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The British oil and gas company said on Tuesday the cut in U.S.
corporate income tax from 35 percent to 21 percent was expected
to positively impact its U.S. earnings in the long run.
But in the short term, lower tax rates would affect its deferred
tax assets and liabilities, resulting in a one-off, non-cash
charge of $1.5 billion to its fourth quarter results which are
due to be announced on Feb. 8, it said.
"The ultimate impact of the change in the U.S. corporate income
tax rate is subject to a number of complex provisions in the
legislation which BP is reviewing," BP said in a statement.
Deferred tax assets refer in some cases to a company overpaying
taxes in advance and then getting them back in the form of tax
relief.
BP has large operations in oil and gas production in the Gulf of
Mexico and onshore shale operations as well as refineries that
can process up to 746,000 barrels per day of crude oil,
according to its website.
Shell <RDSa.L> said last week it would incur a one-off charge of
$2-$2.5 billion, although the new legislation would have a
"favorable" impact on earnings.
On Dec. 22, President Donald Trump signed the $1.5 trillion tax
overhaul into law, cutting tax rates for businesses and offering
some temporary cuts for some individuals and families.
(Additional reporting by Arathy S Nair in Bengaluru; Editing by
David Goodman and Mark Potter)
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