Tax reform proposals could significantly impact energy companies

November 2017

Overview

The House Ways and Means Committee on November 9, 2017 approved the ‘Tax Cuts and Jobs Act of 2017’ bill (HR 1) which includes provisions that could significantly impact energy companies. HR 1, as approved by the committee, includes amendments offered by Ways and Means Committee Chairman Kevin Brady (R-TX) on November 3, 6, and 9 to revise key provisions of the bill as originally introduced on November 2, and to add new proposals. See our Insights Overview of Ways and Means Chairman Brady’s tax reform bill and House Ways and Means Committee approves amended tax reform legislation for more information.

Senate Finance Committee Chairman Orrin Hatch (R-UT) on November 9, 2017 released a Senate version of the ‘Tax Cuts and Jobs Act’ (the ‘Hatch bill’). The Senate tax reform proposals would lower business and individual tax rates, modernize US international tax rules, and simplify the tax law, but differ in key aspects from the House Ways and Means Committee-approved tax reform bill. See our Insight Finance Committee Chairman Hatch releases Senate tax reform bill for more information.

This Insight provides a brief summary of select business and international tax reform proposals in HR 1 and the Hatch bill that could significantly impact energy companies.

The takeaway

The tax reform legislation being considered in the House and Senate remains open to significant changes as Congress attempts to overcome political hurdles that could affect the prospects for enacting sustainable reform of US tax laws, providing a more competitive tax system for business taxpayers and improved economic opportunities for individuals and families. Energy companies considering the effects of these provisions should look at the overall benefits of reforms intended to boost US competitiveness and productivity through lower business tax rates, a modernized international tax system, and incentives to invest in the United States.

Certain of these proposals could require new strategies and a rethinking of business models and supply chains, which could take considerable time to develop and implement. As tax reform moves through the legislative process, energy companies should continue to model the effects of proposed provisions and develop action plans to mitigate risks and take advantage of potential opportunities. Energy companies with advanced insight into the potential impact of the proposals being considered should be able to respond more rapidly to changes if and when legislation is enacted.

 

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Bobby Marandi
US Energy Tax Leader
Tel: +1 (713) 356 5556
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