A Multinational Corporation May Attempt to Minimize the Taxes It

question 13

Multiple Choice

A multinational corporation may attempt to minimize the taxes it pays in a country with a high effective tax rate by setting a very high transfer price on goods transferred to a subsidiary in a high-tax country. Why is this often not successful?

• A) Laws in the foreign country may prohibit such a scheme.
• B) The high transfer price would actually increase taxes.
• C) Foreign exchange losses will eliminate any tax savings.
• D) None of the above

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Definitions:

Axis V

Axis V refers to the Global Assessment of Functioning scale, historically used in psychiatric diagnoses to rate an individual's overall psychological, social, and occupational functioning.

Axis I

A classification in earlier versions of the Diagnostic and Statistical Manual of Mental Disorders (DSM) that includes clinical disorders and other conditions that may be a focus of clinical attention.

Personality Disorders

Mental health conditions characterized by enduring patterns of behavior, cognition, and inner experience that deviate from the expectations of the culture.

Personality Disorder

A type of mental disorder characterized by enduring maladaptive patterns of behavior, cognition, and inner experience.