BP to take $1.5 billion charge to adjust to US tax changes
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BP expects its future US after-tax earnings to be positively impacted by the recently-enacted changes to US corporate taxes, reads a message from BP.
This is largely due to the reduction of the US federal corporate income tax rate from 35 percent to 21 percent (effective 1 January 2018), according to the message.
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 lowering of the US corporate income tax rate to 21 percent requires revaluation of BP’s US deferred tax assets and liabilities. The current estimated impact of this will be a one-off non-cash charge to the Group income statement of around $1.5 billion that will impact BP’s fourth quarter 2017 results,” said BP.
Earlier, the the US Senate approved the $1.5 trillion tax bill, which includes permanent tax breaks for corporations and temporary tax cuts for individuals, by a final vote of 51-48.
The bill lowers the top individual tax rate from 39.6 percent to 37 percent and slashes the corporate tax rate to 21 percent, a dramatic fall from its current rate of 35 percent.
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