People walk past the British American Tobacco offices in London, Britain.     File photo: REUTERS
People walk past the British American Tobacco offices in London, Britain. File photo: REUTERS

US corporate tax cuts could lift British American Tobacco’s earnings per share by 6% this year.

The Trump administration’s Tax Cuts and Jobs Act was signed into law last month, providing tax breaks to businesses and individuals in the world’s largest economy.

London-based and JSE-listed British American Tobacco (BAT), which generated about 22% of its profit from the Americas in the first half of 2017, said on Tuesday that the new tax laws would probably reduce the group’s effective tax rate to the "high-twenties" this year.

This was from an expected tax rate for 2017 of about 30%.

While the group’s effective tax rate for 2017 would not change, it expected a noncash exceptional tax credit as a result of the revaluation of deferred tax balances arising from the acquisition of Reynolds American.

"We continue to work through the full impact of these changes on British American Tobacco and will give more detail in our preliminary announcement for the year ended December 31 2017 in February."

Shares in the group were up 1.2% at R840.06 at 12.22pm on the JSE on Tuesday.

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