Singapore is home to thousands of high net-worth individuals (HNIs) that opt for the most exclusive and luxurious cars in the world because of the kind of lifestyles they lead.
The taxes on the luxury car segment of vehicles in Singapore has witnessed a revision recently. The announcement came as a part of the Budget Speech by Deputy Prime Minister of Singapore, Lawrence Wong. Singapore is home to a lot of wealthy personalities who migrate to the country mostly for business. Hence, the trend of owning luxury cars is rather common, especially in this elite section of society. Going forward, the taxes on buying high-end luxury cars is set to increase significantly although it might not be such a big issue for the affluent.
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Luxury Car Taxes Increase in Singapore
As a part of the speech, the announcement to increase the ARF (Additional Registration Fee) was made. This means that the tax on vehicles over OMV (Open Market Value) S$40,000 will be raised drastically. In fact, the biggest jump in the tax rates will be levied on cars with an OMV of over S$80,000. This segment of automobiles will now have to pay 320% tax on this OMV price compared to 220% earlier. This will result in the revision of the rates pertaining to the Certificate of Entitlement (COE).
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Market analysts think that this would not impact the demand for luxury cars all that much. It is well-known that the people who buy such high-end cars are anyway so affluent that their vehicles are not a huge part of their overall net worth. Comparing this to the middle-class population of any country around the world would show that it is not the case with them. Their cars form a large part of their overall net worth. Hence, an increase in the amount to be paid in taxes for owning luxury cars would hardly make any difference to the wealthy.
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Higher ARF Rates for those buying luxury cars
Part of the reason why it is so is that there is prestige and brand value associated with luxury car marques. Owning a vehicle from such legacy auto giants is a symbol of opulence, wealth and exclusivity in the higher echelons of society. That is the reason why paying a little extra won’t be too much of a concern for these people who will continue to buy exotic cars. The aim of this announcement is to generate more revenues for the government by increasing taxes for people who can afford it.
