BP Sees $1.5 Billion Charge for Last Quarter on U.S. Tax LawBy
Deferred tax assets to be revalued; long-term effect positive
Shell also said last week it would book fourth-quarter charge
BP Plc, the British oil major that invests more in the U.S. than anywhere else, expects to take a charge of about $1.5 billion following recent tax changes in the country, despite the prospects of long-term gains from the legislation.
“The lowering of the U.S. corporate income-tax rate to 21 percent requires revaluation of BP’s U.S. 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.
A tax overhaul signed into law on Dec. 22 by President Donald Trump contains a raft of new rules, including a cut in the corporate tax rate to 21 percent from 35 percent. 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.
Royal Dutch Shell Plc 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 Feb. 1, while BP will report on Feb. 6.
— With assistance by Kelly Gilblom