How can transfer pricing be used to avoid tariffs?
What will be an ideal response?
Tariffs, also called import duties, are taxes that are levied on the value of imported goods. Most tariffs consist of ad valorem duties, which increase the price of imported products by a certain percentage, depending on the size of the tariff. To lower the incidence of these taxes to the importing affiliate, a multinational corporation could set a low transfer price. This does not completely avoid the tariff, but it reduces the base on which the tariff is calculated which lowers the revenue of the government imposing the tariff.
You might also like to view...
List the functions that the board of directors of a corporation must perform as specified by the Revised Model Business Corporations Act (RMBCA)
What will be an ideal response?
During the question-and-answer period of a presentation, you should not
A) treat each questioner with unfailing courtesy. B) give long, comprehensive answers. C) look at the entire audience while answering questions. D) refuse to admit you don't know the answer to a question. E) listen carefully to each question.
Which of the following is NOT essential to a valid deed?
a. Grantor. b. Grantee. c. Delivery. d. Recording.
The owner of an amusement park has decided to open a second entry booth and hire another employee to service customers entering the park. Customers arrive at the rate of 20 per hour and will wait in a single line until one of the two employees is available to provide service. The average service time of both employees is 2 minutes to provide service. The arrival rate follows Poisson distribution, and the service time follows a negative exponential distribution. Determine the average number of customers waiting in the system.
a. 0.75 b. 0.89 c. 0.08 d. 0.98