The Complete Guide to ARF, PARF & COE Rebates
The Three Rebates Every Car Owner Should Understand
When you buy a car in Singapore, you pay a series of taxes and fees that collectively push the price well above the vehicle's intrinsic value. When you eventually deregister that car, you get some of that money back in the form of rebates. Understanding how these rebates work is essential for making informed decisions about when to buy, when to sell, and when to deregister.
There are three key financial mechanisms at play: the Additional Registration Fee (ARF), the Preferential Additional Registration Fee (PARF) rebate, and the COE rebate. Together, they form a system of incentives designed to encourage timely vehicle turnover and manage the vehicle fleet's age profile. Let us examine each in detail.
Additional Registration Fee (ARF)
The ARF is a tax levied at the point of vehicle registration. It is calculated based on the vehicle's Open Market Value (OMV), which is the import value assessed by Singapore Customs. The ARF uses a progressive tiered structure, meaning higher-OMV vehicles pay a disproportionately higher rate.
2026 ARF Tiered Rates
| OMV Portion | ARF Rate |
|---|---|
| First $20,000 | 100% |
| $20,001 to $40,000 | 140% |
| $40,001 to $60,000 | 180% |
| Above $60,000 | 220% |
The tiered structure means the effective ARF rate increases with the vehicle's value. For a car with a low OMV, the ARF is roughly equal to the OMV. For a luxury car with a high OMV, the ARF can be more than double the OMV.
Example Calculation 1: Cat A Sedan (OMV $27,000)
| OMV Portion | Rate | ARF Amount |
|---|---|---|
| First $20,000 | 100% | $20,000 |
| $20,001 to $27,000 ($7,000) | 140% | $9,800 |
| Total ARF | $29,800 |
The effective ARF rate here is 110% of OMV ($29,800 / $27,000).
Example Calculation 2: Cat B Luxury SUV (OMV $70,000)
| OMV Portion | Rate | ARF Amount |
|---|---|---|
| First $20,000 | 100% | $20,000 |
| $20,001 to $40,000 ($20,000) | 140% | $28,000 |
| $40,001 to $60,000 ($20,000) | 180% | $36,000 |
| $60,001 to $70,000 ($10,000) | 220% | $22,000 |
| Total ARF | $106,000 |
The effective ARF rate here is 151% of OMV ($106,000 / $70,000). The progressive structure clearly penalises higher-value vehicles, creating a significant tax wedge between mass-market and luxury vehicles.
Calculate the ARF for any OMV using our ARF Calculator.
Why the ARF Matters Beyond Purchase
The ARF is not just a sunk cost at purchase. A portion of it comes back to you as the PARF rebate when you deregister. The higher your ARF, the larger the potential rebate, though the new $30,000 cap limits the maximum recovery. This creates a direct link between the OMV of your car, the ARF you paid, and the rebate you receive at end of life.
PARF Rebate: Getting Part of Your ARF Back
The Preferential Additional Registration Fee rebate is the mechanism through which the government returns a portion of the ARF to vehicle owners who deregister within the car's original 10-year COE period. The PARF rebate is designed to incentivise timely deregistration and vehicle fleet renewal.
How the PARF Rebate Is Calculated
The PARF rebate is a percentage of the ARF paid at registration. The percentage decreases with the vehicle's age, following a step-down schedule. Below are the rebate percentages effective from 13 February 2026 under the Budget 2026 changes, which cut all rates by 45 percentage points from the previous schedule:
| Vehicle Age at Deregistration | PARF Rebate (% of ARF) | Previous Rate (pre-Feb 2026) |
|---|---|---|
| Not exceeding 5 years | 30% | 75% |
| Above 5 but not exceeding 6 years | 25% | 70% |
| Above 6 but not exceeding 7 years | 20% | 65% |
| Above 7 but not exceeding 8 years | 15% | 60% |
| Above 8 but not exceeding 9 years | 10% | 55% |
| Above 9 but not exceeding 10 years | 5% | 50% |
The $30,000 PARF Cap (Budget 2026)
Effective 13 February 2026, the PARF rebate is capped at a maximum of $30,000, regardless of how high the original ARF was. This is a significant reduction from the previous cap of $60,000 introduced in February 2023.
The cap means that for high-OMV vehicles, the PARF rebate no longer scales proportionally with the ARF paid. Consider our Cat B luxury SUV example with an ARF of $106,000:
- Without cap: Deregistering within 5 years would yield 75% x $106,000 = $79,500
- With $30,000 cap: The rebate is capped at $30,000, regardless of the calculated amount
For the Cat A sedan with an ARF of $29,800, deregistering within 5 years gives 75% x $29,800 = $22,350, which is below the cap and therefore fully received.
The cap disproportionately affects buyers of high-OMV luxury vehicles, reducing the financial incentive for early deregistration of expensive cars. For mass-market Cat A vehicles, the cap is less likely to be binding because the ARF is lower.
Example: PARF Rebate at Different Ages
For our Cat A sedan (ARF $29,800):
| Deregistration Age | Rebate % | Calculated Rebate | After Cap |
|---|---|---|---|
| 4 years | 30% | $8,940 | $8,940 |
| 6 years | 25% | $7,450 | $7,450 |
| 8 years | 15% | $4,470 | $4,470 |
| 10 years | 5% | $1,490 | $1,490 |
For the Cat B luxury SUV (ARF $106,000):
| Deregistration Age | Rebate % | Calculated Rebate | After Cap |
|---|---|---|---|
| 4 years | 30% | $31,800 | $30,000 |
| 6 years | 25% | $26,500 | $26,500 |
| 8 years | 15% | $15,900 | $15,900 |
| 10 years | 5% | $5,300 | $5,300 |
The reduced percentages mean the PARF rebate is now a much smaller factor in the ownership equation. Even for the luxury SUV, the cap only binds at the earliest deregistration age (30% of $106,000 = $31,800 vs $30,000 cap). At later ages, the calculated rebate falls well below the cap. This dramatically reduces the incentive for early deregistration across all vehicle types.
