Funds can be moved out of a particular country in which a parent country has set up a subsidiary by _____.

Question

Quizplus · Accepted Answer

The parent company can set high transfer prices for goods supplied from the subsidiary in the host country, which would reduce the profits of the subsidiary and allow the parent company to move funds out of the country. This can be an effective way to avoid taxes and increase profits for the parent company.

B, C, and D are not effective methods for moving funds out of a country. Removing royalties or charging discounted fees would decrease the revenue of the parent company, and issuing loans at a discounted rate could potentially increase the liabilities of the parent company. None of these options directly address the issue of moving funds out of a country.

Funds Can Be Moved Out of a Particular Country in Which