BP: Trump’s tax reforms will lead to $1.5bn hit for the oil company

BP (LON: BP) has said that it is likely to take a $1.5 billion (£1.1 billion) hit to it’s fourth-quarter earnings following Trump’s changes to the US tax rules.

The energy firm stated in its regulatory filing that it expects a hit its earnings in the last three months of 2017. The group does, however, expect a long-term boost from the new tax rate.

“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.

Shell (OTCMKTS: RYDAF), Barclays (LON: BARC) and Goldman Sachs (NYSE: GS) have made similar statements regarding the new tax laws. Goldman Sachs said it expects a $5 billion hit in the fourth quarter of 2017.

Shell said it would incur a charge of around $2.5 billion, long-term impacts will be “favourable” on earnings.

Stock markets have surged in recent weeks after the US Congress signed off on the drop in corporate tax rate cut from 35 percent to 21 percent. Investors are hoping the cut in taxes will lead to a jump in company profits.

Trump’s changes to the US tax system are the biggest since the 1980s.

“Corporations are literally going wild over this, I think even beyond my expectations, so far beyond my expectations,” he said.

Critics claim that the changes are simply for Wall Street and large corporations, with the average US citizen having few or no benefits.

“At the end of 10 years, 83% of the benefits go to the top 1%, 60% of the benefits go to the top one-tenth of 1%, meanwhile well over 80 million Americans will be paying more in taxes, 13 million will lose their healthcare and we will have an additional $1.4tn deficit …” said Senator Bernie Sanders to CNN’s State of the Union.

BP’s shares were down 1.15 percent by 1534 GMT.