​Multinational Companies with Subsidiaries in Both High- and Low-Tax Countries

question 18

Multiple Choice

​Multinational companies with subsidiaries in both high- and low-tax countries may use transfer pricing to:

• A) ​shift costs to high-tax countries and to shift revenues to low-tax countries.
• B) shift revenues to high-tax countries and to shift costs to low-tax countries.
• C) shift costs and revenues to high-tax countries.
• D) shift costs and revenues to low-tax countries.

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Definitions:

Payments

The act of transferring money from one party to another in exchange for goods, services, or to fulfill a legal obligation.

Loan

A sum of money that is borrowed, usually from a financial institution, which requires repayment with interest over a set time frame.

Invested Funds

Money allocated into financial ventures with the expectation of achieving a profit or gaining an income.

Accumulate

The process of gathering or increasing an amount of something over a period of time.