A multinational corporation can move funds from a subsidiary in one country to a subsidiary in another country so foreign exchange exposure and the tax liability of the multinational corporation as a whole are minimized.

Question

Quizplus · Accepted Answer

This statement is true. Multinational corporations often engage in financial management strategies such as cash pooling and transfer pricing to centralize cash and reduce foreign exchange exposure and tax liability. This involves moving funds from subsidiaries in different countries to a central account or to other subsidiaries in countries with favorable tax rates.

A Multinational Corporation Can Move Funds from a Subsidiary in One