Question

Which of the following is true?

1. Investment centers want the lowest possible transfer price for intermediate goods purchased from a related party within the same decentralized firm
2. None of these are right
3. Multinational firms can minimize global tax payments by transferring intellectual property to a wholly owned subsidiary in a high tax jurisdiction
4. More than one of these are right
5. Firms can increase operating income for external financial reporting purposes by shifting income from high tax jurisdictions to low tax jurisdictions

Answer 1

Option d is true

More then one of these are Right

C. Multinational firms can minimize global tax payments by transferring intellectual property to a wholly owned subsidiary in a high tax jurisdiction.(As this is a tips and tricks for MNCs to avoid high tax payments)

A. Investment centers want the lowest possible transfer price for intermediate goods purchased from a related party within the same decentralized firm.(In investment center wants possible low transfer pricing because by the low cost transfer price for intermediate goods can help them to attract more customers with legible pricing brackets)

E. Firms can increase operating income for external financial reporting purposes by shifting income from high tax jurisdictions to low tax jurisdictions. ( Yes, Firms can increase their operating income to shows as external reporting purposes and can attract more investment and customers towards to the firm).

So,

Options ,a,c,e are true