The overpricing or underpricing of products in the intrafirm trade of multinational corporations in an attempt to shift income and profits from high to low tax nations is known as

Question

Quizplus · Accepted Answer

The technique mentioned in the question is known as transfer pricing, which involves setting the price of goods or services traded between different divisions or subsidiaries of a multinational corporation. This is done to manipulate profits and shift income from high-tax countries to low-tax countries, where the corporate tax rate is relatively lower. Such transfer pricing practices are often scrutinized by tax authorities to ensure that they comply with the arm's length principle (i.e., the transfer price should be equivalent to the price that would have been charged between unrelated parties in a similar transaction). Predatory pricing, tax pricing, and out-bidding pricing are not relevant to the scenario described in the question.

The Overpricing or Underpricing of Products in the Intrafirm Trade