BP plc (NYSE: BP)announced on Tuesday that it expects a $1.5 billion charge impact to its fourth quarter results for 2017 due to the new U.S. tax reform.
The Trump administration recently passed a new tax reform, slashing corporate tax rate from 35 percent to 21 percent, which is now in effect. Although, BP estimates a negative impact charge, the company foresees a positive impact in the long term.
In the short term, the lowered tax rates will impact its deferred tax assets and liabilities. The impact will result in a one-off non-cash charge of $1.5 billion to BP’s fourth quarter results, which is expected to be announced on February 8.
The new tax rate is “subject to a number of complex provisions”, which BP is currently reviewing.
BP joins other oil giants like Royal Dutch Shell (NYSE:RDS.A), who estimates a $2 billion to $2.5 billion charge. Other major companies, such as Goldman Sachs announced an estimated $5 billion charge too.
Many analysts say that the tax reform was a key to President Donald Trump’s campaign platform to benefit companies operating in America resulting from a tax reduction, according to Nasdaq.