Compass sees effective tax rate cut to 24% on US changes

FTSE 100 catering company Compass said on Monday that changes to the US tax system will cut its effective tax rate from 26.5% to around 24%.

In addition the group's cash tax rate is expected to drop to between 19% and 22% in the year ended 30 September 2018.

Compass said the new law, which came into effect at the start of January, will require it to revalue the net deferred tax asset recognised on its US balance sheet before 30 September 2018, although this is not expected to be material.

"We note that certain aspects of the new law may still be subject to future clarification and as such could affect the extent to which we are impacted by the reduction in the headline tax rate. In addition, there is still uncertainty around the interaction between the new federal tax legislation and tax legislation at the state level which could also have an impact."