Essay
Suppose ABC International Company's Canadian subsidiary sells 1,300 trucks monthly to the French affiliate at a transfer price of $27,000 per truck.The Canadian and French marginal tax rates on corporate income are 45% and 50%,respectively.Assume the transfer price of the trucks can be set at any level between $25,000 and $30,000.Explain the transfer price you will set in order to minimize the total taxes paid by the Company.
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