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As this example suggests, the manipulation of an MNC’s consolidated intracompany accounts by one subsidiary generally benefits one subsidiary (or the parent) while leaving the other subsidiary (or the parent) unharmed. The exactdegree and direction of the actual manipulations, however, may depend on the tax status of each country. The MNC obviously would want to have the exchange rate losses in the country with the higher tax rate. Finally, changes in intra-MNCaccounts can also be subject to restrictions and regulations put forward by the respective host countries of various subsidiaries.
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