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Setting Up a Car Rental Company

Updated: Mar 20

Setting Up a Car Rental Company

Starting a car rental company in Singapore can be a rewarding venture, but there are important steps to take to ensure you comply with regulations and launch a successful business. Here's a breakdown of the key processes involved:

1. Business Planning

  • Market Research: Analyze the competition, identify your target audience (tourists, business travelers, locals), and understand their car rental needs.

  • Develop a Business Plan: Outline your company's goals, target market, marketing strategy, financial projections, and fleet management plan.

  • Choose Your Fleet: Decide on the types of vehicles you'll offer (economy cars, SUVs, luxury vehicles) based on market research and budget.

A car rental company refers to a company that rents out private hire cars for a fee. These private hire cars are described as "Private Hire" on the vehicle log card.

With effect from 1 October 2017, you may convert your car online by logging in using your Singpass 2FA to our LTA’s OneMotoring website > Digital Services > Convert Vehicle Type or Scheme (e.g. Normal Car to Private Hire Car or Revised Off-Peak Car, and Vice Versa) (Requires login)

You will need:

1. Your vehicle number; and

2. $100 administrative fee will be payable by Credit/ Debit Cards (VISA or MasterCard only) or Internet Banking Account with DBS/POSB, OCBC, Standard Chartered Bank or UOB (eNETS Debit) or SGQR Paynow/ ApplePay/ GooglePay/ PayPal.

Upon successful conversion, a receipt will be generated. Vehicle owner will also receive a notification letter on the successful conversion.

Owners of Private Hire (chauffeur-driven) cars need to ensure the cars are affixed with a pair of tamper-evident decals within 3 calendar days, and the cars must also be adequately insured with at least third-party liability risk insurance coverage (including "use for hire or reward") to be used for paid chauffeured services.

2. Company Registration

  • Register Your Business: Register as a Limited Liability Company (LLC) with the Accounting and Corporate Regulatory Authority (ACRA) in Singapore

To set up a car rental company, your company’s principle activity declared to the Accounting and Corporate Regulatory Authority (ACRA) must be listed as “Renting of Private Cars” or “Private Cars for Hire”.

  • Tax Registration: Apply for a Goods and Services Tax (GST) registration with the Inland Revenue Authority of Singapore (IRAS).

3. Licensing and Permits

  • Land Transport Authority (LTA) Registration: Obtain a business license from the Land Transport Authority (LTA) to operate as a car rental company.

Cars used for rental purposes are registered with LTA as “PHC”. Vehicle class code of ‘R’ and ‘Z’ denote Private Hire (self-drive) and Private Hire (chauffeur-driven) respectively. You may use ‘R10 or Z10’ when you are registering a car, and ‘R11 or Z11’ when you are registering a station wagon. Rental cars meant for purpose of offering “Grab/Uber” related type of services should be registered under Private Hire (Chauffeur-Driven) with vehicle class code “Z”.

Additional Considerations

  • Location: Choose a strategic location with easy access for customers, considering factors like rent and target market.

  • Car Rental Software: Invest in car rental management software to streamline operations, bookings, and customer service.

  • Insurance: Secure comprehensive insurance coverage for your rental fleet.

If you lease out your vehicle in return for rental fees, you should notify your insurance company and apply for coverage. Additional premiums will apply.

  • Marketing Strategy: Develop a marketing plan to reach your target audience. Consider online advertising, partnerships with travel agencies, and social media marketing.

Remember, this is a general overview. It's advisable to consult with a business advisor or lawyer to ensure you comply with all legal and regulatory requirements specific to your business model.

Expenses incurred by car rental companies for private rental cars rented to customers are tax-deductible

Under Sections 14 and 15 of the Income Tax Act 1947 (ITA), your car rental company can claim a deduction for expenses incurred on private hire cars rented to customers. Capital allowances may also be claimed on the cost of purchasing such a private hire car.

Income arising from car rental activities will be segregated, i.e. losses and capital allowances arising from such activities cannot be deducted from other income. However, under Section 23(4) and Section 37(12) of the ITA, unutilised losses and unutlilised capital allowances can be carried forward to be deducted from income derived from the same car rental activity business in subsequent Years of Assessment (YAs).

Unutilised losses and unutilised capital allowances remaining after the car rental business has been terminated will be disregarded.

The requirement to segregate income from a car rental business does not apply to unutilised losses and unutilised capital allowances relating to the year of assessment 1999 and before. Therefore, such unutilised losses and unutilised capital allowances can be used to deduct from other income earned by your car rental company.

If your car rental company operates other businesses, you will need to keep separate records and accounts to easily identify and determine income and expenses related to your car rental business, separate from income/expenses from other businesses.

How Bestar can Help

Setting Up a Car Rental Company

There are some general areas where Bestar might be able to assist in relation to car rental services in Singapore:

Bestar could help with:

  • Company Registration: Bestar helps with the process of registering your LLC with ACRA and obtaining an initial business license.

Contact Bestar and inquire about our specific services for car rental businesses in Singapore. Bestar has experience in company registration and business licenses for the car rental industry. We can ensure you comply with all legal requirements and navigate the registration process.

Bestar helps launch your car rental company in Singapore. Contact us.


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