Why do governments scrutinize transfer pricing arrangements so carefully?
Transfer pricing refers to when a company uses selective prices for internal transactions, and there are several reasons for governments to look over them carefully. Transfer pricing can be used to hide subsidiary profits and to escape foreign market taxes, by reaping the benefits of a lower tax rate in the country that the subsidiary resides.
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Pricing for International Markets
- What is demand elasticity?
- What factors influence international pricing?
- Which out of the four types of countertrade is the most beneficial to the seller?
- Why is counter trade increasing?
- What are the alternative objectives in setting transfer prices?
- In what various ways does the government set prices? Why do they engage in such activities?
- Why has dumping become such an issue in recent years?
- How can a marketer adjust prices to accommodate exchange-rate fluctuations?
- Do value-added taxes discriminate against imported goods?
- Why are companies generally not "allowed" to perform price fixing, but governments are?
- How can the problem of price escalation be counteracted?
- What is transfer pricing?
- What is dumping?
- What is price escalation?
- What is skimming?
- What is parallel imports?
- What are the causes of price escalation? Do they differ for exports and goods produced and sold in a foreign country?
- Why is it so difficult to control consumer prices when selling overseas?
- What are the causes and solutions for parallel imports and their effect on price?