $102,460 + 8% of $20,492)
Vehicular Emission Scheme (VES) Rebate Or Surcharge
Depending on your vehicle’s emission, you may either have to pay a surcharge or enjoy an ARF rebate. VES rebate reduces the car’s Additional Registration Fee (ARF). VES surcharge will increase the ARF.
For the BMW 7 Series, there is a surcharge of $15,000.
Certificate of Entitlement (COE)
A Certificate of Entitlement (COE) gives you the right to own and use a vehicle in Singapore.
Currently, a Category B COE which is what a BMW 7 Series would require costs $115,500 (March 2023).
How Much Revenue Will The Government Receive On A Car With An OMV Of $102,460
Here’s a recap of the various costs that are incurred.
|Additional Registration Fee (ARF)||$207,872|
|Vehicular Emission Scheme (VES)||$15,000|
|Certificate of Entitlement (COE)||$115,500|
The amount of tax we charge on a car is truly staggering. For an expensive car with an OMV of $102,460, we are paying $368,700, or more than three times the actual open market value of the car, as taxes to the government. The type of taxes highlighted above is similar to other car models though the amount will be lesser for cars that are less expensive.
Do note in the event of early deregistration, a portion of the ARF will be refunded back to the buyer. If a car is deregistered after 10 years with no further renewal of its COE, 50% of the ARF will be refunded. The COE amount will also be prorated if the car is deregistered before 10 years. However as announced in the Singapore Budget 2023, PARF rebates will be capped at $60,000.
Read Also: Explaining Why Cars In Singapore Are So Expensive
Listen to our podcast, where we have in-depth discussions on finance topics that matter to you.