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Unformatted text preview: subsidiary for $2,500, earning a $500 profit. Irish taxes paid: $20 United States (Tax rate = 34%) The U.S. subsidiary sells the system at cost for $2,500. No profit is earned. U.S. Taxes paid: $0 NOTE : Some authors suggest that transfer pricing is still used by MNCs while others state that many countries control this practice (illegal). If laws are in place and enforced, transfer pricing can be monitored. On the other hand, in countries where the rule of law is still relatively weak, transfer pricing would be possible....
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- Spring '10