Latest news with #profitsharing
Yahoo
11-08-2025
- Business
- Yahoo
Why the Nvidia, AMD revenue-sharing pact with the White House is ripe for a legal challenge
The White House's reported deals with chipmakers Nvidia (NVDA) and Advanced Micro Devices (AMD) for a cut of their chip sales to China are unorthodox and unprecedented — and likely to end up in court. The two pacts, according to multiple reports, would divert 15% of the companies' respective sales revenues earned on China-destined chips to the US government. In exchange for the profit sharing, the US would grant export licenses allowing Nvidia to resume sales of its H20 chips to China and AMD to resume sales of its MI308 chips to China. Wall Street is happy, at least in early afternoon trading on Monday: Both Nvidia and AMD stocks are up. But legal experts say that neither the president nor Congress is empowered to tax exports. Article I, Section 9, of the US Constitution, known as the Export Clause, prohibits such levies, saying, "No Tax or Duty shall be laid on Articles exported from any State.' 'The Constitution is clear that there really cannot be any tax on exports,' said Douglas Jacobson, an international trade lawyer with Jacobson Burton Kelley. 'In my view, it's a slam-dunk unconstitutional tax on exports.' And the US Supreme Court has interpreted the Export Clause to prohibit Congress from imposing duties on exports, even when they're characterized otherwise. Its controlling view on federally mandated export charges was stated in the unanimous 1998 decision in United States v. United States Shoe Corp. In that case, the high court struck down a congressionally approved ad valorem charge of 0.125% on exports imposed by the US Customs Service. The charge, calculated based on the value of commercial cargo shipped through US ports, known as the Harbor Maintenance Tax (HMT), was intended to fund upkeep on US harbors. On behalf of former President Bill Clinton's administration, the US Solicitor General argued that the HMT was a 'user fee,' and not a tax. But the court disagreed, reasoning that because the charge operated like an export tax, it violated the Export Clause. Siding with US Shoe, the court said in its opinion that the HMT 'bears the indicia of a tax.' Beyond the Constitution's export tax prohibition, the Export Controls Reform Act, passed by Congress in 2018, specifically prohibits charging exporters to obtain export licenses. Under US law, certain fees on export licenses have been held constitutional. Military exports, for example, are treated differently from non-military goods and fall under the administration of the US State Department, which requires manufacturers of military items to pay annual licensing fees. Even so, those fees are not based on the value of an applicant's exports. 'User fees are entirely permissible,' Jacobson said, but a deal for chipmakers to pay the government a 15% profit share acts like a reverse tariff and 'is clearly not a user fee.' "None of us have seen the government get a piece of the pie in this explicit way before," Tom Essaye, Sevens Report Research founder, told Yahoo Finance on Monday. A spokesperson for Nvidia neither confirmed nor acknowledged the reported profit-sharing agreement. 'We follow rules the US government sets for our participation in worldwide markets. While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide,' the spokesperson said. 'America cannot repeat 5G and lose telecommunication leadership. America's AI tech stack can be the world's standard if we race." Exactly who might legally challenge revenue sharing plans is not altogether clear. Nvidia and AMD are unlikely to dispute their own accords. And so far, challenges from rival chipmakers are unlikely, as there's no indication that other exporters would be subject to similar agreements. Potential challenges, however, could come from Nvidia and AMD shareholders and possibly from state attorneys general. Jacobson, the trade lawyer, said it's possible shareholders could argue that the profit-sharing agreements create an adverse effect on the price of the companies' shares because the businesses are subject to an unconstitutional tax that decreases their revenue. State attorneys general, on the other hand, may be able to argue that the deal impacts a company operating within their state or jeopardizes the state's revenue. For Nvidia and AMD, the agreements make sense as a short-term play, Jacobson said, even though they would likely be invalidated if challenged. By signing on to the agreements, the companies may be able to get their chips flowing to China and later deal with clawing back damages they may be entitled to. In an interview with Yahoo Finance, Pangaea Policy founder Terry Haines said the agreements may turn out to be a "one-off" for the administration due to concerns that the strategy could spread beyond Nvidia and AMD and because of China's concerns that US chips could contain "backdoors" that allow for US tracking. "The Chinese are saying they may not want the chips after all," Haines said. Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on X @alexiskweed. Click here for in-depth analysis of the latest stock market news and events moving stock prices Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
11-08-2025
- Business
- Yahoo
Why the Nvidia, AMD revenue-sharing pact with the White House is ripe for a legal challenge
