BP to take US$1.5 bln hit on US tax reforms
LONDON: British energy major BP said that it expected to take a US$ 1.5- billion ( 1.2- billion- euro) hit from US President Donald Trump’s tax reforms.
“The lowering of the US corporate income tax rate to 21 per cent requires revaluation of BP’s US deferred tax assets and liabilities,” the company said in a statement.
“The current estimated impact of this will be a one-off non-cash charge to the group income statement of around US$1.5 billion that will impact BP’s fourth quarter 2017 results.”
However, the energy giant cautioned that longer-term earnings would be “positively impacted” by the US changes.
BP is scheduled to unveil its fourth-quarter figures on February 6.
Trump has signed into law a sweeping overhaul of the US tax code, in what was his first major legislative victory since taking office nearly a year ago.
The measure is expected to boost corporate profits of banks and other companies over the medium and long term by lowering the corporate tax rate to 21 per cent from 35 per cent.
However, several large corporations have signalled that the law will result in a short-term hit on earnings repatriated from overseas.
The reform taxes these earnings at 15.5 per cent on cash and equivalents and eight per cent on real estate and other illiquid assets.
Other large companies that have alluded to large one-time hits for the fourth quarter include BP’s key rival Royal Dutch Shell, as well as banking groups Barclays and Credit Suisse. — AFP