Question

Historically, which one of the following statements is most correct about the tax burden of U.S. technology giants such as Google?

		Tthey have been paying very high taxes because they have been very profitable
		They have been paying very low taxes by using transfer pricing and channeling income through foreign subsidiaries in low income tax countries
		hey have been paying very low taxes by setting up subsidiaries in low income tax countries
		They have been paying very low taxes simply by using transfer pricing
		They have been paying very low taxes because they have been incurring losses overseas

Answer 1

OPTION B-----They have been paying very low taxes by using transfer pricing and channeling income through foreign subsidiaries in low income tax countries.

Transfer Pricing refers to the pricing set between two related companies in intra company transactions or trading. The latter can involve buying and selling of goods, services between a parent and subsidiary company.Google use lower tax jurisdictions in Europe like Ireland, Luxemborg to record most of the revenues earn in Britain, France and Germany.