MUNICH (dpa-AFX) - German automaker Daimler AG (DDAIF.PK) said it expects the tax cut signed by President Donald Trump Friday to result in an increase in 2017 net income by 1.7 billion euros. The positive income tax benefit will not impact the Free Cash Flow of the Industrial Business or the Group EBIT for the year 2017.
The law signed by the President of the USA for a comprehensive tax reform or 'Tax Cuts and Jobs Act', includes the reduction of the nationwide federal corporate income tax rate from 35% to 21%, starting January 01, 2018. Due to the broadly based U.S. industrial and financial services business, combined with a material value added, Daimler -similar to many other local U.S. companies - benefits from the decided tax reform.
In addtion, the law includes several other measures. The impact of the other measures on Daimler are analyzed in detail at the moment, Daimler said.
Daimler said it currently expect other issues not connected with the U.S. tax reform, which will increase the tax expenses and will lead to an overall increase of Group Net Income by approximately only EUR1 billion net.
Separately, BMW AG (BMW.L, BAMXF.PK, BAMXY.PK) said it expects re-measurement of deferred taxes as a result of US tax reform to have a positive impact on deferred taxes in 2017 and therefore on group net profit in the region of 950 million euros to 1.550 billion euros. The exact amount can only be computed during preparation of the 2017 group financial statements. The re-measurement of the deferred taxes has no impact on earnings before tax or EBT or cash flow in 2017.
From 2018, both the lower tax rate and negative effects included in the US tax reform must be considered. The overall effect cannot currently bequantified with reasonable certainty.
Copyright RTT News/dpa-AFX