If the Income Tax Rate in a Foreign Country Where

question 11

Multiple Choice

If the income tax rate in a foreign country where an MNC has a subsidiary is lower than the tax rate in the MNC's home-country:

• A)the MNC might sell goods or services to that foreign subsidiary at higher prices to increase the income in the low-tax-rate country.
• B)the MNC might sell goods or services to that foreign subsidiary at low prices to increase the income in the low-tax-rate country.
• C)the MNC might sell goods or services to that foreign subsidiary at higher prices to decrease the income in the higher-tax-rate country.
• D)the MNC might sell goods and services to that foreign subsidiary at prices that would allow the MNC and its subsidiary to have balanced income.

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Definitions:

Acid-Catalyzed

A chemical reaction that is accelerated in the presence of an acid, which acts as a catalyst to increase the rate of the reaction.

Organic Product

A compound or material derived from living organisms or produced through organic reactions.

Acid Catalyst

A substance that increases the rate of a chemical reaction through donation of protons (H+ ions) without undergoing any permanent chemical change itself.

Acyclic Compound

A chemical compound that does not contain any rings in its structure, consisting of linear or branched chains of atoms.