Mining giant BHP Billiton has become the latest multinational company to report a financial hit from tax reform in the US.
The FTSE 100 company has said it faces a tax charge of $1.8bn (£1.3bn) from measures passed by President Donald Trump in December to lower the federal corporate tax rate from 35pc to 21pc.
Roughly $900m of this hit comes from reassessing certain deferred taxes it had built up on its balance sheet, while the rest comes from the cancellation of foreign tax credits.
The charge will be treated as a one-off item when it reports its half-year results on Feb 20.
In common with other UK-listed companies that have been caught up in the reform, BHP argued it would be beneficial in the long run: “The US tax reform will have a positive impact on the group’s US attributable profits in the longer term mainly due to the lower corporate tax rate.”
Barclays, Shell, Credit Suisse, Deutsche Bank and even Manchester United are among the international names that have recorded one-off hits from the tax changes, which, alongside lowering the headline rate of tax, also cancelled certain tax breaks.
BHP is one of the largest foreign investors in the US oil industry, owning extensive shale fields in Texas, some of which it is now looking to sell. It also co-owns a number of oilfields in the Gulf of Mexico and holds a stake in a copper project in Arizona.
Donald Trump signs his $1.5 trillion tax cut bill in December
The tax hit could dampen expectations that next week BHP will follow its rival Rio Tinto, which announced a record dividend and a share buyback at its full-year results earlier this month.
UBS analyst Myles Allsop said: “We do not expect a buy-back with net debt at the top end of range [at around $14bn] and the Samarco court case expected on April 20.”
BHP is awaiting the outcome of a case in Brazil to decide the final compensation due following the fatal accident at Samarco in 2015. A dam at the iron ore mine collapsed, killing 19 and flooding a river valley. Prosecutors had been looking for billions of dollars in compensation for the damage wrought.
The Anglo Australian group is forecast to report half-year revenue of $21.4bn and underlying earnings of $11.6bn next week.
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