Explore BrainMass

Multinational corp: Transfer pricing ethical? Good business?

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

Multinational corporations can use transfer pricing to adjust costs in transactions involving the transactions between divisions in different countries. There may be a tax consequence. Is this ethical ? Is this good business?

© BrainMass Inc. brainmass.com October 25, 2018, 9:37 am ad1c9bdddf

Solution Preview

Transfer pricing permits a firm, especially those operating in multiple taxing authorities, to "push" profits into the low tax rate locations and costs into the high tax rate locations. This minimizes taxes. It is considered a practical way to minimize expenses and is not unethical as long as it is transparent and not deceitful. If taxing authorities prohibit it or company policies prohibit it, then it is unethical (and potentially illegal).

Now for the stickier question: Is this good business? Transfer pricing must be planned carefully because moving profits around ...

Solution Summary

Your discussion is 376 words and names three problems with transfer taxes that address both the ethical and business impact.

See Also This Related BrainMass Solution

ethnocentric, polycentric and geocentric

1. What are the main advantages and disadvantages of the ethnocentric, polycentric and geocentric approaches to MARKETING strategy globally? When is each approach appropriate?

2. What is the DIFFERENCE between ethics and social responsibility? Do you think social responsibility for a multinational corporation is something better managed domestically or internationally? Explain why.

3. How can a global firm use TRANSFER PRICING to increase its after-tax income? What are the constraints it needs to be aware of?

View Full Posting Details