Review numerical example-2 on Transfer pricing with a tax differential between the countries and a tariff (or import duty) in country B. Now choose, for the multinational corporation, the best reasoning and strategy (assuming the government and the tax authorities do not intervene here): Use transfer price (TP) of $15, because a low transfer price benefits the multinational corporation Use transfer price (TP) of $15, because you save on import duty compared to TP of $18 Use a golden mean transfer price (TP), which minimizes the total taxes paid across both countries and import duties. Use transfer price (TP) of $18, because you save on total taxes paid to two countries Review numerical example-1 on Transfer pricing (TP) with difference in taxes between countries but NO tariffs (or import duties) in country B, then choose the correct answer (assuming governments and tax authorities do not intervene): If shipping goods from country B to country A, when tax rates in country A are less than tax rates in country B, charge as high a transfer price as possible If tax rates in country A are more than tax rates in country B, and you ship goods from country B to country A, then charge a low transfer price If tax rates in country A are more than tax rates in country B, then charge a low transfer price in shipping goods from country A to country B If shipping goods from country A to country B, when tax rates in country A are less than tax rates in country B, charge as low a transfer price as possible Review numerical example-1 and example-2 in Transfer pricing, then select the best strategy If governments and tax authorities are to be considered, always err on the side of whatever is best strategy for your corporation from your point of If governments and tax authorities are to be considered, always err on the side of high transfer prices to be free of any litigation If governments and tax authorities are to be considered, always err on the side of low transfer prices to be free of any litigation If governments and tax authorities are to be considered, always err on the side of signing advance pricing arrangements (APAs) Review numerical example-2 on Transfer pricing with a tax differential between the countries and a tariff (or import duty) in country B. Now choose, for the multinational corporation, the best reasoning and strategy (assuming the government and the tax authorities do not intervene here): Use transfer price (TP) of $15, because a low transfer price benefits the multinational corporation Use transfer price (TP) of $15, because you save on import duty compared to TP of $18 Use a golden mean transfer price (TP), which minimizes the total taxes paid across both countries and import duties. Use transfer price (TP) of $18, because you save on total taxes paid to two countries Review numerical example-1 on Transfer pricing (TP) with difference in taxes between countries but NO tariffs (or import duties) in country B, then choose the correct answer (assuming governments and tax authorities do not intervene): If shipping goods from country B to country A, when tax rates in country A are less than tax rates in country B, charge as high a transfer price as possible If tax rates in country A are more than tax rates in country B, and you ship goods from country B to country A, then charge a low transfer price If tax rates in country A are more than tax rates in country B, then charge a low transfer price in shipping goods from country A to country B If shipping goods from country A to country B, when tax rates in country A are less than tax rates in country B, charge as low a transfer price as possible Review numerical example-1 and example-2 in Transfer pricing, then select the best strategy If governments and tax authorities are to be considered, always err on the side of whatever is best strategy for your corporation from your point of If governments and tax authorities are to be considered, always err on the side of high transfer prices to be free of any litigation If governments and tax authorities are to be considered, always err on the side of low transfer prices to be free of any litigation If governments and tax authorities are to be considered, always err on the side of signing advance pricing arrangements (APAs)
