The Trump administration has reportedly granted Nvidia Corp. and Advanced Micro Devices Inc. export licenses for artificial intelligence chips sold to China in exchange for a 15% cut of the sales revenue. This may be the worst of all regulatory worlds: an arbitrary export tax that enriches the Treasury without strengthening national security or advancing a long-term strategy.
Instead of tying permission to national security safeguards or even making clear that generated tax revenue will be reinvested in AI, the White House has seemingly opted for a profit-sharing model that blurs the line between regulator and business partner.
The potential precedent is troubling. Other governments, including China, could adopt a similar “pay-to-play” approach—demanding revenue sharing in exchange for loosening their own export restrictions. While that may work to the US’ advantage now, in the long run it could erode the domestic leverage that export controls aim to provide. The US may one day find itself on the other side of a similar requirement.
Such arrangements can outlast the conditions that give rise to them. Once companies get used to paying for market access, they may lobby to maintain those agreements even when strategic priorities shift. In a worst-case scenario, ponying up for export permissions can become just another cost of doing business abroad rather than an exceptional concession.
If hamstrung AI chips pose little strategic risk, the deal still rings of opportunism. But if they do pose a risk, the Trump administration has effectively traded away some measure of security for revenue, a choice that is hard to reconcile with years of bipartisan efforts to slow China’s technological rise.
Either way, the 15% cut is more than a fee—it shows the world how the US values its most sensitive technologies.
—Andrew Leahey
Welcome to the Week in Insights for Bloomberg Tax’s latest analysis and news commentary. This week, experts analyzed the introduction of qualified rural opportunity funds, PepsiCo’s high court victory in its royalties tax dispute with Australia, and more.
The Exchange—It’s where great ideas on tax and accounting intersect.
Insights
Businesses Using Passthrough Entities Win Big in Trump Tax Bill
Frost Brown Todd attorneys say the new federal tax package will let businesses maximize tax savings by reducing cash flow and individual liability at the state level.
Canada Nixing Digital Services Tax Poses Several Legal Questions
Davies partners say Canada’s “unusual” phrasing of its announcement rescinding its digital service tax poses confusion for taxpayers and could affect those who paid liabilities in advance.
Qualified Rural Opportunity Funds Are Set to Boost US Heartland
Pillsbury’s Joshua Becker says the new tax package’s improvements to the qualified opportunity zone program will make underserved rural areas more attractive for investors and developers.
How Smart Tax Policy Could Help Stabilize Lithium Supply Chains
Tax adviser Anthony Assassa looks at the different international models for lithium taxation and suggests that a jointly developed smart tax policy could support both global decarbonization and sovereign economic goals.
Implementing Tax Package Will Take Discipline, Accountability
RSM US’ David Kautter says the IRS must update tax forms and technology, establish target dates, and issue regulatory and sub-regulatory guidance related to the new $3.4 trillion tax law.
Minnesota Cannabis Businesses Can Level Up by Being Efficient
Cannabis accounting experts Abraham Finberg and Simon Menkes say that owners of cannabis companies in Minnesota can hedge against tax-related concerns by using sound business practices.
Clean Energy Credits Must Not Become IRS Targets Under Trump Law
Chamberlain Hrdlicka attorneys say the Trump administration’s focus on clean energy tax credits shouldn’t translate into spending excessive IRS resources to audit more than a traditional sampling of companies for compliance.
Tariffs Underscore the Need to True-Up Transfer Pricing Early
Grant Thornton’s Steven Wrappe says tariff costs can affect the profitability of parties in transfer pricing transactions and delays can create tax administration burdens.
PepsiCo Tax Win Shows Australia Can’t Wish Royalties Into Being
Arnold Bloch Leibler’s Shaun Cartoon says PepsiCo’s high court victory in its royalties tax dispute with the Australian Taxation Office is a boost for freedom of contracting.
Tax-Exempt Companies Ignoring Current Climate Do So at Own Peril
ZMF Law’s Steven Miller and Eric Hylton say tax-exempt organizations should assess all possible risks and outcomes related to government oversight.
