Economics · Transfer Pricing
What is the primary negative consequence of abusive transfer mispricing between associated enterprises?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It automatically establishes an agency permanent establishment.
- 2It manipulates transaction prices to shift profits to low-tax jurisdictions, eroding the tax base.✓
- 3It strictly enforces the arm's length principle.
- 4It forces corporate entities to obtain a Tax Residency Certificate.
Correct answer
It manipulates transaction prices to shift profits to low-tax jurisdictions, eroding the tax base.
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