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In: Economics

Transfer Pricing Assume that a multinational corporation (MNC) is (i) shipping product from Brazil (Country B)...

Transfer Pricing


Assume that a multinational corporation (MNC) is (i) shipping product from Brazil (Country B) to Australia (Country A), and (ii) the tax rate in Country B < tax rate in country A, in answering the following questions:


If MNC managers wish to minimize (taxes), how should they go about setting the transfer price [Provide thumb-rules as part of your answer]


Solutions

Expert Solution

The transfer prices are affected by the import duty of the country A ( Australia) . If australia charge a import duty on goods transferred by Brazil than they are able to set a low transferrd price on it. this will reduce the duty to be paid and maximize the profits.

Rahul Sunny answered 2 years ago
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