Royal Dutch Shell and Barclays have warned of a hit to their earnings from Donald Trump's US tax reforms despite hopes over a long-term boost from the overhaul.
The pair said the changes, which were signed into law on December 22nd and will see corporation tax in the US slashed from 35 per cent to 21 per cent, will affect profits as they have to recalculate the deferred tax assets built up on their balance sheets.
Shell said that, while it was still assessing the impact, based on third-quarter earnings the tax reforms will see it take a charge of $2 billion-$2.5 billion. Barclays also announced its expected impact from the new tax laws, saying it is set to take a £1 billion charge to its 2017 accounts.
But both firms said they expect to benefit in the long run, with Shell saying the January 1st changes are set to be “favourable” for the group and its US business.
Barclays also 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”.
– PA
