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

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.