NEW YORK: Goldman Sachs expects to take a $5 billion hit to profits for the fourth quarter and year because of the tax overhaul signed into law last week.
As a result, the New York bank will likely report a loss for the last quarter of 2017. But Goldman and other banks will be among the largest beneficiaries of the new tax code.
Goldman on Friday became one of the first companies to release details on how changes in the tax code will affect how money parked overseas is handled. The bank said two-thirds of the $5 billion is related to changes in repatriation taxes, when funds are returned from overseas.
The new tax overhaul imposes a discounted one-time levy on overseas money returned to the US — 15.5 percent for earnings held in cash or other liquid assets and 8 percent for earnings held in harder-to-sell assets. Previously, companies had to pay a 35 percent corporate tax when they returned that money, so they left it parked overseas.
It has been expected that changes in the law would prompt many companies to return money to the US, potentially $2.5 trillion or more. Keefe Bruyette & Woods analyst Brian Kleinhanzl estimated that the repatriation part of Goldman’s charge equates to an 11 percent tax rate, based on the $32.6 billion in undistributed foreign earnings Goldman had at the end of 2016.
Goldman had been expected to post fourth-quarter net income of $2.07 billion, according to banking analysts polled by FactSet. The bank reports earnings in mid-January.
After taking a hit on repatriated earns, Goldman, and other banks, will operate in a much more favorable tax environment.
The tax measure signed into law by President Donald Trump this month spreads benefits across a wide array of American industry, including banks.
Finance and insurance companies would have paid an effective corporate tax rate of 26.1 percent next year. Now, it will be 14.3 percent. Analysts at Goldman Sachs have estimated that the tax law will boost big-bank earnings per share by 13 percent next year. The top beneficiary will be Wells Fargo, which has been dogged by scandals over cheating customers. It will enjoy an 18 percent earnings surge in 2018, Goldman estimates.
Economists believe the overall effect on the economy will be muted, however, because of those cuts to the US corporate tax rate.
Historically, repatriated profits have not had a broad effect on the US economy anyway.
A 2004 law temporarily cut taxes on repatriated profits to 5.25 percent, from 35 percent. That led 843 companies to bring back $312 billion. But those companies tended to use the money to buy back shares of their own stock, not to hire or expand operations.
Goldman also said part of the reduction to fourth-quarter earnings comes from recalculating the value of it deferred tax assets. Those are past losses that companies can use to lower future tax bills. Goldman and other banks suffered huge losses during the financial crisis. Those assets will now have less value because of the lower corporate tax rate.
The effect of the tax changes on Goldman Sachs was revealed in a filing with the US Securities and Exchange Commission early on Friday.
The company did not say how changes in the tax law would affect its decisions on investments going forward, and did not immediately return messages left early Friday.
Shares of Goldman Sachs Group Inc. fell 1 percent to $254 in early trading.
Goldman Sachs expects $5 billion hit from tax overhaul in 4Q
Goldman Sachs expects $5 billion hit from tax overhaul in 4Q
First EU–Saudi roundtable on critical raw materials reflects shared policy commitment
RIYADH: The EU–Saudi Arabia Business and Investment Dialogue on Advancing Critical Raw Materials Value Chains, held in Riyadh as part of the Future Minerals Forum, brought together senior policymakers, industry leaders, and investors to advance strategic cooperation across critical raw materials value chains.
Organized under a Team Europe approach by the EU–GCC Cooperation on Green Transition Project, in coordination with the EU Delegation to Saudi Arabia, the European Chamber of Commerce in the Kingdom and in close cooperation with FMF, the dialogue provided a high-level platform to explore European actions under the EU Critical Raw Materials Act and ResourceEU alongside the Kingdom’s aspirations for minerals, industrial, and investment priorities.
This is in line with Saudi Vision 2030 and broader regional ambitions across the GCC, MENA, and Africa.
ResourceEU is the EU’s new strategic action plan, launched in late 2025, to secure a reliable supply of critical raw materials like lithium, rare earths, and cobalt, reducing dependency on single suppliers, such as China, by boosting domestic extraction, processing, recycling, stockpiling, and strategic partnerships with resource-rich nations.
The first ever EU–Saudi roundtable on critical raw materials was opened by the bloc’s Ambassador to the Kingdom, Christophe Farnaud, together with Saudi Deputy Minister for Mining Development Turki Al-Babtain, turning policy alignment into concrete cooperation.
Farnaud underlined the central role of international cooperation in the implementation of the EU’s critical raw materials policy framework.
“As the European Union advances the implementation of its Critical Raw Materials policy, international cooperation is indispensable to building secure, diversified, and sustainable value chains. Saudi Arabia is a key partner in this effort. This dialogue reflects our shared commitment to translate policy alignment into concrete business and investment cooperation that supports the green and digital transitions,” said the ambassador.
Discussions focused on strengthening resilient, diversified, and responsible CRM supply chains that are essential to the green and digital transitions.
Participants explored concrete opportunities for EU–Saudi cooperation across the full value chain, including exploration, mining, and processing and refining, as well as recycling, downstream manufacturing, and the mobilization of private investment and sustainable finance, underpinned by high environmental, social, and governance standards.
From the Saudi side, the dialogue was framed as a key contribution to the Kingdom’s industrial transformation and long-term economic diversification agenda under Vision 2030, with a strong focus on responsible resource development and global market integration.
“Developing globally competitive mineral hubs and sustainable value chains is a central pillar of Saudi Vision 2030 and the Kingdom’s industrial transformation. Our engagement with the European Union through this dialogue to strengthen upstream and downstream integration, attract high-quality investment, and advance responsible mining and processing. Enhanced cooperation with the EU, capitalizing on the demand dynamics of the EU Critical Raw Materials Act, will be key to delivering long-term value for both sides,” said Al-Babtain.
Valere Moutarlier, deputy director-general for European industry decarbonization, and directorate-general for the internal market, industry, entrepreneurship and SMEs at European Commission, said the EU Critical Raw Materials Act and ResourceEU provided a clear framework to strengthen Europe’s resilience while deepening its cooperation with international partners.
“Cooperation with Saudi Arabia is essential to advancing secure, sustainable, and diversified critical raw materials value chains. Dialogues such as this play a key role in translating policy ambitions into concrete industrial and investment cooperation,” she added.
