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Investing.com -- Shares of Grab Holdings (NASDAQ:GRAB) climbed 10% today as investors responded to Singapore’s new tax policy changes, which are expected to benefit the company. The stock’s rise comes on the heels of the city-state’s budget announcement, which forecasts a second consecutive year of budget surpluses and includes provisions that could positively impact Grab’s financials.
Singapore’s Prime Minister and Finance Minister Lawrence Wong revealed a fiscal surplus of S$6.8 billion, or 0.9% of GDP, defying analysts’ expectations of a deficit. The surplus is attributed to robust corporate and consumption tax revenues. The 2025 budget includes a variety of spending initiatives, from infrastructure investments to consumer vouchers, aimed at strengthening the economy against global trade challenges and supporting citizens amid rising living costs.
A key feature of the budget that has caught the attention of investors is the 50% rebate on corporate taxes, capped at S$40,000, which Grab is poised to utilize. Bloomberg Intelligence analyst Nathan Naidu commented on the potential impact: "Sea and Grab could benefit from a 50% rebate on corporate taxes -- capped at S$40,000 -- contained in Singapore’s 2025 budget, as they both appear on track to post net profit this year. Sea’s tax expenses, about S$311 million in the January-September period, accounted for more than 50% of its pretax income. Grab, albeit expected by consensus to remain loss-making in 2024, may incur a S$71 million tax expense on an estimated S$322 million of pretax profit in 2025. GoTo might need five more years to achieve a net profit, based on a Jan. 6 filing."
The budget also addresses concerns over elevated living costs, with Wong announcing S$800 in vouchers for households to alleviate expenses at supermarkets and restaurants, which represents an increase from the previous year.
In the context of these developments, Grab’s stock movement reflects investor optimism regarding the company’s future profitability and the broader economic environment in Singapore. The government’s fiscal strategy, including the tax rebate, appears to be a boon for Grab as it navigates a path to profitability in a competitive global market.
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