Multinational enterprises use transfer pricing to:
A)lower prices of their products and gain market share.
B)reduce their global tax burden.
C)move products to the markets where the demand for those goods is relatively inelastic.
D)provide managers in a foreign affiliate with an incentive to maximize local profit.

Question

Quizplus · Accepted Answer

Multinational enterprises use transfer pricing as a way to reduce their global tax burden by allocating profits to subsidiaries in low-tax countries. This is often done by setting prices for goods and services transferred between different affiliates of the company in a way that minimizes taxes paid in higher tax jurisdictions. This practice is legal but can be controversial when it is perceived that companies are not paying their fair share of taxes in countries where they do business.

Multinational Enterprises Use Transfer Pricing To