In: Economics
What is the connection between export import policy with International Taxation? (Explain and relate the answer with Transfer Pricing)
Answer:
There is a strong coorelation between export import policy and
international taxation. If import policy of a country impose more
import duty on a particular goods and services compare to the
international transfer pricing imposed on it, in that case
organization may opt for creating a subsidiery business in other
country and just transferring the profit incurred by it by paying
smaller amount of international transfer price.
International tranfer price refers to the rules and methods for
pricing transaction between or within enterprises under common
ownership or control.
Similarly, if international transfer pricing is more than import
duty in this case importing the goods and services would be more
profitable business for the enterprises and they follow the same to
increase their profit.
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