BP outlines likely impact of Trump's tax reforms

The company said on Tuesday that the reduction of the US federal corporate income tax rate from 35% to 21%, which came into force on Monday, will mean its future US earnings will be “positively impacted”.

However, BP added that the reform will require a revaluation of BP’s US deferred tax assets and liabilities, with the estimated impact of this being a “one-off non-cash charge” to the group income statement of around $1.5bn (£1.1bn).

The hit will be shown in BP’s fourth quarter results.

“BP expects its future US after-tax earnings to be positively impacted by the recently-enacted changes to US corporate taxes, largely due to the reduction of the US federal corporate income tax rate from 35% to 21%.

“The ultimate impact of the change in the US corporate income tax rate is subject to a number of complex provisions in the legislation which BP is reviewing,” the company said.

Last week Goldman Sachs warned that it is likely to take a $5bn (£3.7bn) hit to earnings as a result the tax reforms.

The Wall Street bank said that the biggest impact would come as a result of the repatriation tax which covers earnings from foreign subsidiaries, accounting for around two-thirds of the total financial drag.

Both Shell and Barclays have warned profits will be affected as they have to recalculate the deferred tax assets built up on their balance sheets.