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British American Tobacco has said it anticipates that, for the year to the end of December 2018, the changes brought about by the US Tax Cuts and Jobs Act would reduce the Group’s effective tax rate percentage to the high-twenties.
‘All other things being equal, this would result in a benefit of six percent to full year 2018 earnings per share, supporting our commitment to high single digit earnings growth and increased investment in the roll out of Next Generation Products,’ the company said in a note posted on its website today.
BAT said it noted that approval had been given for the new Act and said that it was continuing to work through the full impact it would have on the company. It said it would provide in February more details about that impact as part of its preliminary announcement for the year ended 31 December 2017.
‘For the year to 31 December 2017 the announced changes will have no impact on the Group’s underlying effective tax rate, which we have previously said we expect to be around 30 percent, BAT said. ‘However, we anticipate that the changes will result in a non-cash exceptional tax credit as a result of the revaluation of deferred tax balances arising from the acquisition of Reynolds American Inc. (RAI).’