Columnist Corner
Washington, DC’s public funding plan for a new Washington Commanders stadium is a bad deal for taxpayers, as it only guarantees the stadium’s construction while lacking enforcement of its affordable housing promises, Andrew Leahey says in his latest Technically Speaking column.
“If the city insists on keeping the stadium deal alive, it should at least demand more than a rent penalty for failure to meet construction benchmarks,” Andrew writes, adding that missed deadlines should trigger automatic clawbacks or mandatory reinvestment. Read More
News Roundup
IRS Vets and Wild Cards: Trump’s Options for Replacing Long
With the surprise ouster of the IRS chief last week, agency watchers are eager to know whether the president will choose another wild card or stick with a conventional pick.
NY, NJ Fail in Court Bid to Keep Their SALT Cap Workarounds
States failed to overturn a Treasury Department ban on programs that allowed residents to bypass the federal SALT cap by directing their tax payments to state-run charities and claiming a more generous deduction.
PepsiCo Scores Big Win in Royalty Tax Dispute With Australia
PepsiCo won a long-running court battle against Australia Wednesday over the payment of royalty taxes, an issue that threatened to raise taxes for almost all multinationals operating in the country.
Tax Influencers Face Off Over Scams and Tips, While IRS Looks On
The IRS lists “bad social media advice” as among taxpayers’ biggest threats, but it’s a problem the agency has struggled to counter. Some private CPAs have taken up that fight in the last few years.
Tax Management International Journal
What Are the Impacts of Impending Tariffs on Transfer Pricing?
Forvis Mazars practitioners explore the mechanics and interaction of tariffs and transfer pricing.
Methanex Prevails in Privy Council Dispute in Trinidad and Tobago
The Methanex decision confirms that commercial practice and well understood corporate law concepts are to be respected in interpreting tax statutes and tax treaties, say Osler, Hoskin & Harcourt practitioners.
Warranty Insurers in M&A Adapt to Brazil’s Tax Contingencies
Warranty insurers have become increasingly sophisticated in assessing and underwriting risks arising from M&A transactions involving Brazilian targets, adapting global practices to the nuances of the complex Brazilian legal and tax environment, say Campos Mello Advogados practitioners.
The Big Problem With Global Tax Warfare Is Double Taxation
“Tax warfare” may cause unforeseen consequences such as double taxation, says a Grant Thornton practitioner.
Tax Management Memorandum
How OBBBA Impacts Certain 501(c)(3) Medicaid Plans and Providers
Healthcare law and regulatory consultant discusses the One Big Beautiful Bill Act’s new §71113 that prohibits federal direct spending Medicaid payments to prohibited entities that provide abortion services.
President Signals Policy Shift With High Stakes for 401(k) Plans
Hall Benefits Law practitioners discuss practical and strategic takeaways for plan sponsors after the executive order was issued directing federal agencies to broaden 401(k) access to cryptocurrency, private equity, private credit, and venture capital assets.
Career Moves
Kostelanetz Brings On Former DOJ Tax Division Head Karen Kelly
Karen Kelly has joined Kostelanetz as a partner in the Washington, DC, office, the firm announced Monday.
Holland & Knight Taps Andrew Siracuse as Partner in Washington
Andrew Siracuse has joined the Washington, DC, office of Holland & Knight and will be a partner in the public policy and regulation group, the firm announced Monday.
Miller Thomson Gains Tax Partner Ummat in Firm’s Toronto Office
Amit Ummat has joined the Toronto office of Miller Thomson and will be a partner in the firm’s tax disputes resolution and commodity taxes group, the firm announced Monday.
Loeb & Loeb Brings Tax Partner Natan Leyva to Its DC Office
Natan Leyva has joined Loeb & Loeb as a tax partner in the Washington, DC, office, the firm said Monday.
Clark Hill Adds Estate Planning Pro McCuiston to Texas Office
Jason McCuiston joined Clark Hill as a member in its tax and estate planning group in the firm’s Collin County, Texas office, the firm announced Thursday.
To contact the editors responsible for this story:
Learn more about Bloomberg Tax or Log In to keep reading:
See Breaking News in Context
From research to software to news, find what you need to stay ahead.
Already a subscriber?
Log in to keep reading or access research tools and resources.