Which one of the following would NOT be an important use of transfer pricing by a MNC?
A)avoiding customs inspections
B)avoiding exchange controls
C)reducing taxes
D)reducing tariffs.

Question

Quizplus · Accepted Answer

Transfer pricing is mainly used by MNCs to reduce taxes, avoid exchange controls, and minimize tariffs. Avoiding customs inspections is not a significant use of transfer pricing. Transfer pricing is an accounting practice used to determine the value of goods and services traded between two different units of the same company located in different countries. By setting transfer prices, MNCs can allocate profits to lower tax jurisdictions, thus minimizing their overall tax burden. They can also use transfer pricing to avoid foreign exchange controls and reduce tariffs by declaring a lower value for their imports or exports.

Which One of the Following Would NOT Be an Important