The White House's reported deals with chipmakers Nvidia (NVDA) and Advanced Micro Devices (AMD) for a cut of their chip sales to China are unorthodox and unprecedented — and likely to end up in court. The two pacts, according to multiple reports, would divert 15% of the companies' respective sales revenues earned on China-destined chips to the US government. In exchange for the profit sharing, the US would grant export licenses allowing Nvidia to resume sales of its H20 chips to China and AMD to resume sales of its MI308 chips to China. Wall Street is happy, at least in early afternoon trading on Monday: Both Nvidia and AMD stocks are up. But legal experts say that neither the president nor Congress is empowered to tax exports. Article I, Section 9, of the US Constitution, known as the Export Clause, prohibits such levies, saying, "No Tax or Duty shall be laid on Articles exported from any State.' 'The Constitution is clear that there really cannot be any tax on exports,' said Douglas Jacobson, an international trade lawyer with Jacobson Burton Kelley. 'In my view, it's a slam-dunk unconstitutional tax on exports.' And the US Supreme Court has interpreted the Export Clause to prohibit Congress from imposing duties on exports, even when they're characterized otherwise. Its controlling view on federally mandated export charges was stated in the unanimous 1998 decision in United States v. United States Shoe Corp. In that case, the high court struck down a congressionally approved ad valorem charge of 0.125% on exports imposed by the US Customs Service. The charge, calculated based on the value of commercial cargo shipped through US ports, known as the Harbor Maintenance Tax (HMT), was intended to fund upkeep on US harbors. On behalf of former President Bill Clinton's administration, the US Solicitor General argued that the HMT was a 'user fee,' and not a tax. But the court disagreed, reasoning that because the charge operated like an export tax, it violated the Export Clause. Siding with US Shoe, the court said in its opinion that the HMT 'bears the indicia of a tax.' Beyond the Constitution's export tax prohibition, the Export Controls Reform Act, passed by Congress in 2018, specifically prohibits charging exporters to obtain export licenses. Under US law, certain fees on export licenses have been held constitutional. Military exports, for example, are treated differently from non-military goods and fall under the administration of the US State Department, which requires manufacturers of military items to pay annual licensing fees. Even so, those fees are not based on the value of an applicant's exports. 'User fees are entirely permissible,' Jacobson said, but a deal for chipmakers to pay the government a 15% profit share acts like a reverse tariff and 'is clearly not a user fee.' "None of us have seen the government get a piece of the pie in this explicit way before," Tom Essaye, Sevens Report Research founder, told Yahoo Finance on Monday. A spokesperson for Nvidia neither confirmed nor acknowledged the reported profit-sharing agreement. 'We follow rules the US government sets for our participation in worldwide markets. While we haven't shipped H20 to China for months, we hope export control rules will let America compete in China and worldwide,' the spokesperson said. 'America cannot repeat 5G and lose telecommunication leadership. America's AI tech stack can be the world's standard if we race." Exactly who might legally challenge revenue sharing plans is not altogether clear. Nvidia and AMD are unlikely to dispute their own accords. And so far, challenges from rival chipmakers are unlikely, as there's no indication that other exporters would be subject to similar agreements. Potential challenges, however, could come from Nvidia and AMD shareholders and possibly from state attorneys general. Jacobson, the trade lawyer, said it's possible shareholders could argue that the profit-sharing agreements create an adverse effect on the price of the companies' shares because the businesses are subject to an unconstitutional tax that decreases their revenue. State attorneys general, on the other hand, may be able to argue that the deal impacts a company operating within their state or jeopardizes the state's revenue. For Nvidia and AMD, the agreements make sense as a short-term play, Jacobson said, even though they would likely be invalidated if challenged. By signing on to the agreements, the companies may be able to get their chips flowing to China and later deal with clawing back damages they may be entitled to. In an interview with Yahoo Finance, Pangaea Policy founder Terry Haines said the agreements may turn out to be a "one-off" for the administration due to concerns that the strategy could spread beyond Nvidia and AMD and because of China's concerns that US chips could contain "backdoors" that allow for US tracking. "The Chinese are saying they may not want the chips after all," Haines said. Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on X @alexiskweed. Click here for in-depth analysis of the latest stock market news and events moving stock prices
Sky News
11-08-2025
- Business
- Sky News
UK's biggest independent toy shop chain given to employees
The UK's biggest independent toy retailer is being taken from private ownership and will be owned by its employees, who will share in the company's profits. The founder of The Entertainer chain, Gary Grant, is putting the future of the business in the control of its 1,900 employees. The company operates more than 160 shops as well as concessions in Tesco, Matalan and M&S. As a result of the ownership changes, employees will be rewarded through tax-free bonuses based on the profits generated in the future. Direction of the company will be overseen by a three-person trust, one of whom will be a representative of the staff board. That trust will own 100% of the company. Current shareholders, the Grant family, will be compensated for the sale of their stake from future profits of the business. It's being done to ensure the business, which also owns the Early Learning Centre and Addo Play, remains independent and to preserve the family legacy and feel of the business. 'A growing trend' It's part of what's being described by the chief executive of the Employee Ownership Association, James de la Vingne, as a "growing trend" for retailers. "We're seeing a growing trend for retailers making the move to employee ownership alongside calls to help save the high street," he said. Other businesses operating such a model include the John Lewis Partnership, home entertainment retailer Richer Sounds, and outdoor adventure company Go Ape. "I have no doubt that other familiar brands will follow The Entertainer's example of what's possible. The future of the high street is employee ownership," Mr de la Vingne added. What is The Entertainer? The company was founded in 1981 in Buckinghamshire by Gary and Catherine Grant. It's also a designer, sourcer, developer and wholesaler of toys across multiple international markets.
