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Cape Town - JSE-listed British American Tobacco [JSE:BTI] on Tuesday announced that its effective tax rate was set to decrease following the passage of US Tax Cuts and Jobs Act.
The major tax reform plan was signed into law by US President Donald Trump in late December 2017.
BAT is one of the largest companies listed in the JSE by market capitalisation. It has its primary listing on the London Stock Exchange.
BAT said while the passage of the act, which has been criticised for giving tax breaks to the wealthy, would not affect its underlying tax rate for the year ended 2017, it anticipates benefiting from a “non-cash exceptional tax credit as a result of the revaluation of deferred tax balances arising from the acquisition of Reynolds American”.
It did not say what the credit would amount to.
BAT said it is expecting a lower effective tax rate for 2018, which in 2017 stood at "around 30%".
“For the year to December 31 2018 we currently anticipate that the changes will reduce the group’s effective tax rate percentage to the high twenties,” it said in a note to investors on Tuesday morning.
“All other things being equal, this would result in a benefit of 6% 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.”
At 11:30 on Tuesday, BAT shares were trading at R836.80 on the JSE, up 0.8% on the day.
