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Shell weighs up US tax cut

The energy giant has been weighing up Donald Trump's tax reforms
January 2, 2018

According to Royal Dutch Shell (RDSB), President Trump’s tax reforms, specifically the reduction of the corporate tax rate from 35 to 21 per cent, are expected to be broadly “favourable” for the group, but they will negatively impact its fourth-quarter results.

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Based on the group’s third-quarter earnings, the tax reforms will result in a charge of $2bn to $2.5bn (£1.5bn to £1.9bn) due to a re-measurement of its deferred tax position in view of the lower rate of corporate income tax. UK rival BP (BP.) estimates its one-off revaluation at $1.5bn. Shell, like any other company, has accumulated deferred assets during unprofitable periods and is able to utilise them to offset future tax payments. However, these assets are worth less on paper now that the tax overhaul has reduced the rate.