This phenomenon is called regulatory arbitrage, and it is a feature of national sovereignty not a bug. In fact, most developed countries has relatively high tax compliance with a relatively high tax by historical standard.(imagine the tax evasion in the middle ages).
It is a bit like a race to the bottom, if a country does have lower tax, or favorable treatment, it would incentivizes companies to past income through.
Now, here is the rub, 1 percent of something is always better than 50 percent of nothing, so the wisdom goes.
The idea is similar to prisoner dilemma, it is rational for countries to defect and stuff it to the foreigners. That is not even accounting for what some people like to called the corrupting influence of money on politics and power and lobbying.
In your case, it is not so much that Ireland taxpayer got stiff, but in fact taxpayer in foreign countries that got stiff. Since foreign tax payable was reduce by shifting profit to Ireland, and Apple paid little to no tax in Ireland. Though without this deal, Ireland probably won't get any part of those tax anyways.
So, while countries technically can use national sovereignty to do whatever they please(within the laws/customs of each country in turn), the stable solution to this system might very well be the current situation.
Notice that the proposed international tax reporting is done in the OECD, and generally done to exclude those developing world that has the most tax non-compliance.
In fact, one of best tax haven for non-Americans is USA since IRS generally does not make the effort to assist foreign tax collection agency(with some exceptions of course).

@"Now, here is the rub, 1 percent of something is always better than 50 percent of nothing, so the wisdom goes." - the very same arguement could be used for the corporations.

If they aren't able to extract resources at all, without paying tax, then they're actually better off just paying the tax.

Of course i was thinking the reverse, that extracting minerals may damage a country (by removing some natural resources) and ruin it's future. This means that the options for the nation aren't 1% vs 50% but a cost of 20% plus 1% tax vs a cost of 20% + 50% tax (say).

So it is entirely possible that the arguement is wrong to begin with. Depending on how you count costs, or which costs you think should count.

The irish case doesn't really interest me that much. Though i did post on medium about it, i suspect my views are pretty clear there.

The fact is, countries are not sovereign, they are bound by international treaties. Especially those which protect investors rights. So if a country was to attempt to repatriate the profits, but the 'internationally agree' standards for tax reporting had been respected, then a violation of international law would require the states protecting the corporation's right to step in.

Either with trade embargos or similar economic sanctions.

And in that way, Imperialism continues in economic exploitation.

Why not just use the concept of "imputed income" the way the IRS does on "zero interest" bonds? If comparable domestic resource-extraction companies earn 20% profit on revenue, then impute that much income for tax purposes, regardless of the intra-company transaction.

@Hauta, that does go into my question of 'why don't sovereign nations just take their cut' and the answer, which apparently i didn't think of when originally posting is, investor protections.

Essentially the country (aka sovereign nation) is making a choice between direct tax income and encouraging economic activity, which can bring other benefits (jobs, tax on the income of workers, local purchasing by the company and its employees, etc.).

Many countries offer incentives to attract multinational companies. This can be lower tax rates generally, but why give a tax break to a company that is already there? Temporary reliefs, such as lower tax for X years, are more common. Less often you also see things like reduced personal tax rates for nominated staff.

Of course, governments don't like it when they consider that another country is stealing business from them. In the 2000's many large companies restructured their European businesses to move ownership of some activities into Switzerland to take advantage of tax deals available there. As these were existing activities the companies had to be careful that the authorities in the country where the activities were previously owned (and taxed) accepted the change.

From the companies' point of view there is a dilemma. Typically company directors have an obligation to maximise the value of the business for the shareholders, so is it right for them to not minimise tax by pursuing options like these? Remember that through your pension fund you may well have an interest in companies that do this.

Many resource rich countries are also quite corrupt, so letting someone extract resources without tax implications is one great way for politicians to deliver value. (Another would be to sell the right to extract at a below-market rate). Now all they need to do is find/create an Estonian trust that can conceal their ownership in the company making the profit (or if they are more discreet, to receive a payoff from a "3rd party").

Many countries without a lot of economic development have two roads, one from the presidential palace to the airport and one from the mining area to the seaport.

Thus allowing great extraction of mineral wealth in exchange for enough welath for the rulers to run things. No need for schools, or hospitals, because those things don't contribute signifigantly to national wealth.

There is a case for the existance of natural resources to exploit being a major impediment towards development (like the discovery of oil). Meanwhile, when a nation derives a majority of its income from taxing the people then you tend to see small things like schools to help the people earn more money (which can then be taxed), and hospitals to help keep people alive/healthy longer so they can earn more (higher return on investment in education).

And thus also some infrastructure to transport people from home to school/hospital...

I would suspect that 'off the books' payments are a large part of why taxation in less developed nations is allowed. But you can't blame everything on corruption. Especially when we have the ability to track publicly and securely all financial transactions (it is called block-chain, and is the technology underlying bitcoin, but you can use it for any transaction, you could use it to trace land registry, for example).

How about the way the Greek nation treats it's shipping industry for tax purposes ? A nation with a debt of about 180% of it's GDP, mostly owed to European Union countries. Yet it's shipping industry is virtually untaxed. No tax on shipping company profits, (a complex, innefective "tonnage tax" with so many loopholes, so it raise very little revenue) no tax on share holders dividends or capital gains ( unlike taxes on shareholders in other, non shipping companies ) and the owners ( mostly dynastic families ).. are also virtually exempt from paying taxes, eg an inheritance tax exemption. And it looks like Greece's economy is about to go into recession again.

As I said above, gov'ts make a choice between taxing a business directly or gaining indirectly by encouraging the activity. Shipping is a business that really could operate from anywhere so it would not take much for them to relocate; a classic case of 1% of something is better than 50% of nothing.

@MM, it looks like Greece's tax base is rather narrow and limited, somehow i think this is a case of internal Greek politics, the way you describe it, the influence of greek dynasties.

That is entirely up to the Greek people to address. If i were an investor, of looking at Greek bonds on the international bond market, i would definitely consider how broad the tax base is in Greece before investing (which would help them pay off that massive debt... though it will largely be written off at this stage).

Diplomat..they're not even getting 1%...try between 0% and 0.5%, on shipping company profits, and 0% on shareholders dividends and capital gains, and 0% on inheritance taxes whilst other Greek businesses are required to pay a lot higher tax rates on profits, and there are similar differences with shareholders and inheritance taxes.
So really, they are effectively getting 0% .or an infitesimely small %
So your 1% of something being better than 50% of nothing tends to fall on its ass.
Fortunately those hardworking, taxpaying Socialists in Europe are there to constantly bail these "free market, zero taxing stooges to Capitalism" out of their extravagant debts.

Increase the profits with taxpayer funded business welfare and privatise them, Nationalise losses, but exempt higher income earners and businesses from the costs of that, throw all that on the workers....but get Yannick and Capt Brad to spin a nice confected window dressing bit of propaganda to hide those inconvenient truths. Right wing economic theory 101. LoL.