When a commodity is sold by one subsidiary of a company to another in a second country,what kind of price is set in order to by-pass taxes and tariffs by shifting funds internally?

Question

Quizplus · Accepted Answer

The price set in this situation is called a transfer price, which is an internally set price to transfer goods or services from one subsidiary to another. This allows companies to shift funds internally and avoid taxes and tariffs that would normally apply to external transactions. Market-based pricing would involve selling to an external customer at a price determined by the market, which would not achieve the goal of bypassing taxes and tariffs. Market shirk and market delayed are not commonly used terms in this context, and internal pricing may not reflect the market value of the commodity.

When a Commodity Is Sold by One Subsidiary of a Company