Singapore will reduce its Preferential Additional Registration Fee (PARF) rebate to as low as 5 per cent under new changes announced in Budget 2026, reshaping the economics of car ownership.

Prime Minister Lawrence Wong said in his Budget statement that the rebate for cars deregistered at the end of their 10-year Certificate of Entitlement (COE) cycle will fall from 50 per cent of the Additional Registration Fee (ARF) to 5 per cent.

The rebate cap will also be reduced from S$60,000 to S$30,000.

The move is expected to affect resale values, depreciation rates and long-term ownership costs, particularly for petrol vehicles.

What The PARF Rebate Change Means

The ARF is a tax paid when a vehicle is first registered, based on its open market value. The PARF rebate allows owners to recover part of that ARF when they deregister their vehicles before or at the end of the 10-year COE period.

Under the revised structure, rebates across all age bands will be sharply reduced:

• Up to 5 years: 75% → 30%
• 5–6 years: 70% → 25%
• 6–7 years: 65% → 20%
• 7–8 years: 60% → 15%
• 8–9 years: 55% → 10%
• 9–10 years: 50% → 5%

For example, a vehicle with S$20,000 in ARF previously qualified for a S$10,000 rebate at year 10. Under the new rules, that falls to S$1,000.

This reduces the “paper value” of cars and raises effective depreciation over time.

Impact On Car Owners And Buyers

The lower PARF rebate is likely to dampen resale values, as future buyers factor in smaller rebates at deregistration. Owners may see reduced financial returns if they scrap their vehicles at the end of the COE cycle.

The change could also encourage more motorists to renew their COE and keep cars beyond 10 years, rather than replace them early.

For new car buyers, long-term ownership costs will increase. Previously, the PARF rebate offset part of the total cost of ownership. With rebates reduced, buyers will bear more of the ARF cost over the vehicle’s lifespan.

A car with S$15,000 in ARF, for instance, would have yielded S$7,500 under the old 50 per cent rebate. Under the new framework, that drops to S$750 at year 10.

EV Incentives Remain In Place

The PARF rebate cut comes as Singapore continues to promote electric vehicle (EV) adoption.

EV buyers currently benefit from the EV Early Adoption Incentive, which provides a 45 per cent ARF rebate capped at S$7,500. Combined incentives can reach up to S$30,000 in some cases.

By reducing the future rebate for all vehicles while maintaining upfront EV incentives, the policy shift may narrow the cost gap between EVs and internal combustion engine cars.

Singapore has previously stated its intention to phase out internal combustion engine vehicles by 2040.

Broader Policy Shift

The PARF system was originally introduced to encourage early scrapping of older vehicles, helping to keep the vehicle fleet newer and cleaner.

With improvements in vehicle emissions standards and rising EV adoption, the Government appears to be recalibrating incentives away from early replacement.

The move also reduces the fiscal outlay associated with large rebate payouts.

The revised PARF rebate structure will apply to vehicles deregistered under the updated framework following Budget 2026.

Motorists considering a new car purchase may need to reassess long-term cost calculations, including depreciation and potential COE renewal.