The UK and US Treasuries will be taking a loss due to the Gulf oil spill. Because the company has been pushed into debt due to the blown well incident they are geared to apply for tax credit with both countries. This will amount to approximately 6.5 billion pounds in tax credit in the UK.
With the new government’s plans to make major cuts, any loss of expected tax revenues will cause difficulty. While the majority of the tax revenue losses will hit the US government the UK will have some loss. Last year BP paid 930 million pounds in corporate taxes to the UK Treasury.
There is also a loss to the Treasury due to a reduction in dividend taxation.
BP announced today that it is making a 32.2 billion US dollar provision for the cost of the spill. That pushed BP’s second-quarter results into a record loss for the company of $17 billion. Last year the company reported a profit of $3.1 billion.
The company detailed in it’s announcement that the net impact to BP’s financial report will only be $22 billion since they will be recording a $9.9 billion tax credit.
The fact that BP will be taking tax credit will likely come with criticism from politicians on both sides of the ocean.