Which of the following is one of the gains derived by adjusting transfer prices?

Question

Quizplus · Accepted Answer

At least four gains can be derived by adjusting transfer prices: 1. The firm can reduce its tax liabilities by using transfer prices to shift earnings from a high-tax country to a low-tax one. 2. The firm can use transfer prices to move funds out of a country where a significant currency devaluation is expected, thereby reducing its exposure to foreign exchange risk. 3. The firm can use transfer prices to move funds from a subsidiary to the parent company (or a tax haven) when financial transfers in the form of dividends are restricted or blocked by host-country government policies. 4. The firm can use transfer prices to reduce the import duties it must pay when an ad valorem tariff is in force-a tariff assessed as a percentage of value. In this case, low transfer prices on goods or services being imported into the country are required. Since this lowers the value of the goods or services, it lowers the tariff.

Which of the Following Is One of the Gains Derived