Jan 2, 2018

BP says US tax reforms will cause $1.5bn hit

BP has warned that US tax reforms signed into law by President Donald Trump last month will cause a one-off charge of $1.5bn but the changes would be beneficial to earnings in the long run. Tuesday's announcement from the UK energy group followed similar disclosures by large companies on both sides of the Atlantic as the corporate sector assesses the impact of the biggest overhaul of the US tax code for 30 years. BP said that, while the lowering of the US corporate tax rate from 35 to 21 per cent would have a positive impact on future earnings, the reforms would have a negative impact on fourth-quarter results to be announced on February 6. "The ultimate impact of the change in the US corporate income tax rate is subject to a number of complex provisions in the legislation which BP is reviewing," the company said. The sweeping tax reforms passed by the Republican-controlled Congress have been seen by many Wall Street analysts as a long-term boon for companies operating in the US because of the reduction in the headline tax rate.

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