Shell cheers boost from US tax reforms
The group said the January 1 changes – largely the move to slash US corporation tax from 35% to 21% – will be “favourable” for the group.
Oil giant Royal Dutch Shell has said President Donald Trump’s US tax reforms are set to boost the group and its American business thanks to next month’s cut in corporation tax.
The group said the January 1 changes – largely the move to slash US corporation tax from 35% to 21% – are expected to be “favourable” for the group but will affect its fourth-quarter results.
It will announce the full impact as part of its fourth-quarter and full-year results on February 1.
But it said that, based on third-quarter earnings, the tax reforms will see it take a charge of 2 billion US dollars (£1.5 billion) to 2.5 billion US dollars (£1.9 billion) due to a re-measurement of its deferred tax position to reflect the lower corporate income tax rate.
Barclays also announced its expected impact from the new tax laws, which were passed on December 22, saying it is set to take a £1 billion charge to its 2017 accounts.
However, like Shell, it said the overall tax cut is likely to “positively impact” its future earnings, although it added that the ultimate impact will also depend on the “effect of other complex provisions in the Act”.
President Trump signed the 1.5 trillion US dollar (£1.1 trillion) tax overhaul into law last Friday, cutting tax rates for businesses and also offering some temporary cuts for some individuals and families.
He has said his sweeping reforms will act as an economic rejuvenator and claimed that the steep cuts in the corporate tax rate will invigorate the economy.
Hopes of a boost from the US tax reforms act as a further fillip for Shell after it recently announced it was restoring its cash dividends after more than two years in the latest sign that the industry is emerging from an extended slump.
The company confirmed in November that it was cancelling the scrip dividend programme that was in place since 2015, which gave shareholders the option to receive payments in shares or cash as it battled tough market conditions and a plunge in oil prices sparked by lower demand and a glut in supply.
Shell also increased its cash generation forecast as Brent crude prices continue to hold above 60 US dollars a barrel, having fallen as low as 27.26 in January.
And in a surprise announcement last week, Shell said it had acquired energy group First Utility in a move that will see it become a direct energy provider to 825,000 British homes.