To avoid paying the higher corporate tax to a foreign government,the rule states that a multinational could set the transfer price for its goods entering the country for sale to an affiliate as ________ as possible to lower tariff payments.

Question

Quizplus · Accepted Answer

By setting a lower transfer price, the multinational can show lower profits in that country, thus reducing the amount of taxes it would have to pay. This is known as transfer pricing and is a common practice among multinational corporations.

To Avoid Paying the Higher Corporate Tax to a Foreign