tax rates are higher in the exporting country and lower in the importing country, a multinational corporation?
Posted on December 8, 2008 by admin
powelltabby asked:
When tax rates are higher in the exporting country and lower in the importing country, a multinational corporation can increase its combined income by ________________ transfer prices.
When tax rates are higher in the exporting country and lower in the importing country, a multinational corporation can increase its combined income by ________________ transfer prices.
a multinational corporation can make profit by lowering the price of the goods sold by the exporting company to the importing company.
The exporting company will see it’s profits lowered and hence pays less taxes. The importing company will see his profits increases and will pay more taxes. The difference for the whole group should be a lower total tax burden.