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1. Currently, the value of a motor vehicle is
assessed to be the price it would normally fetch
between independent buyers and sellers in an open
market. This method of valuation, which is based
on the Brussels Definition of Value (BDV),
generally includes the following expenses in arriving
at the taxable value of a motor vehicle:
(a) 'Transaction value': The
price paid or payable for a vehicle by a buyer
(e.g. motor trader) to a supplier on a CIF basis.
CIF refers to the cost of goods plus insurance
and freight charges.
(b) 'Handling charge': The handling
expense for transferring a vehicle from the
conveyance carrier onto land if the vehicle
arrives by air or sea. Handling charges are
imputed as 1% of the vehicle's CIF value.
(c) 'Agency uplift': Expenses
for advertising, promotion, warranties, as well
as showroom and warehousing costs. Generally,
agency uplift is estimated as a percentage of
a vehicle's invoice price. This percentage is
generally reviewed on an annual basis.
2. The value of a vehicle, commonly known as
its 'open market value' or OMV, is computed as
follows:
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Value of a vehicle
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=
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Transaction value + Handling
charge + Agency uplift
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3. The Customs Valuation Code (CVC)
is an alternative method of valuation that is
endorsed by the WTO, and increasingly used by
many countries. This method generally assesses
the value of a motor vehicle based on its transaction
value.
4. With effect from 1 April 2003, the basis for
valuing motor vehicles in Singapore will change
from the BDV to the more widely-accepted
CVC. The new valuation method will
apply to those vehicles where excise duties are
paid on or after 1 April 2003.
5. As a result, the Additional Registration Fee
(ARF) and excise duty payable for most vehicles
are expected to decrease by at least 3 to 5%.
This reduction in taxes arises because the 'handling
charge' and 'agency uplift', which are included
under the BDV, will no longer be added to the
value of a vehicle under the CVC. For a typical
1,500 cc car with an assessed open market value
or OMV of $15,000 under the BDV, a 5% saving in
tax amounts to about $1,100.
6. Generally, the reductions in ARF and excise
duty will be greater for cars with higher uplifts.
Cars with higher uplifts will generally be those
with higher marketing, warranties, showroom and
warehousing costs relative to the volume of cars
sold.
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