Finding the transfer price in different situations : If Austria introduces an import tariff of 25 percent on microwave ovens, and permits this to be a deductible expense in figuring the subsidiary’s income tax, what should the transfer price be?
Sub: Finance Topic: Transfer pricing Question: Finding the transfer price in different situations. ClassOf1 provides expert guidance to College, Graduate, and High school students on homework and assignment problems in Math, Sciences, Finance, Marketing, Statistics, Economics, Engineering, and many other subjects. Harpoon, Inc., is a U.S. multinational corporation that ships small appliances to its subsidiary in Austria. The marginal profits tax rate in the United States is 34 percent, and the marginal profits tax rate in Austria is 55 percent. The U.S. taxes foreign subsidiary income only when repatriated, and allows a credit for foreign taxes paid. Austria has a 20 percent withholding tax on dividend payments, for which the United States gives a complete tax credit.
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