A multinational corporation may attempt to minimize the taxes it pays in a country with a high effective tax rate by setting a very high transfer price on goods transferred to a subsidiary in a high-tax country. Why is this often not successful?
A) Laws in the foreign country may prohibit such a scheme.
B) The high transfer price would actually increase taxes.
C) Foreign exchange losses will eliminate any tax savings.
D) none of the above.
Correct Answer:
Verified
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