Singapore’s LTA Proposes Merging COE Categories A and B with New Fee-and-Rebate Model

The Land Transport Authority (LTA) of Singapore is set to transform the vehicle Certificate of Entitlement (COE) system by proposing a merger of Categories A and B into a single passenger car category. This bold move aims to better differentiate between mass-market and higher-end vehicles through an innovative fee-and-rebate system linked to the car’s open market value (OMV).

Currently, the COE system segments vehicles based on engine capacity and power output into two distinct categories: Category A covers non-fully electric cars with engines up to 1,600cc and power up to 97kW, and fully electric cars with power up to 110kW. Category B includes higher-capacity or more powerful cars. But with rapid advancements in vehicle technology—especially the rise of electric vehicles—these criteria have become less reliable, leading manufacturers to tweak specs and intensify competition for Category A COEs. In fact, between February and June 2026, COE prices for Category A vehicles exceeded those for Category B on three occasions, highlighting a growing distortion.

Under the proposed system, Categories A and B would be combined, with COE prices adjusted based on each car’s OMV. Lower-value cars would benefit from rebates, while buyers of more expensive vehicles would face surcharges, creating a clearer price distinction. Importantly, the maximum COE price difference between a luxury car and a mass-market vehicle would be capped at S$30,000, ensuring a balanced approach to cost differentiation.

This fee-and-rebate system aims to preserve the original intent of COE categories by distinguishing vehicle segments more effectively in today’s evolving automotive landscape. The LTA has opened a public consultation from October 8 to November 2, 2026, inviting feedback on these proposed changes. The success of this new approach will largely depend on public input and how the final regulations are structured.

This initiative marks a significant step in adapting Singapore’s vehicle ownership policies to changing technological trends, maintaining fairness, and fostering a more transparent market for car buyers.