system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5: How does tax evasion by large multinationals work?

I hear a lot about large multinationals (Apple, Google, but also Panasonic etc) setting up their 'headquarters' in a country that has relatively low tax rates. How precisely does this work though and how come they don't have to pay tax in other countries if they've also 'set up shop' there?
gpt
Take a coffee company who buys coffee in country A then it is placed into a small bags in country B and then sold in country C. Now any profits the company makes can be taxed in country A, B or C, now for most companies this would normally be country C, however if the company sets up sub divisions of its company in country A B and C and if country B has a very low tax rate it may do some sneaky accounting. Division A buys coffee and sells it on to division B without making a profit, division B then sells the newly packaged coffee to division C at a huge profit, division C sells the coffee to the public without making a profit.

The company then pays minimal tax in country B and no tax in countries A and C and has successfully evaded tax.