Uh, folks, here's the way it works:
Under long-standing principles of international taxation, a multinational company first, and foremost, pays tax on profits earned in a particular country to that country. If the multinational company is required to include those same profits in its taxable income for another country - for example, the country where the top holding company is formed, like the U.S. - then it is generally granted a tax credit against the tax in that other country for the tax that it already paid in the source country. This is known generically as the "foreign tax credit" and it is one of the fundamental tools of cross-border taxation, including in the Internal Revenue Code (w/o reference to any tax treaties or foreign law).
For example, in the U.S., most U.S. corporations that own at least 10% of the stock of a foreign corporation are required to include a proportionate share of that foreign corporation's own income in the U.S. taxable income of the U.S. corporation, the U.S. corporation is further required to "gross up" that amount of foreign income by its share of the foreign taxes paid by the foreign corporation, and lastly the U.S. corporation is permitted to claim a foreign tax credit for its share of the foreign taxes paid by the foreign corporation.
For example, assume that Tesla Inc., a Delaware corporation, owns 100% of Tesla Sarl, a French corporation. Further assume that Tesla Inc. builds 200 cars, each at a cost of $100, and that it sells 100 of those cars to Tesla Sarl for a cost of $110 (the price would be set by a transfer pricing agreement between the two companies that is intended to - and generally does - require intercompany transactions to be priced on an arms' length basis), resulting in $1,000 of profits for Tesla Inc. from intercompany sales. Further assume that Tesla Inc. sells the remaining cars for $200 each to the U.S. public, resulting in gross profits from U.S. sales of $10,000. Further assume that Tesla Sarl sells its allotment of 100 cars to the French public for $220 each, resulting in gross profits from French sales of $11,000. Further assume that the French corporate income tax is 33% (it's actually 33-1/3%), and that the U.S. corporate rate is 21% (which it is). Further, assume that Tesla Inc. has depreciation and amortization deductions on its U.S. facilities of $12,000. Finally, for the sake of simplicity, assume that income from sales of inventory is treated as arising from the location where the seller is resident for tax purposes - i.e., Tesla Inc's sales are considered to give rise to U.S.-source income and Tesla Sarl's sales are considered to give rise to French-source income.
In this case, since Tesla Sarl earned $11,000 from French sales, it owes French income tax of $3,630.
Now, because Tesla Inc. owns 100% of Tesla Sarl, Tesla Sarl is a "controlled foreign corporation" (a "CFC") and for U.S. tax purposes Tesla Inc. must include a substantial portion of Tesla Sarl's income in Tesla Inc's own U.S. taxable income (as either subpart F income or as GILTI income). The inclusion requirement is typically limited to the lesser of the CFC's taxable income or its earnings & profits ("E&P"); E&P is generally less than taxable income because corporate income taxes are deducted in deriving E&P, but not when computing taxable income.
For the sake of simplicity, let's assume that Tesla Inc. had to include all of Tesla Sarl's income, up to its E&P, in its U.S. taxable income. That means that, with the gross-up for French taxes paid by Tesla Sarl, Tesla Inc. includes an additional $11,000 of taxable income in its U.S. income.
As a result, Tesla has $22,000 of gross income ($11,000 from U.S. sales, and $11,000 from French sales coming up from Tesla Sarl). Tesla Inc. also has a deduction of $12,000 for depreciation on its U.S. factory. That leaves taxable income of $10,000, on which Tesla Inc. owes a tentative tax of 21%, or $2,100.
However, because Tesla Inc. included Tesla Sarl's income, Tesla Inc. also gets a foreign tax credit for the taxes Tesla Sarl paid to France. This credit is equal to the lesser of (a) the amount of French tax paid, or (b) the U.S. tax on Tesla Inc's French-source income. Basically, the U.S. foreign tax credit system is designed to prevent foreign countries from free-riding on the U.S. tax system, so a foreign tax credit is generally limited to the amount of U.S. tax imposed on the foreign-source income. Thus, since Tesla Sarl paid $3,630, there is a maximum possible credit of $3,630. However, Tesla Inc. reported only $11,000 of French taxable income - assume for the sake of simplicity that the factory depreciation was allocated solely to the U.S.-source income - on which the U.S. income tax is $2,310, so its foreign tax credit is limited to the lesser of $3,630 and $2,310. There is a further limitation, inasmuch as the foreign tax credit is not refundable; thus the credit is further limited to $2,100, the amount of Tesla's actual U.S. income tax liability.
As a result, because Tesla Inc. has a tentative U.S. income tax of $2,100, it is allowed a foreign tax credit of $2,100, and its net U.S. income tax bill is now $0.
However, that is reasonable, because it in fact had no net U.S. source income, since its depreciation deductions were greater than its U.S. source income, and therefore it should not have any U.S. corporate income tax to pay. Furthermore, it in fact paid $3,630 in French tax on its French sales profits of $11,000.
So, on a global level, this version of Tesla Inc. was profitable - it had gross sales revenues of $42,000, gross profits of $22,000, on an EBIT basis it had earnings of $10,000 (i.e., gross profits less depreciation), and paid total taxes of $3,630 - but from a strictly U.S. perspective, it paid no U.S. income tax because the U.S. gross profits of $11,000 were less than the depreciation allocable to, and deductible from, those gross profits.
That is, in an extremely simplified fashion, what is most likely going on here.
This is just a hit-piece designed to gaslight people into thinking that large multinational corporations are "cheating" on their taxes because the global group has large profits but the U.S. parent doesn't pay any tax.
