BP to Take $1.5 Billion Tax Charge -- WSJ
January 03 2018 - 3:02AM
Dow Jones News
By Sarah Kent
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (January 3, 2018).
LONDON -- BP PLC said Tuesday it would take a roughly $1.5
billion accounting charge for its latest quarter related to the
U.S. tax overhaul, though it added that a corporate tax cut would
be a long-term positive.
The charge, which won't affect the oil company's cash flow,
highlights the wide-ranging impact of changes to the American tax
code enacted by Congress and signed late last year by President
Donald Trump. The accounting hit will be reflected in BP's version
of net earnings for the fourth quarter of 2017, when buoyant oil
prices likely gave a big boost to profits..
BP said the tax bill will provide a long-term benefit in
reducing the corporate tax rate it and other companies pay in the
U.S. to 21% from 35%.
In the short term, BP said the tax changes would reduce the
value of its deferred-tax assets. Companies can log such assets
during unprofitable periods and use them as credits toward future
tax payments. Lowering the overall corporate tax rate makes those
assets worth less on paper.
Last week, Royal Dutch Shell PLC said the tax-change impact on
its earnings will likely be a noncash hit of between $2 billion and
$2.5 billion in the fourth quarter. Banks, including Barclays PLC
and Credit Suisse Group AG have also warned of significant charges
to their fourth-quarter results related to the new U.S. tax
law.
While BP said the tax overhaul will "positively" affect its net
earnings over the long term, there is some uncertainty on how
beneficial it will be for foreign firms with large U.S. businesses.
The company said it is still reviewing "a number of complex
provisions in the legislation."
Credit Suisse says a new U.S. tax on services and interest
payments to affiliated companies outside the U.S. could push its
tax liability up. Longer term though, the bank said the tax changes
would boost U.S. economic activity and its business there.
BP's share price fell 1% on Tuesday, while other energy
companies experienced modest gains.
Write to Sarah Kent at sarah.kent@wsj.com
(END) Dow Jones Newswires
January 03, 2018 02:47 ET (07:47 GMT)
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