Calculate your specific PARF rebate using our PARF Rebate Calculator.
Important PARF Rules
- PARF eligibility expires with the original COE. If you renew your COE instead of deregistering, you permanently forfeit all PARF eligibility. A renewed COE carries zero PARF.
- PARF applies only to the original owner's ARF. If you buy a used car, the PARF is calculated based on the ARF paid at the car's original registration, not any amount you paid for the used car.
- The cap applies per vehicle. You cannot combine PARF rebates from multiple vehicles to circumvent the $30,000 limit.
COE Rebate: The Time-Based Refund
The COE rebate is separate from the PARF rebate and is available regardless of whether the car is within its original COE period or on a renewed COE. It refunds the unused portion of the COE based on remaining validity.
How the COE Rebate Is Calculated
The COE rebate formula is straightforward:
COE Rebate = (Remaining months of COE / Total months of COE) x COE premium paid
For a car registered on a 10-year COE at a premium of $110,000 and deregistered after 7 years (84 months out of 120):
COE Rebate = (36 / 120) x $110,000 = $33,000
The COE rebate is calculated to the nearest month and uses the actual premium paid at the original bidding exercise, not the current market rate or PQP.
COE Rebate on Renewed COEs
If you renewed your COE for 10 years at a PQP of $110,000 and then deregister after 6 years of the renewed period:
COE Rebate = (48 / 120) x $110,000 = $44,000
Note that renewed COEs provide a COE rebate but never a PARF rebate. The COE rebate is the only financial recovery available on a renewed COE.
COE Rebate on 5-Year Renewals
For a 5-year renewal at 50% of PQP (say $55,000), deregistered after 3 years:
COE Rebate = (24 / 60) x $55,000 = $22,000
Total Deregistration Value: Putting It All Together
When you deregister a vehicle, your total financial recovery is:
Total Deregistration Value = PARF Rebate + COE Rebate + Scrap Value
The scrap value is the residual value of the car's body, parts, and materials, typically assessed by a scrap dealer. For most cars, scrap value is modest, ranging from $500 to $5,000 depending on the vehicle's condition and the current market for used parts and recyclable materials.
Complete Example: Cat A Car Deregistered at 8 Years
| Component | Calculation | Amount |
|---|---|---|
| PARF Rebate | 15% x $29,800 ARF | $4,470 |
| COE Rebate | (24/120) x $110,000 COE | $22,000 |
| Scrap Value (est.) | Market rate | $2,000 |
| Total Deregistration Value | $28,470 |
This $28,470 can be applied towards your next vehicle or simply taken as cash. Under the old PARF rates, this figure would have been $41,880 — the Budget 2026 PARF cut reduced the recovery by over $13,000.
Strategic Implications
Understanding the rebate system allows you to make more strategic ownership decisions:
- The PARF cliff: The biggest drop in PARF percentage occurs between "not exceeding 5 years" (30%) and "above 5 years" (25%). While the step is smaller in absolute terms than under the old schedule, early deregistration still preserves the highest rebate rate.
- The cap is now rarely binding: With the reduced percentages, the $30,000 cap only applies to vehicles with very high ARFs deregistered within 5 years. For most vehicles, the calculated rebate falls below the cap at all ages, so the cap is no longer the constraint it once was.
- COE rebate as flexibility: The pro-rated COE rebate means you are never fully locked in. If your circumstances change, deregistering early recovers a proportional share of the COE, providing a financial safety valve.
- Renewal vs deregistration: With the reduced PARF rates, the balance has shifted significantly toward renewal. Even for high-ARF vehicles, the PARF recovery at deregistration is now much smaller, making the case for renewing at PQP relatively stronger. Use our Renew vs Scrap Calculator with the updated rates.
Frequently Asked Questions
Do the Budget 2026 PARF changes apply to cars registered before February 2026?Yes. Both the reduced PARF percentages (30/25/20/15/10/5%) and the $30,000 cap apply based on the date of deregistration, not the date of registration. If you registered your car in 2020 and deregister it after 13 February 2026, the new lower rates and cap apply. Vehicles deregistered before that date were subject to the previous higher rates (75/70/65/60/55/50%) and $60,000 cap. Always check the latest policy at the time of deregistration.
Can I receive both PARF and COE rebates simultaneously?Yes. If you deregister within the original 10-year COE period, you receive both the PARF rebate (based on vehicle age and ARF) and the COE rebate (based on remaining COE months). These are separate calculations and paid together as part of the total deregistration value.
What happens to my PARF if I sell my car to a used car dealer?When you sell to a dealer (trade-in), the dealer typically handles the deregistration and captures the PARF and COE rebates as part of the trade-in valuation. The rebates are factored into the trade-in price the dealer offers you. If you want to maximise your PARF recovery, deregister the car yourself through LTA before selling the body to a scrap dealer, though this is more complex and time-consuming.
Is there a PARF rebate for motorcycles?Yes. The PARF system applies to motorcycles (Category D) in the same way as cars. The rebate percentages and age-based schedule are identical. However, because motorcycle ARFs are much lower (reflecting lower OMVs), the absolute rebate amounts are correspondingly smaller. The $30,000 cap is rarely relevant for motorcycles.