American Express said it expects to report a fourth-quarter loss due to a $2.4 billion hit from the tax legislation, which makes it cheaper for US companies to repatriate profits.
The impacts of the tax act in the fourth quarter will reduce American Express’ regulatory capital and capital ratios for the fourth quarter, the company said.
In the long run, AmEx expects the lower corporate tax rate to be a significant benefit. The company anticipates effective tax rate of about 20 per cent before discrete tax items in 2018.
Congress' US tax overhaul Bill, which President Donald Trump signed into law last month, significantly cuts the corporate tax rate to 21 per cent from 35 per cent.
According to the new law, profits brought back to the United States would not be taxed at the full 35 per cent corporate tax rate that would normally be due. Instead, those profits would be taxed at only 15.5 per cent for cash assets and 8 percent for illiquid assets.
Goldman Sachs Group Inc said last week it also expects fourth-quarter earnings to decrease by about $5 billion due to the tax legislation. On Tuesday oil giant BP said it expects to take a €1.5 billion charge following the tax changes in the US, but said there would be long-term gains from the legislation.
- Reuters
