In Singapore, luxurious automobiles just like the Porsche Taycan can price practically $610,000, and even regular household automobiles just like the Toyota Prius nonetheless price over $100,000. However why is that the case? This video by Kuma Kuruma solutions that query, and the reasoning is definitely extra easy than you would possibly assume.

Utilizing the Volkswagen Polo for example, he begins by explaining the Open Market Worth, or OMV. The OMV is the worth of the automobile earlier than any taxes or charges are utilized. Within the case of the Polo, that may be $17,796 SGD ($13,423 USD). Subsequent up is the Excise Obligation, which is an extra tax amounting to twenty p.c of the OMV. The Polo’s Excise Obligation is $3,559 SGD ($2,684 USD). Then there’s the Items & Companies Tax (GST), one other tax amounting to 7 p.c of the mixed complete of the Excise Obligation and the OMV. The Polo’s GST is $1,494 SGD ($1,127 USD).

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After that, there’s the Extra Registration Price (ARF), which is the worst one but. The magnitude of the charge works on a bracket system, and for automobiles with a $20,000 SGD OMV and beneath, you’re paying an additional 100% of the OMV on high of the unique OMV, Excise Obligation, and GST. For automobiles with an OMV between $20,001 and $50,000 SGD, you pay an additional 140 p.c of the OMV on high of the unique OMV, Excise Obligation, and GST. Lastly, for automobiles with an OMV over $50,000 SGD, you pay an additional 180 p.c of the OMV on high of the unique OMV, Excise Obligation, and GST. Not simply that, however choices are taxed individually, bringing the automobile’s price up much more.

For the reason that Polo’s OMV is simply $17,796 SGD ($13,423 USD), its ARF would “solely” be one other $17,796 SGD ($13,423 USD) on high of that. Mixed with the $3,559 SGD ($2,684 USD) Excise Obligation and the $1,494 SGD ($1,127 USD) Items & Companies Tax, that brings the entire price of this sub-$20k Polo to $40,646 SGD ($30,658 USD), or greater than double the worth of the unique automobile.

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Nonetheless, it doesn’t finish there. At this level, you’ve purchased the automobile, however there’s nonetheless yet one more factor you want earlier than you’ll be able to drive it: the Certificates of Entitlement (COE), which lets you drive your newly acquired automobile for as much as 10 years. The COEs are restricted in provide, so pricing can differ from month to month, and which sort of COE you want varies primarily based in your automobile. For the Polo, one among these certificates would go for about $48,000 SGD ($35,669), on this case extra. At this level, our sub-$20k Polo now prices round $99,000 SGD ($74,600 USD), or practically 4 instances the worth of the unique automobile.

So ultimately, whereas the automobiles themselves are initially comparatively inexpensive in Singapore, it’s all of the compounding taxes and charges that drive the costs as much as such exorbitant quantities. For a extra in-depth breakdown of the entire system, you’ll be able to take a look at Kuma Kuruma’s video under.