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Business, 17.12.2019 23:31 fhemmie963

Zen manufacturing inc. is a multinational firm with sales and manufacturing units in 15 countries. one of its manufacturing units, in country x, sells its product to a retail unit in country y for $356,000. the unit in country x has manufacturing costs of $185,000 for these products. the retail unit in country y sells the product to final customers for $485,000. zen is considering adjusting its transfer prices to reduce overall corporate tax liability.
required:
1. assume that both country x and country y have corporate income tax rates of 40% and that no special tax treaties or benefits apply to zen. what would be the effect on zen’s total tax burden if the manufacturing unit raises its price from $356,000 to $427,200?
2. what would be the effect on zen’s total taxes if the manufacturing unit raised its price from $356,000 to $427,200 and the tax rates in countries x and y are 20% and 40%, respectively?

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