Tax overhaul costs Goldman Sachs $5 billion
Posted December 29, 2017 6:52 a.m. EST
LONDON (CNNMoney) — Goldman Sachs says it's about take a big hit from the massive overhaul to the U.S. tax code.
The investment bank forecast that changes to American tax rules will knock $5 billion off its profit in the final quarter of 2017.
Goldman said the majority of the $5 billion hit will come from a "repatriation tax," which is the cost of moving money between the U.S. and foreign countries.
It will also have to write down the value of tax credits it had been saving up from past losses. Goldman plans to use the credits in the future to lower its tax bill, but they'll be worth much less when the new rules take effect next year.
President Trump signed the tax reform bill into law last week with the promise that lower taxes would boost business profits. But many big international companies have warned that the tax changes will mean billions of dollars in one-off losses.
Major European banks Barclays, Credit Suisse and UBS, plus oil giant Shell, have indicated the new tax rules could cost them between $1 billion to $3 billion each in one-off charges.
Longer term, a lower U.S. corporate tax rate -- down to 21% from 35% -- is expected to be positive for business. In the short-term, the picture is murkier as accountants are still crunching the numbers on how this will all play out.