Companies buy a combination of goods and IP (patents and trademarks). The goods come from a developed country and the IP is licensed from a tax haven. The goods are sold at near cost with the markup being in the IP. The result is a supply of goods between countries that causes a significant diversion of the revenue to the tax haven. This is used by most big companies in tech, pharma, etc. The government can’t challenge these schemes because there is no open market for IP (because they’re monopoly rights) so there’s no way to argue that the price paid wasn’t the open market price.

Sure, but this was a discussion about taxing revenue produced within a country. What you are describing is avoiding for example profit tax, is it not?

I'm still not seeing how it applies to the proposed example.

So, the reason that people want to tax revenue is to negate the benefits of transfer pricing.

For instance, Google France makes 1bn euro in revenue, but purchases Google services from Google Ireland for 999mn, thus almost no profit and thus no tax. Google Ireland make 20bn but pay 19.99bn to Google Bermuda, which is the exclusive licensee of Google IP worldwide (even though the IP is almost exclusively produced in the US).

Taxing revenue means that these shenanigans do not reduce the tax paid in a particular country to zero.

Right, and I know you're not GP, but isn't that exactly what I said?

That they would pay French taxes on that €1bn, and the French wouldn't care what they did after that.

Yeah, but it seemed that someone else in the thread didn't get it, so I explained with an example.