Global Giant, a multinational corporation, has a producing subsidiary in a low-tax rate country and a marketing subsidiary in a high-tax country. If Global Giant wants to minimize its worldwide tax liability, we would expect Global Giant to ________.
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- A firm ships its products to foreign subsidiary and charges a price that may increase import duties but lower the income taxes paid by the subsidiary. The most likely reason for these effects is that the a. Price is an arm-length’s price b. Price is a cost-plus price c. Transfer price is too low d. Transfer price is too highA firm can use transfer pricing to lower its income tax payments by reporting more income in high-tax-rate countries and less income in low-tax-rate countries. However, the tax regulations of different countries restrict the transfer prices that companies can use. True False: A firm can use transfer pricing to lower its income tax payments by reporting more income in low-tax-rate countries and less income in high-tax-rate countries. False: The tax regulations of different countries do not restrict the transfer prices that companies can use. both B and C none of the above“On an international scale, tax authorities and international organisations increasingly scrutinize and penalizemultinational corporations for misusing transfer pricing.” In light of this statement, critically evaluate why MNCsstill engage in transfer pricing.=
- Assume the government introduces a lump-sum tax on each firm within a perfectly competitive industry. Which of the following will be true after the introduction of this tax? a. Consumer prices will increase b. There will be no change in any firm’s level of profits c. A deadweight efficiency loss will occur d. There will be no change in the market quantity of output51. A US based company that buys components from one of its foreign subsidiaries at a price above market is likely to Group of answer choices shifting from a high tax country to a low tax country need tax consultants to be intermediaries get large dividends by the subsidiary ask for the money backIf a firm is structured so that it has a more favorable tax status than that of its competitors, this can give the firm an overall cost advantage over its competitors. The question is, how would this give them a cost advantage over its competitors?
- Which of the following is an example of managing economic exposure by flexible sourcing policy? An American company sells its products in Brazil and Portugal. Reduced sales in Brazil due to the dollar appreciation against the “real” can be compensated by increased sales in Portugal due to the dollar depreciation against the euro. If yen is strong, it is preferable for a Japanese company to open a manufacturing subsidiary in the U.S. to produce and sell its products there. An American IT company hires software developers in Ukraine because of the weak position of grivna against dollar. A Canadian company spends a lot of money for research & development activities to improve its reputation and gain more customers.The good creates a negative externality to producers. The government taxes producers exactly at the size of the external harm created by the externality. Which of the following is true: The tax will result in under provision of the good compared to the optimum The tax will result in over provision of the good compared to the optimum The tax will result in an optimal production of the goodTax planning is the act of arranging one’s tax affairs in ways that postpone or avoid taxes. By employing effective tax planning variables, one can have more positive cash flows to save and invest or more money to spend.Required:Explain what constitutes the variables of tax planning. The Government of Ghana has been worried by the rising incidence of Transfer Pricing abuses by Multinational and Group Companies. For this reason, it introduced new transfer pricing rules and guidelines through the Transfer Pricing Regulations, 2012 (LI 2188).Required:a. Explain any four (4) objectives of the transfer pricing regulations of Ghanab. Explain the arm’s length principle
- Question-. If a pure monopolist can price discriminate by separating buyers into two or more groups: A. the marginal revenue curve will now shift to a position above the demand curve. B.marginal revenue will become less at each level of output than it would be without price discrimination. C. the firm will face multiple marginal revenue curves. E. the marginal revenue curve and the total revenue curve will now coincide I think the answer is C?Which of the following is true of accounting for research and development cost? Responses Accounting for research and development costs is same under U.S. GAAP and IFRS. Accounting for research and development costs is same under U.S. GAAP and IFRS. The current accounting for research and development costs under U.S. GAAP avoids the probability of companies to manipulate their earnings. The current accounting for research and development costs under U.S. GAAP avoids the probability of companies to manipulate their earnings. U.S.GAAP adheres to the matching principle by expensing research and development costs. U.S.GAAP adheres to the matching principle by expensing research and development costs. Under U.S. GAAP accounting for research and development costs violates the conservative principle. Under U.S. GAAP accounting for research and development costs violates the conservative principle.Finance rocks had decided to reduce its fixed costs by seller some of its manufacturing facilities and assigning the production of certain parts to a group of predecessors suppliers, by doing so the company is trying to adjusts its operating leverage, financial leverage or tax burden?