Multinational Firms Often Face Conflicting Pressures When Developing Transfer Pricing

question 141

Multiple Choice

Multinational firms often face conflicting pressures when developing transfer pricing policies. Tax avoidance results when:

• A) inflated transfer prices are used to reduce the profits of divisions in high tax-rate countries.
• B) inflated transfer prices are used to reduce the profits of divisions in low tax-rate countries.
• C) cost-based transfer prices are used instead of market transfer prices in high tax-rate countries.
• D) cost-based transfer prices are used instead of negotiated market transfer prices in low tax-rate countries.

---

Definitions:

Business Necessity

A defense to an allegation of employment discrimination in which the employer demonstrates that an employment practice that discriminates against members of a protected class is related to job performance.

Employment Discrimination

Unfair or unequal treatment of workers based on certain attributes such as age, sex, race, or disability, rather than job performance or qualifications.

Genuine Requirements

The legitimate needs or conditions stipulated by a party in agreement or transaction.

Disabilities Act

Legislation that protects individuals with disabilities against discrimination and ensures their access to opportunities and accommodations.