US tax overhaul to give German automakers big earnings boost

BERLIN – German automakers BMW and Daimler say they expect the $1.5 trillion tax overhaul in the United States to boost their earnings for the year significantly.

The legislation that U.S. President Donald Trump signed into law on Friday cuts the corporate tax rate from 35 per cent to 21 per cent. BMW and Daimler said they therefore have to recalculate deferred taxes in the balance sheets of their U.S operations.

Daimler says the change means a roughly 1.7 billion-euro ($2 billion) boost for its 2017 net earnings. The automaker anticipates earnings to increase total only 1 billion euros overall because unrelated issues are expected to push up other tax expenses.

BMW said it expects a net profit boost between 950 million and 1.55 billion euros ($1.12 billion to $1.84 billion.)