Understanding PARF and COE Rebates

What Are PARF and COE Rebates?

When you deregister a vehicle in Singapore—whether by scrapping it at an authorised scrapyard, exporting it, or surrendering the registration—you may receive two separate refunds from the government: a PARF rebate and a COE rebate. Together, these can amount to tens of thousands of dollars and sometimes exceed the market value of the car itself. Understanding how they work is essential for any car owner approaching a deregistration decision or evaluating the true cost of ownership.

These two rebates operate independently, are calculated differently, and serve different policy purposes. This guide explains each in detail, walks through the major changes introduced in Budget 2026, and helps you evaluate whether scrapping or renewing is the better financial decision for your situation.

The PARF Rebate Explained

PARF stands for Preferential Additional Registration Fee. When you first register a car in Singapore, you pay the Additional Registration Fee (ARF)—a tiered tax on the vehicle’s Open Market Value that can range from a few thousand dollars for an economy car to well over $100,000 for a luxury vehicle. The PARF rebate returns a portion of that ARF to you when you deregister the vehicle, provided it is less than 10 years old.

The policy rationale is to incentivise owners to deregister cars before they reach 10 years, freeing up road capacity and ensuring the vehicle fleet stays relatively young and roadworthy. The rebate decreases with each passing year, creating a declining incentive that becomes zero once the car hits the decade mark.

Budget 2026: A Major Overhaul of PARF

The PARF system has gone through three distinct regimes in recent years, and understanding all three is important because your car’s registration date determines which rules apply. The government has not applied the changes retroactively, so cars registered under older rules continue to follow those rules for their entire lifespan.

Regime 1: Pre-February 2023 (Original Rates, No Cap)

Cars registered before the February 2023 changes enjoy the original, uncapped PARF rebate schedule. The rebate percentages were the most generous of any era, and crucially, there was no dollar ceiling on the refund. For high-OMV luxury cars with ARFs of $100,000 or more, the PARF rebate could exceed $75,000 if the car was deregistered within the first five years. This created a significant embedded asset value for owners of expensive cars, effectively reducing the cost of upgrading to a new vehicle.

Regime 2: February 2023 to February 2026 ($60,000 Cap)

In February 2023 the government introduced a $60,000 cap on the PARF rebate. This was the first time a monetary ceiling was imposed. The move was aimed at reducing the implicit subsidy for owners of very expensive cars, whose ARF—and therefore PARF rebate—could be disproportionately large relative to mass-market vehicles. For owners of economy and mid-range cars with ARFs below $80,000, the cap had minimal practical impact since their rebates were already below $60,000.

Regime 3: From 13 February 2026 (Reduced Rates, $30,000 Cap)

Budget 2026 brought the most significant PARF changes in years. Effective from 13 February 2026:

• PARF rebate rates were reduced across all age tiers, meaning a lower percentage of the ARF is returned at each age bracket.
• The cap was halved from $60,000 to $30,000.

These changes apply to vehicles registered from 13 February 2026 onward. Cars registered before that date continue to follow the regime that was in place at the time of their registration. The practical effect is that if you buy a new car today, your future PARF rebate will be significantly lower than it would have been under either of the two previous regimes.

Typical PARF Rebate Tiers

The PARF rebate declines with vehicle age. While the exact percentages vary by regime, the general structure that has applied historically is as follows:

Note: The percentages above reflect the general pre-2026 structure. Budget 2026 reduced these rates for vehicles registered from 13 February 2026 onward. Check the exact rates applicable to your registration date using our PARF Rebate Calculator, which accounts for all three regimes.

The COE Rebate Explained

Separately from the PARF rebate, you receive a COE rebate when you deregister a vehicle before its Certificate of Entitlement expires. This rebate is a pro-rated refund of the COE premium you originally paid, based on the remaining months of validity. Unlike the PARF rebate, which only applies to cars under 10 years old, the COE rebate applies whenever there is unused COE tenure remaining, including on renewed COEs.

How the COE Rebate Is Calculated

The formula is straightforward:

COE Rebate = Original COE Premium × (Remaining Months / Total COE Months)

For a standard 10-year COE (120 months), if you deregister with 36 months remaining:

COE Rebate = COE Premium × (36 / 120) = 30% of the original premium

If you paid $100,000 for your COE and deregister with 3 years left, your COE rebate would be $30,000. If you deregister with 5 years left, it would be $50,000. The rebate is linear and predictable, making it easy to model for any deregistration scenario.

This is separate from and in addition to any PARF rebate you may receive. Many owners do not realise that these are two distinct refunds, which leads to confusion when estimating deregistration proceeds.

Renewed COEs

If you renewed your COE for a further 5 or 10 years at the Prevailing Quota Premium (PQP), the same pro-rated logic applies to the renewal premium. However, there is no PARF rebate on renewed COEs, since the PARF only applies to the original 10-year registration period. The PARF eligibility window is gone once the car is older than 10 years, regardless of COE renewal status.

Track current PQP levels on our PQP Tracker to understand the cost of COE renewal in your category.

A Worked Example

Consider a car registered in 2020 with the following profile:

• OMV: $25,000
• ARF paid: $27,000 (100% of first $20K + 140% of next $5K)
• COE premium paid: $50,000
• Deregistered in 2026 (6 years old, 4 years of COE remaining)

PARF Rebate

At 6 years old, the car falls into the 65% PARF tier (pre-2023 registration, so original uncapped rates apply).

