Global Giant, a Multinational Corporation, Has a Producing Subsidiary in a Low

question 131

Multiple Choice

Global Giant, a multinational corporation, has a producing subsidiary in a low tax rate country and a marketing subsidiary in a high tax country. If Global Giant wants to minimize its worldwide tax liability, we would expect Global Giant to ________.

• A) stop producing in the low tax rate country
• B) stop marketing in the high tax rate country
• C) establish a low transfer price when the producing unit sells to the marketing unit
• D) establish a high transfer price when the producing unit sells to the marketing unit

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Definitions:

French and Indian War

The North American conflict (1754-1763) between British and French forces, including their respective Native American allies, part of a larger series of conflicts known as the Seven Years' War.

Sugar Act

A law passed by the British Parliament in 1764 aiming to raise revenue from the American colonies by imposing a tax on sugar and molasses imported into the colonies.

Stamp Act

A 1765 British Act imposing a tax on the colonies, requiring many printed materials in the colonies to be produced on stamped paper from London, contributing to the American Revolution.

Revolution

A dramatic and wide-reaching change in the way a society or system operates, often achieved through violent or nonviolent means.