A US-Based Multinational Has Two Subsidiaries, One in Lithuania Where the the Tax

question 46

Multiple Choice

A U.S.-based multinational has two subsidiaries, one in Lithuania where the tax rate is 15%, and one in Ireland where the tax rate is 2%. The tax rate in the U.S. is 35%. If the Lithuanian-based subsidiary is transferring a good to the Irish subsidiary and the goal is to avoid taxes, it will

• A)sell it to the U.S. parent at a transfer price equal to marginal cost, which will then sell it to the Irish subsidiary at monopoly level pricing.
• B)set the transfer price to the Irish subsidiary at the monopoly level.
• C)set the transfer price to the Irish subsidiary at marginal cost.
• D)Unable to determine with the information given.

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Definitions:

L-Glutamic Acid

An amino acid involved in protein synthesis and the neurotransmitter cycle, playing key roles in brain function and metabolism.

pH

A scale used to specify the acidity or basicity of an aqueous solution, with values ranging from 0 (acidic) to 14 (basic), and 7 being neutral.

L-Arginine

An essential amino acid that plays a vital role in protein synthesis and is a precursor for the synthesis of nitric oxide, a crucial compound for blood vessel health.

pH

A scale used to specify the acidity or basicity of an aqueous solution, where 7 is neutral, below 7 is acidic, and above 7 is basic.