Global Giant,a multinational corporation,has a producing subsidiary in a low tax rate country and a marketing subsidiary in a high tax country.If Global Giant wants to minimise its worldwide tax liability,we would expect Global Giant to:
A)stop marketing in the high tax rate country.
B)stop producing in the low tax rate country.
C)establish a high transfer price when the producing unit sells to the marketing unit.
D)establish a low transfer price when the producing unit sells to the marketing unit.

Question

Quizplus · Accepted Answer

Establishing a high transfer price when the producing unit sells to the marketing unit allows Global Giant to allocate more profit to the low tax rate country, thereby minimizing its worldwide tax liability.

Global Giant,a Multinational Corporation,has a Producing Subsidiary in a Low