Answer
Managers should consider income tax issues when choosing a transfer-pricing method because different methods can lead to significant variations in reported operating income across divisions in different tax jurisdictions. These differences can impact the overall tax liability of the company, taking into account varying tax rates, deductions, and incentives. It's crucial to select a method that aligns with the company's tax strategy, complies with local tax laws, and optimizes the overall tax position. Proper documentation and transparency are also important for tax compliance and defense during audits.
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