The government monitors transfer pricing closely because it is an easy way for companies to avoid taxes on profits.

Question

Quizplus · Accepted Answer

Transfer pricing refers to the practice of setting the price on goods and services sold between different subsidiaries or divisions within the same company. Companies can manipulate transfer pricing to shift profits to subsidiaries in countries with lower tax rates, thereby avoiding taxes in higher tax rate countries. The government monitors transfer pricing to prevent companies from exploiting this loophole and avoid taxes on their profits.

The Government Monitors Transfer Pricing Closely Because It Is an Easy