/biz/ - Business & Finance

https://en.wikipedia.org/wiki/Transfer_pricing
>Base erosion and profit shifting (BEPS) refers to corporate tax planning strategies used by multinationals to "shift" profits from higher-tax jurisdictions to lower-tax jurisdictions or no-tax locations where there is little or no economic activity, thus "eroding" the "tax-base" of the higher-tax jurisdictions using deductible payments such as interest or royalties

>Parent company has three subsidiaries with operations in Africa, Bermuda, and Canada
>Company A makes a thing that costs $5 and sells it to Company B for $10, making a $5 profit at 40% effective tax
>Company B buys it for $10 and sells it to Company C for $80, making a $70 profit at 8% tax
>Company C then sells it at $85 to the public or other companies and makes a $5 profit at 40% tax
>This lets the parent company dodge a huge amount of tax

This is frowned upon but still legal, since it does not follow Arm's Length accounting rules set by the OECD and WEF and shit.
But what's to stop me from making a shell company in Bermuda, functioning as a legally distinct middleman between the two sister companies, buying from A and selling to C, then retaining all the profits and paying out the parent over like a 5 year term with fixed cash flows, and taking a 1-2% cut for my service?