Subsidiary companies often reduce their profitability by licensing or purchasing materials from a parent company located overseas in a low-tax region. While thi

Subsidiary companies often reduce their profitability by licensing or purchasing materials from a parent company located overseas in a low-tax region. While this is usually a relatively legal way of transferring some profitability abroad, most countries also have regulations which specify that the relative contributions of various entities in complex corporate structures have to be reasonable and reflect the location where value is created. So while things are murky with IP licenses, increased news coverage and public pressure can succeed in calling attention to particularly egregious situations.