Pepsi hit with $10.9m tax bill

An Illinois judge has ruled that PepsiCo. Inc. cannot claim its snack food subsidiary, Frito-Lay North America Inc., operates as a foreign corporation to avoid Illinois income taxes. The ruling, made by Sangamon County Circuit Court Judge Robin Schmidt, holds Pepsi liable for $10.9m in back taxes, penalties, and interest. The judge affirmed the Illinois Department of Revenue’s position that PepsiCo had created a foreign “shell company” to exclude Frito-Lay’s earnings from its tax return for the years 2016 and 2017. Schmidt stated that PepsiCo Global Mobility LLC (PGM) was used to facilitate this tax strategy.