Excise duty
Excise duty is the customs duty Singapore levies on a car's Open Market Value, charged before other taxes and a major reason cars cost so much here.
What it means
Excise duty is a customs tax applied to a car when it enters Singapore, calculated as a percentage of its Open Market Value, or OMV. The OMV is the assessed cost of the vehicle including its price, freight, insurance, and other charges incurred before it arrives. Excise duty is one of the first taxes to land on a car: it is added to the OMV, and other charges then build on top of that combined figure. GST, for example, is calculated on a base that already includes excise duty, which is why people sometimes describe the system as tax stacked on tax. Excise duty is collected by Singapore Customs, while the registration-related charges and COE are handled through LTA. The exact percentage applied is set by government policy and has been adjusted over time, so the duty on any given car depends on the rate in force when it is brought in.
Why it matters in Singapore
Excise duty is one of the main reasons a car in Singapore costs far more than the same model elsewhere. It sits early in the chain of taxes, so it not only adds its own cost but also enlarges the base that later taxes are calculated on. For anyone trying to understand a new car's price, excise duty explains part of the gap between the manufacturer's figure and the showroom number. It is a separate item from the value-based registration tax, ARF, even though both are tied to OMV.
What it means for car owners
For a buyer, excise duty is a cost paid once and absorbed into the on-the-road price of a new car. You do not see it as a recurring charge. The useful thing to understand is the order of the stack: excise duty first, then taxes layered on top. That order is why a higher-value car carries disproportionately more tax overall. When comparing cars, treat the quoted on-the-road price as already containing excise duty, GST, the registration fees, and COE.