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

Question

Quizplus · Accepted Answer

By setting a lower transfer price for its goods entering the country for sale to an affiliate, the multinational can reduce its taxable profits in the foreign country and pay a lower amount of corporate tax. This is known as transfer pricing, and it is a common strategy used by multinational corporations to minimize their tax liabilities in high-tax jurisdictions. Therefore, the best choice is A (low).

To Avoid Paying the Higher Corporate Tax to a Foreign