Daily Mail
11-08-2025
- Business
- Daily Mail
Major British toy retailer announces huge shakeup which is set to affect all 1,900 of its staff
One of Britain's biggest toy chains is set to become employee-owned after the founders said they were handing over control to the group's 1,900 staff. The Entertainer, which is behind Early Learning Centre toys, will share profits amongst workers under the new structure. Gary Grant opened the first shop in Amersham, Buckinghamshire, with his wife Catherine 44 years ago. The group now runs some 160 shops and 1,000 concessions across the UK in retailers such as Tesco, Matalan and Marks & Spencer. Mr Grant said it was a 'momentous day' for the family, adding: 'Over the last 44 years, we have invested our working lives into this business. 'All our children are shareholders, and our two oldest sons joined to work alongside us, 20 years ago - so it's truly a family business. Gary Grant opened the first shop in Amersham, Buckinghamshire, with his wife 44 years ago 'This is a significant decision for the family, and one we haven't taken lightly, but it feels like the right time to transfer our entire shareholding into an employee ownership trust.' As beneficiaries of the trust, employees will be handed bonuses based on the amount of profit the business makes in the future. It also means staff get to have a say in how the business is run. The Entertainer shops across the UK close on Sundays as part of the Grant family's Christian ethos which encourages staff to spend the day with their families. The group made a pre-tax profit of £7.9million in the year to the end of January 2024, according to its most recently filed accounts. The UK's biggest employee-owned company is the John Lewis Partnership, with around 70,000 of its staff sharing in the company's profits. Outdoor activities group Go Ape has some 1,000 staff that share in any surplus profits after handing over ownership in 2022, while TV and hi-fi retail chain Richer Sounds transferred shares into a trust six years ago. James de la Vingne, chief executive of the Employee Ownership Association, said it was 'always an exciting time when a major high street brand takes the bold move to become employee-owned'. 'We're seeing a growing trend for retailers making the move to employee ownership alongside calls to help save the high street,' he said.
The Independent
11-08-2025
- Business
- The Independent
One of UK's biggest toy chains set to become employee-owned
One of the UK's biggest toy chains is set to become employee-owned after the founders said they were handing over control to the group's 1,900 staff. The Entertainer, which is behind Early Learning Centre toys, will share profits amongst workers under the new structure. Gary Grant opened the first shop in Buckinghamshire with his wife Catherine 44 years ago. The group now runs some 160 shops and 1,000 concessions across the UK in retailers like Tesco and Marks & Spencer. Mr Grant said it was a 'momentous day' for the family, adding: 'Over the last 44 years, we have invested our working lives into this business. 'All our children are shareholders, and our two oldest sons joined to work alongside us, 20 years ago – so it's truly a family business. 'This is a significant decision for the family, and one we haven't taken lightly, but it feels like the right time to transfer our entire shareholding into an employee ownership trust.' As beneficiaries of the trust, employees will be handed bonuses based on the amount of profit the business makes in the future. It also means staff get to have a say in how the business is run. The Entertainer shops across the UK close on Sundays as part of the Grant family's Christian ethos which encourages staff to spend the day with their families. The group made a pre-tax profit of £7.9 million in the year to the end of January 2024, according to its most recently filed accounts. The UK's biggest employee-owned company is the John Lewis Partnership, with around 70,000 of its staff sharing in the company's profits. Outdoor activities group Go Ape has some 1,000 staff that share in any surplus profits after handing over ownership in 2022, while TV and hi-fi retail chain Richer Sounds transferred shares into a trust six years ago. James de la Vingne, chief executive of the Employee Ownership Association, said it was 'always an exciting time when a major high street brand takes the bold move to become employee-owned'. 'We're seeing a growing trend for retailers making the move to employee ownership alongside calls to help save the high street,' he said.
