Although the tax cut will positively impact it in the long term, adds oil giant
Oil giant BP has warned that it will experience a one-time hit of $1.5bn (£1.1bn) to its fourth quarter earnings due to the radical US tax regime that was signed into law by the US President Donald Trump.
In its regulatory filing today, the UK-based energy company said although the tax cut will positively impact it in the long term, it will require a revaluation of its deferred tax assets and liabilities in the US, which will lead to a non-cash charge of “around” $1.5bn in the fourth quarter.
It added the final figure will be disclosed in its fourth quarter results next month.
BP’s announcement comes days after investment bank Goldman Sachs said that it will take an estimated $5bn blow in the fourth quarter from this reform. Shell and Barclays have made similar announcements.
The US House of Representatives gave final approval last month to the biggest overhaul of the US tax code in 30 years, which included a cut to the corporate tax rate to 21 per cent from 35 per cent.
The bill ‘will have pervasive financial reporting implications, both in the period of enactment and on a prospective basis,’ PwC said in a report.