Because tax rates are different in different countries,companies have incentives to set transfer prices that will
A)increase revenues in low-tax countries and increase costs in high-tax countries.
B)increase costs in low-tax countries and increase revenues in high-tax countries.
C)decrease costs in high-tax countries and decrease revenues in low-tax countries.
D)None of the answers is correct.

Question

Quizplus · Accepted Answer

Transfer pricing strategies often aim to allocate higher revenues to low-tax countries and higher costs to high-tax countries to minimize the overall tax burden. This is achieved by setting transfer prices that shift profits to where they are taxed at lower rates.

Because Tax Rates Are Different in Different Countries,companies Have Incentives