A Multinational Corporation May Attempt to Minimize the Taxes It

question 1

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:

Trait Approach

A methodology in psychology focused on the identification and measurement of specific personality traits as key components in understanding human behavior.

Trait Researchers

Psychologists who study characteristics that are consistent over time and across situations, focusing on identifying and measuring individual differences in personality.

Mechanisms

The processes or means through which an effect is produced or a purpose is accomplished.

Typology Systems

Classification schemes that categorize individuals or things based on common characteristics.