Shell Will Usher In A New Business Boom Thanks To U.S. Tax Cut

The oil giant, Royal Dutch Shell, is about to experience a massive boost next year thanks to President Donald Trump’s US tax reforms. The tax cut will reportedly cut US corporation taxes from 35 percent to 21 percent.

While Shell believes the corporate tax cut will be “favorable” for the company when it becomes law on January 1st, the group thinks it will ultimately affect their fourth-quarter results. Shell will announce the ramifications of the impact as part of its fourth-quarter and full-year results which are due on February 1.

According to its third-quarter earnings report, Shell estimated the tax reforms to take a charge of $2 billion to $2.5 billion due to recalculations of its deferred tax position as to reflect the lower corporate income tax rate.

While the company is ready to take a beating in the next months, they are optimistic about the far-reaching effects of the tax cut. President Trump signed the 1.5 trillion tax reform into law last Friday which cuts tax rates on corporations as well as offering some temporary cuts for some businessmen and families.

According to Trump, the tax overhaul will rejuvenate the economy and give it new tools to sustain itself. The notion seems to be taking effect at least from Shell’s part after the company recently announced that it was restoring its cash dividends, a sign that the industry is coming out of an extended drop.

Brent crude prices currently remain at $60 a barrel, which prompted Shell to increase its cash generation forecast.  While oil prices remain steady, January saw one of the steepest drops of Brent crude prices in recent memory having fallen as low as $27.26 in January.

More so, the company announced last week that it had acquired energy group, First Utility. This will render the oil giant a direct energy provider to over 800 thousand British homes.

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