Transfer pricing and Tax havens (1 Viewer)

[2late]

Help!

I don't get transfer pricing. Anyone have a nice and succint definition??

And... examples of countries which are tax havens???

 

[sneaky pete]

tax havens AFAIK bermuda the virgin isles switzerland, panama, bahamas, cayman islands


isnt transfer pricing when one company sells product to another company at artificially lowered prices in order to reduce tax?
eg bobs computers USA sells hardware to bobs computers australia for extra cheap in order to evade / minimize import tax?

someone please correct me if im wrong on the transfer pricing thing, but i really dont think they'd ask about it

 

[LaZy_KoReAn]

Originally posted by sneaky pete
\

isnt transfer pricing when one company sells product to another company at artificially lowered prices in order to reduce tax?
eg bobs computers USA sells hardware to bobs computers australia for extra cheap in order to evade / minimize import tax?

Thats right

 

[Beaker]

Transfer pricing:

A business's subsidiary makes a smaller profit if they charge a lower price for their outputs to other subsidiaries of the business. This is because the business will get a lower tax rate. That's why TNC's often maximise their profit by setting up subsidiaries in tax havens

A tax haven example btw is like the bahams and vanuatu

 

[aussiechica]

Transfer pricing- a strategy used by MNCs to reduce tax through use of cross border transactions. It does this by underselling its output in a high tax country.


Hey pete- AFAIK<< what does that mean please?


Hey, Bermuda's the eg I always use!

 

[Beaker]

Originally posted by sneaky pete
tax havens AFAIK bermuda the virgin isles switzerland, panama, bahamas, cayman islands


isnt transfer pricing when one company sells product to another company at artificially lowered prices in order to reduce tax?
eg bobs computers USA sells hardware to bobs computers australia for extra cheap in order to evade / minimize import tax?

someone please correct me if im wrong on the transfer pricing thing, but i really dont think they'd ask about it

I think it will be somewhere actually.. in the multis maybe... but its easy.. you just need to know the basics and the rest just falls together

 

[Nupil]

Um use coke to think about it.

Say they produce the can in Country X and the Syrup in country Y and then between countries X and Y they then sell the products between one another for a lower price because they're both subsidiaries of Coca Cola ... they're avoiding paying the normal price of exporting between countries. Make sense?

As for a text-book definition: is the price charged (usually lower then if it was just general exporting between nations) for a good or service traded among a business and its subsidiaries.

Make any sense?

Examples of countries that are tax havens: Caymans Islands, The Bahamas, Vanuatau, Liberia ... there are more, hope that helped!

Edit: I didn't realise how many people where on this board ... I opened to type this a while okay forgot about it came back clicked and there were already so many responses!! Am too lazy to take mine away. Hope you got something out of it 2late!

 

[LaZy_KoReAn]

Nupil, you just made everything more complexed

Sneaky pete's one is basic and correct

 

[Nupil]

There are too many people here!! Argh!!

*runs away from the masses of screaming business students*

... hmm ... 'scuse that.

 

[Beaker]

Originally posted by LaZy_KoReAn
Nupil, you just made everything more complexed

Sneaky pete's one is basic and correct

Nar I actually liked the relevance between it and coke... i'll remember that..

and yeh i wrote mine when there were no answers as well

 

[2late]

Thanks heaps guys!

I get it now....

 

[sneaky pete]

Originally posted by aussiechica
Hey pete- AFAIK<< what does that mean please?

as far as i know



the coke example is good too
whatever helps you remember it better

 

[ezzy85]

Originally posted by 2late
Help!

And... examples of countries which are tax havens???

if youre a simpsons fan, remember the episode where krusty fakes his death? he had an illegal account in the cayman islands. this was a tax haven. so if you get something about this in the exam, just think back to krustys illegal cayman island activites.