&gt;  Without this rule, you can run into situations that allow companies to dodge taxes. Apple and many other companies do this all the time to take U.S. profits and funnel them to Ireland to avoid paying U.S. taxes<p>It doesn&#x27;t really change your overall point, but that&#x27;s not exactly true.  Apple uses transfer prices to take non-US profits and funnel them to Ireland.  They then use tricks such as the Double Irish and the Dutch Sandwich to minimise their Irish taxes.  However they can&#x27;t avoid US taxes; all they can do is delay them.  If and when those profits are moved to the US, they&#x27;ll still be taxed at the full US rate; all the fancy Irish tricks won&#x27;t do anything.  And those tricks don&#x27;t work on US profits at all; since Apple&#x27;s IP is owned by the US firm, they can&#x27;t transfer US profits to the Irish subsidiary.