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Assignment 4: Transfer Pricing
Due Week 8 and worth 320 points
Transfer pricing is probably one of the biggest tax issues facing
taxing authorities. Transfer pricing involves allocating revenues and
costs between countries in order to create the best possible tax
situation for a multinational company. For this assignment, you will
be required to respond to the following scenario:
A multinational company has hired you as its tax professional to
advise the company on how to use transfer pricing to avoid or
mitigate taxes. This company manufactures and sells cars in the U.S.
and two (2) foreign countries.
Using the Internet or Strayer Library, research the rules and
techniques for transfer pricing. Choose two foreign countries and
research their respective tax rates.
Write a six to eight (6-8) page paper in which you:
1. Based on your research, create projections of revenues, costs,
and tax rates for all three (3) countries, including the U.S. Provide
support for your projections.
2. Based on your projections, create at least two (2) scenarios in
which you allocate revenues and costs to each country to determine
the lowest possible overall tax for each country. Provide support for
your rationale.