Multinational companies use transfer prices to minimize worldwide income taxes,________ and ________.
A) tariffs; financial restrictions imposed by U.S. government
B) tariffs; import duties
C) financial restrictions imposed by U.S. government; import duties
D) foreign bribes; import duties

Question

Quizplus · Accepted Answer

Multinational companies use transfer prices to reduce their tax liabilities by shifting profits to subsidiaries in countries with lower tax rates. By using transfer prices, companies can avoid paying higher taxes in countries with higher tax rates. Additionally, transfer prices can be used to avoid import duties on goods produced and sold within the company's subsidiaries. Therefore, the best choice is B as it explicitly mentions the use of transfer prices to avoid tariffs and import duties.

Multinational Companies Use Transfer Prices to Minimize Worldwide Income Taxes,________