Which of the following is a principle basis for transfer pricing favored by governments to stop companies from shifting income to foreign subsidiaries in low- or no-tax jurisdictions?
A) The abundance principle
B) The principle of economic security
C) The arm's length standard
D) The gateway empowerment zone

Question

Quizplus · Accepted Answer

The arm's length standard is a principle basis for transfer pricing favored by governments to stop companies from shifting income to foreign subsidiaries in low- or no-tax jurisdictions. This principle requires that transactions between related parties be conducted as if they were between unrelated parties at fair market value prices, ensuring that profits are not artificially shifted to tax havens.

Which of the Following Is a Principle Basis for Transfer