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COE, LTA, OMV it’s enough to make you CRY Car guru Ben Chia busts the jargon
Buying a car in Singapore can seem complicated and confusing. There are plenty of acronyms and jargon that can be intimidating to first timers. There’s COE, LTA, OMV, ARF, PARF…it’s enough to make you want to CRY.
Here, car guru Ben Chia explains the commonly used terms and phrases associated with buying a car in Singapore.
1. COE (Certificate of Entitlement)
As the name suggests, COE is a ‘certificate’ that entitles you to register, own and use a car in Singapore. Actual certificates are no longer issued; you now get a digital record registered with the Land Transport Authority (LTA).
COEs are acquired via an open bidding process (almost like an auction) held twice a month. The Government maintains a limited and strictly controlled quota of COEs available, with the intention of controlling the vehicle population in Singapore. COEs are valid for a period of ten years, and can be renewed upon expiry. All vehicles require COEs in order to be registered and driven in Singapore, with exceptions allowed only for vehicles purchased by disabled individuals.
2. OMV (Open Market Value)
Broadly speaking, OMV is essentially the value of the car before all relevant taxes are applied in Singapore. This amount includes the base price of the car and other incidental costs like shipping, insurance and so on. The OMV is determined by Singapore Customs, and is used to calculate a number of other automotive-related taxes.
3. ARF (Additional Registration Fee)
Confusingly (even for a car guru), there are three different types of ‘registration fees’ for vehicles here in Singapore.
- The first is simply called, well, Registration Fee, which is a standard $140 for everyone.
- The second is called the Additional Registration Fee (imaginative, right?), and is a percentage-based tax based on the OMV of the vehicle.
- Prior to 2013, the ARF for passenger cars was a simple 100% of the car’s OMV. Cars registered from 2013 onwards however have a tiered ARF system, whereby the first $20,000 of the car’s OMV is taxed at 100%, the next $30,000 taxed at 140%, and any amount in excess of $50,000 is taxed at 180%.
We explain using math
So, using an example, let’s say your Ferrari has an OMV of $100,000. Therefore your ARF is (100% x $20,000 = $20,000) + (140% x $30,000 = $42,000) + (180% x $50,000 = $90,000), or $152,000.
Naturally, the lower your OMV, the lower the ARF you pay. It also determines the PARF you receive upon scrapping or deregistering your car (see below).
4. PARF (Preferential Additional Registration Fee)
PARF isn’t actually a registration fee per se. Instead, it is a rebate given to car owners when their car is scrapped or deregistered, and is calculated based on the car’s ARF value. Generally speaking, the earlier you scrap your car, the more PARF you get. If you scrap the car before it reaches its fifth birthday, you get back 75% of the car’s ARF value. The amount decreases by 5% with every subsequent year, until it reaches 50% at the end of the car’s 10th birthday, i.e. the end of its COE tenure.
If you do renew your car’s COE after ten years, take note that your PARF rebate now becomes zero. The rationale of the PARF rebate is to encourage a younger and more roadworthy vehicle fleet on Singapore’s roads. Additionally, you also get a rebate on your COE if you scrap your car before it reaches 10 years of age, calculated as a pro-rated amount based on the number of months remaining on your COE tenure.
For more car reviews and tips, look out for regular posts in this series.
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