BP, the UK oil major that invests more in the US than anywhere else, expects to take a charge of about $1.5 billion as a result of recent tax changes in the country, despite the prospects of long-term gains from the legislation.
“The lowering of the US corporate income-tax rate to 21% requires revaluation of BP’s US deferred tax assets and liabilities,” the London-based company said Tuesday in a statement. “The current estimated impact of this will be a one-off non-cash charge” affecting fourth-quarter 2017 results.
Longer term, earnings will be “positively impacted” by the changes, according to BP, which is scheduled to announce fourth-quarter results on February 6.
A tax overhaul signed into law on December 22 by President Donald Trump contains a raft of new rules, including a cut in the corporate tax rate to 21% from 35%.
While BP and its peers expect the long-term effect of the legislation to be positive for earnings, the change results in one-time charges driven by the re-measurement of their deferred tax position.
Shell said last week that the charge may be as high as $2.5 billion. The Anglo-Dutch oil producer is scheduled to announce fourth-quarter results on February 1.