A Guide to Buying A Commercial Vehicle In Singapore (2022)

COE prices, taxes and other costs of owning a commercial vehicle in Singapore.

A commercial vehicle could be the boost your business needs. Commercial vehicles can help cut costs, save time on deliveries, and make processes more efficient, increasing productivity and helping you meet targets on time.

In addition to the tax and fees, there are various other factors that you need to consider when buying a commercial vehicle. We take an in-depth look at what such a purchase entails.

Here's a rundown of what we'll cover: 

• Requirements to own a commercial vehicle
• Types of commercial vehicles
• Costs to consider before buying a commercial vehicle
• Factors to consider before buying a commercial vehicle

How to own a commercial vehicle in Singapore

In Singapore, only registered companies are allowed to buy commercial vehicles.

Individuals are not allowed to purchase commercial vehicles unless they possess a hawker licence from the National Environment Agency. When purchasing a commercial vehicle, here is what you need to note:

• Every commercial vehicle requires a Certificate of Entitlement (COE). Commercial vehicles can be registered under category C – Goods Vehicle & Bus, or category E – Open (Except Motorcycle).
  
  As of January 2022, COE for category C is S$42,200, while those in category E pay S$82,501. 
• Commercial vehicles have a maximum life span of 20 years. You can only renew the COE after the first 10 years; after 20 years, you can’t continue using the vehicle.
• The vehicle registration fee is S$220 for all commercial vehicles.
• If you want to purchase a commercial vehicle, you can get up to 90% financing.
• Commercial vehicles have to adhere to a different set of speed limits in Singapore. For example, buses and light goods vehicles generally have to keep to around 50 km/h on roads and 60 to 70 km/h on expressways.  
• Heavy goods and very heavy goods vehicles should only be parked at designated spots when not in use at night between 12:00am and 6:00am.
• For heavy and very heavy goods vehicles, if your vehicle’s width and the roads you will be travelling on require it, you may have to apply for an oversized vehicle movement permit.

Types of commercial vehicles in Singapore

There are four main types of commercial vehicles in Singapore. These vehicles are generally classified according to their Maximum Laden Weight (MLW), with the exception of Goods-cum-Passenger Vehicles. The MLW then determines the road tax payable. The vehicle category also determines the Additional Registration Fee (ARF). Here’s a breakdown of the different categories.

Light Goods Vehicle (LGV)

MLW: Up to 3,500 kg 
Purpose: Transport goods; if small bus, can carry up to 15 passengers
Examples: Nissan Cabstar, Volkswagen Caddy, Toyota Hiace Commuter/Van 
ARF: 5% of vehicle’s Open Market Value (OMV) 

Diesel and diesel hybrid goods vehicles benefit from road tax rebates of 50% from 1 August 2021 to 31 July 2022, while petrol and petrol-hybrid vehicles get 100% road tax rebates for one year over the same period. 

An Additional Flat Component (AFC) of S$190 has been applied for electric LGVs from 1 January 2021 onwards. If your vehicle was registered before then, the AFC is waived till 31 December 2023.

For vehicles registered after 1 January 2021, the AFC will vary from S$50 to S$190, depending on when the vehicles were registered. 

Heavy Goods Vehicle (HGV)

MLW: 3,501 kg to 16,000 kg
Purpose: Transport goods, e.g., truck and lorries 
Examples: Mitsubishi Canter 
ARF: 5% of vehicle’s OMV 

The same rebates as LGV apply for the HGV category from 1 August 2021 to 31 July 2022. 

Very Heavy Goods Vehicle (VHGV)

MLW: More than 16,000 kg 
Purpose: Includes recovery, construction, sanitation, transport (e.g., tow trucks, cranes, mixers) 
ARF: 5% of vehicle’s OMV   

Road tax for Prime Movers only: 

The same rebates as the other categories apply for the HVGV from 1 August 2021 to 31 July 2022. 

Goods-Cum-Passenger Vehicle (GPV)

MLW: Up to 5,000 kg – depending on their weight, they can be classified as LGVs or HGVs. 
Purpose: Transport goods and passengers, e.g., buses, vans, lorries  
Examples: Toyota Liteace, Mitsubishi Triton

ARF:

Road tax: 

Diesel and diesel hybrid GPVs benefit from 50% tax rebate from 1 August 2021 to 31 July 2022, while petrol and petrol-hybrid GPVs have 100% tax rebate for one year over that period. 

The same AFC as LGVs applies to this category. 

Summary of the payment and tax costs for the different categories of commercial vehicles:

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Other costs to consider when buying a commercial vehicle in Singapore

In the previous section, we have already covered additional registration fees, road tax, and COE fees. What are some other costs you will need to factor in when purchasing a vehicle for your business? 

Surcharge/incentive for vehicular emissions

The Commercial Vehicle Emissions Scheme was introduced for the period 1 April 2021 to 31 March 2023 to promote the use of newer and cleaner LGVs, in order to reduce harmful emissions. Vehicles registered during this period will get a rebate or surcharge depending on their levels of emissions. 

Commercial vehicle insurance in Singapore

You will need to purchase insurance for your commercial vehicle. The insurance premium price depends on the car type, coverage, and engine of the vehicle.

Commercial car insurance costs between S$1,500 and S$3,500 per year in Singapore. It will cost you more to insure your commercial vehicle than your small personal car, for example, due to associated industry risks. 

Comprehensive insurance covers generally cost more and insure your vehicle against damage caused by accidents, vandalism, and theft.

The cover may also include extended medical coverage and road assistance. Here are the key considerations you should make when purchasing insurance:

• No claim discount on the insurance cover.
• What does the cover insures? Make sure it covers loss or damage to the car, as well as death or injury to a third party.
• Approved workshops where you can repair your car.
• Income replacement when your vehicle is being repaired.
• Adjustable excess.

Factors you should consider when buying a commercial vehicle in Singapore

Before purchasing a commercial vehicle, consider the following:

Purpose and features of the vehicle

The purpose of the vehicle is one of the main factors that you should consider. LGVs and GPVs should be sufficient for a wide range of uses, while HGVs and VHGVs are usually required for specific industries.  Review what you’d use the vehicle for so as to invest in the right one.

Cost

Make sure that you stick with your budget. Bear in mind that the cost of the car includes taxes, fees, insurance and maintenance costs for the vehicle.

Future business plans

Before you purchase a new commercial vehicle, consider plans and sustainability. The vehicle is an investment, and you should consider future expansion plans. Consider purchasing a commercial vehicle that will assist you in achieving your goals in the next one to two years.

Can you use your commercial car for personal use?

According to the Land Transport Authority, using a commercial vehicle for personal use and transportation is an offence.

If found contravening the rule, you risk a fine of S$1000 or three months in jail for the first conviction. A second conviction means you risk a fine of S$2000 or six months in jail.

A commercial vehicle can only be used for business purposes, such as carrying goods and employees.

To buy or not to buy a commercial car?

If you need a vehicle specifically for business-related purposes, review the taxes and fees you will incur in the different categories. Buy a vehicle that will serve your business effectively while incurring minimal costs, to take your business to the next level. 

Buying a commercial vehicle is an investment you make for your business. Make sure you protect your investment by purchasing the right car insurance. Buy now for insurance deals that guarantee coverage at an affordable rate.

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