Apple China makes a cell phone. Apple China spends maybe $250 on the materials, labor, and equipment to make the phone. Apple China then sells the phone to apple Ireland for $260. Apple China has enough operating expenses that they never quite seem to make any profit. Apple Ireland knows how to apply a markup and turn a profit
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Another one is a company sets up a shell offshore. This shell company holds all ownership of intellectual property and leases it to the onshore company for an exorbitant amount of money, leaving the onshore company with no profit.
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