Which of the following statements is true about international transfer pricing?
A) It is a violation of the Foreign Corrupt Practices Act.
B) It is accomplished using guidelines set up by the FASB.
C) It can be used to minimize the amount of worldwide taxes.
D) It cannot be regulated by countries.

Question

Quizplus · Accepted Answer

International transfer pricing is the practice of setting prices for the transfer of goods or services between entities within the same multinational enterprise, in order to minimize the amount of taxes paid worldwide. This can be done by setting the price high in countries with high tax rates and low in countries with low tax rates, and can be a legal way to reduce taxes. The other statements are incorrect; international transfer pricing is not a violation of the Foreign Corrupt Practices Act, it is not governed by guidelines set up by the FASB, and it can be regulated by countries.

Which of the Following Statements Is True About International Transfer