(RTTNews.com) - British energy giant BP Plc (BP.L, BP_UN.TO, BP) announced Tuesday that it expects around $1.5 billion one-off non-cash charge in its fourth quarter due to the recently-enacted changes to US corporate taxes that was signed into law by President Donald Trump last month. However, BP, with majority of investments in the U.S., sees its future US after-tax earnings to be positively impacted by these tax reforms.
This is largely due to the reduction of the US federal corporate income tax rate to 21% from 35%, effective January 1, 2018. 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 noted.
In a statement, BP said the lowering of the US corporate income tax rate to 21% requires revaluation of BP's US deferred tax assets and liabilities.
On December 22, President Trump signed a tax overhaul into law that contains new rules, including a cut in the corporate tax rate to 21 percent.
Banking major Goldman Sachs recently announced that it will take an estimated $5 billion hit in the fourth quarter from the overhaul. Shell and Barclays also expect charges.
Many Wall Street analysts reportedly consider the tax reform, which was a key campaign platform of Trump, as a long-term benefit for companies operating in America due to the reduction in the headline tax rate.
FT reported, citing accountants at PricewaterhouseCoopers, that the bill also included a slew of tax-law changes that companies will be required to account for in the period in which the bill was signed.
With this, the publicly traded companies are expected to make announcements about the effect of the taxes in the fourth quarter.
PwC said in a report, "Companies will need to carefully evaluate the impact that the changes will have on their existing financial statement positions, assertions, and disclosures, in order to appropriately account for changes in the period of enactment. For many companies, this assessment will be complex and will require significant effort."
In London, BP shares were trading at 520.62 pence, down 0.40 percent.
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