What is cigarette giant British American Tobacco getting out of the roughly 20lb, 600-page tax bill that was recently passed by the Trump administration?
A nice tax cut, that’s what.
According to The Telegraph, BAT, a UK-based company said the US Tax Cuts and Jobs Act; a bill which was introduced last year should reduce its tax rate from roughly 30 percent to the high 20’s in 2018.
The Tax Cuts and Jobs Act of 2017 is a congressional revenue act introduced in Congress, which amended the Internal Revenue Code of 1986 by changing several key elements of the code.
One of those major elements being, the code on tax rates for businesses and individuals.
BAT management said the legislative change should result in a 6 percent boost to its full-year earnings per share.
If you remember back on July 25th, 2017, BAT announced through a press release that they were acquiring the remaining 57.8% of Reynolds American Inc. (“Reynolds”) the company did not already own. This full ownership of a US firm will play a major factor in the potential tax reduction.
Currently, US businesses pay a 35% corporation tax rate for income earned in any country; however, this will change with a US plan to impose corporation tax on overseas earnings at the same rate the country those profits were made in would charge.
This change is meant to encourage US companies to return back to domestic soil, after having relocated to lower-tax regions of the world to reduce their tax.
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