If for example, an MNC gets revenue from a client who is a citizen of a particular country, does that mean the MNC have to pay tax on that share of income to that particular country? Or can an MNC pick and choose which country they have operations in to pay taxes to?
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They pay taxes in each country they do business in. The trick is, they only pay taxes on the profit. So they can *show profit* in countries with low taxes.
For example, Acme Inc has a business. In multiple countries.
Acme of America buys anvils from Acme of Ireland, which sources them from China. Acme of Ireland buys them for $5 and sells them to Acme America for $9.98.
Acme of America then sells those anvils to consumers for $10.
On paper Acme America only makes $0.02 per anvil, so it pays almost no taxes. Acme of Ireland makes $4.98 per anvil, and pays taxes in Ireland, where corporate income taxes are very low.
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