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:

Mean Improvement

The average amount of change or increase, usually measured from a baseline in studies evaluating the effect of interventions.

Training Programs

Structured educational or skill development activities designed to enhance the knowledge, skills, and competencies of participants.

Coefficient of Determination

A statistical measure, usually denoted as R^2, indicating the proportion of variance in the dependent variable that is predictable from the independent variable(s).

MSE

Mean Squared Error, a measure used to evaluate the performance of a regression model by calculating the average squared difference between the observed actual outcomes and the outcomes predicted by the model.