Withholding Taxes on Dividends Paid by a Foreign Subsidiary to a Parent

question 48

Multiple Choice

Withholding taxes on dividends paid by a foreign subsidiary to a parent can be reduced by:

• A) raising prices paid by the parent for goods it acquires from the subsidiary.
• B) raising prices paid by the subsidiary for goods it acquires from the parent.
• C) negotiated transfer pricing.
• D) reducing prices charged by the parent for good transferred to the subsidiary.

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Definitions:

Price

The amount of money required to purchase a good or service.

Price

The amount of money required to purchase a good or service, often determined by factors like demand, supply, and market competition.

Utility Function

A representation or model used in economics to quantify the satisfaction or happiness a consumer derives from consuming goods and services.

Income

Payment obtained, regularly, for services rendered or from capital investments.