PARF rebate = 65% × $27,000 = $17,550

COE Rebate

With 48 months remaining on a 120-month COE:

COE rebate = $50,000 × (48 / 120) = $20,000

Total Rebate

The owner receives $17,550 + $20,000 = $37,550 upon deregistration, plus any scrap value for the vehicle itself (typically $2,000-$5,000 depending on the car’s condition and the scrapyard’s assessment). The total deregistration proceeds in this example would be approximately $40,000-$42,000.

Comparison: Same Car Under Regime 3

If the same car were registered after 13 February 2026 under the new Budget 2026 rules, the PARF rebate would be calculated at the reduced rates and capped at $30,000. For a car with a $27,000 ARF, the cap would not be binding (since the rebate is below $30,000 anyway), but the reduced percentage would mean a lower payout—perhaps $15,000 instead of $17,550, depending on the exact new rates. For high-ARF vehicles, the $30,000 cap becomes the binding constraint and can represent a significant loss compared to the old rules.

Scrap vs Renew: The Key Decision

When your car approaches the 10-year COE expiry, you face a choice: deregister and collect your rebates, or renew the COE at the prevailing quota premium and keep driving. This is one of the most financially consequential decisions a car owner makes in Singapore, and it deserves careful analysis rather than a gut reaction.

When Scrapping Makes Sense

• Your car still has PARF eligibility (under 10 years old) and the combined PARF + COE rebate is substantial relative to the car’s remaining useful value.
• The car is approaching expensive maintenance milestones (transmission overhaul, major electrical work, battery replacement for hybrids/EVs).
• You want to switch to a newer model, an EV, or a different category of vehicle.
• The current PQP for renewal is very high relative to the car’s residual value and your annual usage.
• Your driving needs have changed (e.g., you now work from home and drive much less).

When Renewing Makes Sense

• Your car is in good mechanical condition and you are happy with it.
• The PQP is significantly lower than the current bidding premium for a new COE. If a new COE costs $110K but renewal costs $50K-$60K, the savings can justify keeping an older car.
• Buying a new car at current prices would cost far more than the renewal premium plus expected maintenance over the renewal period.
• You want to avoid the hassle and transaction costs of purchasing and registering a new vehicle.

Our Renew vs Scrap Calculator lets you model both scenarios side by side, factoring in your car’s specific rebate eligibility, the current PQP, estimated maintenance costs, and the cost of a replacement vehicle. It produces a cost-per-year comparison that makes the decision much clearer.

Impact of Budget 2026 PARF Changes on Your Decision

The reduction of the PARF cap from $60,000 to $30,000 for cars registered from 13 February 2026 onward has several practical implications:

• For new buyers: Your future PARF rebate will be lower than under previous regimes. This tilts the economics slightly in favour of keeping the car for longer (closer to the full 10 years) rather than trading in early, since the financial incentive to deregister before 10 years is now smaller.
• For owners under old regimes: If you own a car registered before February 2023 (uncapped PARF) or between February 2023 and February 2026 ($60K cap), your existing PARF rules still apply. If you are in the 8-10 year window and your car has a high ARF, it may make sense to deregister sooner rather than later to maximise your PARF rebate before it drops with each passing year and eventually reaches zero at the 10-year mark.
• For the market overall: Lower PARF rebates may discourage early deregistration of newer cars, which would reduce the flow of replacement COEs into the system and keep quota supply tight. This is a secondary effect but could contribute to sustained premium pressure.

How Deregistration Works

To deregister a vehicle, you take it to an LTA-authorised scrapyard or arrange for export through a licensed exporter. The process is handled through the OneMotoring portal. Upon deregistration:

1. The PARF rebate (if eligible) is calculated automatically based on the vehicle’s age and the ARF paid at registration.
2. The COE rebate is calculated based on the remaining months of COE validity.
3. Both rebates are credited to the registered owner’s bank account, typically within two to four weeks.
4. The scrap value of the vehicle (if scrapping rather than exporting) is paid separately by the scrapyard at the time of handover.
5. If there is an outstanding hire-purchase loan on the vehicle, the finance company must provide a letter of consent before deregistration can proceed. The rebates will be disbursed according to the arrangement between the owner and the finance company.

Key Takeaways

• PARF and COE rebates are two separate refunds with different calculation bases and eligibility rules.
• PARF is tied to the ARF paid and the vehicle’s age; it drops to zero after 10 years and is only available for the original registration period (not renewals).
• COE rebate is a straightforward pro-rated refund of the original premium based on remaining months of validity.
• Budget 2026 reduced PARF rates and halved the cap to $30,000 for new registrations from 13 February 2026 onward.
• Cars registered under earlier regimes retain their original PARF rules—the changes are not retroactive.
• The scrap-vs-renew decision depends on your rebate eligibility, the current PQP, your car’s mechanical condition, and replacement costs.

Use our PARF Rebate Calculator and Renew vs Scrap Calculator to run the numbers for your specific vehicle. For more on how COE premiums are determined and how they interact with these rebates, read our What Is COE? guide. And if any of the terminology in this article is unfamiliar, our Glossary has clear definitions for every key term.