BHP Billiton said that in the long run, however, it expects the new US tax legislation, signed by President Trump in December, to benefit profits, mainly due to the lower corporation tax rate, which has been slashed from 35% to 21%.
The one-off payment for BHP includes a non-cash charge on deferred taxes of $898m and another charge on foreign tax credits of $834m. The $1.8bn charge will be treated as an exceptional item.
The miner is not the only one feeling the impact from the Trump administration’s tax changes.
Apple said last month it will pay $38bn (£27.5bn) to repatriate its funds as part of a $350bn contribution to the US economy over the next five years. Facebook revealed that it had to pay a bill of $2.3bn (£1.59bn). Fast food giant McDonalds, reportedly a favourite of President Trump’s, said its profits were down 40% as a result of the tax reform, while, football club Manchester United blamed it for a £50m loss.
Several banks have also warned they will post losses in 2017 due to the changes. Deutsche Bank said this month that it would post its third consecutive loss in 2017, driven by the reduced value of its US DTAs which would result in a €1.5bn (£1.3bn) charge. Morgan Stanley will also be hit by a $1.25bn (£0.9bn) charge due to the reforms.
However, British American Tobacco (BAT) predicted that the tax reforms would result in a benefit of 6% in its 2018 earnings per share value, and marketer 4imprint announced that the lower US corporate tax rate would have a beneficial impact on earnings per share calculations.