How corporations pay little tax... through legal tax avoidance

How corporations pay little tax... through a legal tactic of tax "Avoidance"

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Here is a simplified example, from my understanding of how tax avoidance works:

1. You decide you need to buy a pair of pants...
2. A US national store chain "S" has a pair of pants you want to buy for $100... 
3. "S" is a multinational corporation headquartered in the US... and needs to report profits and gain for tax purposes in the US...
4. Company "S" has also 'secretly' set up a separate international business corporation (IBC) in a tax haven country like Panama, The Cayman Islands, The Isle of Man, etc. called Company "A"...
5. Company "A" has no legal link to Company "S" and acts as broker who purchases the pants for $5 from a manufacturer in Burma...
6. Company "S" then orders and purchases the pants from Company "A" for $90...
7. This allows Company "A" to make a profit of $85 on the pants. There is legally no tax liability to Company "A" since it is domiciled or located outside US tax jurisdiction and is legally not a division of Company "S"...
8. Company "S," after costs of $90 to purchase pants along with $8 for operating costs, reports a profit of $2 [2%] as their tax liability on the sale of the pants...
9. Other real profits [85%] made on the pants are legally held in sheltered accounts offshore...
10. This is considered legal tax avoidance and not tax evasion (which would be a criminal offense in the US).
11. While there may be some moral or ethical issues with deceptive or secretive practices, there are no illegal activities involved according to the rules of the game in each country or jurisdiction.

In addition, the offshore profits can be transferred to another IBC and eventually used by Company "S" in the US through business loans. This would also provide "S" with the opportunity to deduct some interest as business expenses on what is actually their own hidden money, laundered through several offshore accounts back to "S" in the form of a 'loan.'
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This information has been gained through research. I am not an expert or certified in any of these areas. This information is provided only as an example for educational purposes.