Chapter 6
Q. 6.CR.13
How do international taxation and political considerations affect multinational organizations’ decision management and control systems?
Step-by-Step
Verified Solution
If the local government is threatening to expropriate the assets of high-profit, foreign-owned companies, these companies may want to choose high transfer prices for their imports and low transfer prices for their exports. If multinationals choose transfer prices solely to minimize taxes or for political considerations, they must devise alternative measures of performance to motivate managers of foreign subsidiaries