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Trump tax reforms will help boost oil business, says Shell

The group said it will provide details of the impact of the new US tax changes in its full-year results in February

Oil giant Royal Dutch Shell has said President Donald Trump’s US tax reforms are set to boost the group and its US business thanks to next month’s cut in corporation tax.

The group said the 1 January changes – largely the move to slash US corporation tax from 35 per cent to 21 per cent- are expected to be “favourable” for the group but will impact its fourth-quarter results.

It will announce the full impact as part of its fourth-quarter and full-year results on 1 February.

But it said that based on third-quarter earnings, the tax reforms will see it take a charge of $2bn  (£1.5bn) to $2.5bn (£1.9bn) due to a re-measurement of its deferred tax position to reflect the lower corporate income tax rate.

Mr Trump has said his sweeping overhaul of US taxeswill act as an economic rejuvenator and claims that the steep cuts in the corporate tax rate will invigorate the economy.

Hopes of a boost from the US tax reforms act as a further fillip for Shell after it recently announced it was restoring its cash dividends after more than two years in the latest sign that the industry is emerging from an extended slump.

The company confirmed in November that it was cancelling the scrip dividend programme that was in place since 2015, which gave shareholders the option to receive payments in shares or cash as it battled tough market conditions and a plunge in oil prices sparked by lower demand and a glut in supply.

Shell also increased its cash generation forecast as Brent crude prices continue to hold above $60  a barrel, having fallen as low as $27.26 in January.

And in a surprise announcement last week, Shell said it had acquired energy group First Utility in a move that will see it become a direct energy provider to 825,000 British homes.

Press Association

SOURCE

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