The permanent establishment rules have been ripe for exploitation, especially by technology companies, which are able to shuffle intellectual property and lucrative royalty fees around the world.
Google, for instance, argues that its London headquarters do not have a taxable presence in Britain — even though the search giant employs about 4,000 people in the capital. This definition enables it to funnel profits derived from UK-based clients legally through its headquarters in Dublin to a Caribbean tax haven.
That is not the argument. Instead, it is that Google UK does have a permanent establishment in the UK. But that Google Eire does not. And Google Eire is the one doing the selling of advertising, not Google UK.
Further, it does not funnel profits, it charges the ad revenue from Ireland.