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    Question

    Why is global transfer pricing becoming increasingly

    important for multinationals?
    A To reduce the cost of international trade Correct Answer Incorrect Answer
    B To increase their market share in foreign countries Correct Answer Incorrect Answer
    C To develop transfer pricing policies that maximize after-tax income and minimize tax adjustments and penalties Correct Answer Incorrect Answer
    D To comply with international trade regulations Correct Answer Incorrect Answer
    E All of the above Correct Answer Incorrect Answer

    Solution

    Transfer pricing relates to the price, non-arm’s length companies located in different jurisdictions, charge each other for goods and services. In a global economy dominated by transnational corporations, global transfer pricing is becoming increasingly important for multinationals. Global transfer pricing helps corporations develop transfer pricing policies that maximise the potential for increasing the company’s after-tax income, while minimising the likelihood that it will be subject to tax adjustments and penalties.

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