It is generally understood that it is only profits that are taxed, and only then if the profit or part thereof, isn’t exempt or reduced by allowable losses or reliefs.

Following that general principle, but ignoring the issue of exemptions and reliefs, the fundamental idea that taxes should be paid where the profit is made follows quite nicely and if one is considering the profit made from intellectual property, then that profit would, and should be taxed where the product was designed and invented. This follows on from the reports from the G20/OECD on Base Erosion and Profit Shifting (BEPS).