How to respond to the below discussion reponse:
When it comes to Transfer Pricing issues, it seems that most ofit revolves around taxes. The way American companies reporttransfer pricing internally and also with American companies thatare abroad in other countries, has been a perfect opportunity forcompanies to hide money by overstating transfer prices. Thisespecially works well with foreign subsidiaries that you claimtaxes on the funds that are repatriated back to the Americancompany. (Hiemann, M. and Reichelstein, R) In an attempt to fixthis Section 482 of the Internal Revenue Code and by TreasuryRegulation 1.6662 states that transfer pricing meet market pricesor the prices of a company that the company has no relations to.Before this the Arm’s-Length Standard was enacted so that theCommissioner was able to judge party transactions, but the standardwas useless. In 1962 the Ninth Circuit said that the Arm’s-LengthStandard
(Dix, Edward B) was not the “sole Criterion for determining whatthe true net income is of each controlled taxpayer” Which as hasled to the rampant tax avoidance by U.S. corporations withsubsidiaries abroad, most people think it the cheaper employeewages and cheaper cost for product, I believe that avoidance is oneof the key reasons to move companies overseas.