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Abu Dhabi, UAEFriday 14 December 2018

Goldman expects $5bn hit to quarterly earnings due to new tax law

The new law significantly lowers the income tax rate for US companies to 21 per cent from 35 per cent

Goldman Sachs is expecting a $5 billion hit to profits during the fourth quarter because of the tax overhaul recently signed into law. (AP Photo/Richard Drew, File)
Goldman Sachs is expecting a $5 billion hit to profits during the fourth quarter because of the tax overhaul recently signed into law. (AP Photo/Richard Drew, File)

Goldman Sachs Group said on Friday it expects fourth-quarter earnings to decrease by about US$5 billion due to the new US tax law signed by President Donald Trump last week.

Around two-thirds of the $5bn decrease is due to repatriation tax, Goldman said in a statement with the US Securities and Exchange Commission.

However, the impact of the tax legislation may differ from the estimate, according to the bank.

Congress last week approved a US tax overhaul, the biggest in 30 years, which includes steep tax cuts for corporations and wealthy taxpayers.

The new law significantly lowers the income tax rate for US companies - to 21 per cent from 35 per cent - allowing them to repatriate cash from overseas, and modifies numerous deductions, among other changes.

The tax overhaul will allow Apple to bring back its US$252.3bn foreign cash pile without a major tax hit - a long-standing company goal.

Drugmaker Amgen Inc last Friday also said it expects to incur tax expenses of US$6bn to US$6.5bn over time as it repatriates cash it has accumulated around the world because of the new law.