Pepsi Tax Avoidance Ruling Should Stand, Illinois Tells Judges

A trial court ruling that PepsiCo Inc. owes $10.9 million in Illinois income tax should be upheld because the company created a foreign subsidiary just to avoid taxes, the state tax agency told an appeals court.

Pepsi asked the Illinois Appellate Court, Fourth Judicial District, in May to reverse the trial court’s ruling that income from the company’s snack food subsidiary Frito-Lay North America Inc. should have been included on Pepsi’s state tax returns. Pepsi set up PepsiCo Global Mobility LLC as a shell company under Frito-Lay to exclude Frito-Lay’s earnings from its Illinois combined tax return in 2016 and ...