BP Takes $1.5 Billion Charge Related to U.S. Tax Overhaul -- Update
By Sarah Kent
LONDON-- BP PLC is joining a host of companies whose earnings will be dented by the U.S. tax overhaul, saying Tuesday it would suffer a roughly $1.5 billion accounting charge in the fourth quarter because of the legislation.
The charge, which won't affect the company's cash flow, highlights the wide-ranging impact of changes to the American tax code enacted by Congress and signed by President Donald Trump late last year. The accounting hit will weigh on BP's version of net earnings for the fourth quarter of 2017, a period when profits were expected to surge because of buoyant oil prices.
BP said the tax bill would help the company in the long term, reducing the corporate tax rate it and other companies pay in the U.S. to 21% from 35%.
However, in the short term, BP said the tax changes would change 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 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 they will record significant charges in the fourth quarter related to the tax changes.
BP said it is still reviewing the ultimate impact of the tax rewrite.
Write to Sarah Kent at firstname.lastname@example.org
(END) Dow Jones Newswires
January 02, 2018 05:19 ET (10:19 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.