What will the group overall gross profit be

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Question - Tio Inc. a US parent owns two subsidiaries, Ecuador Inc. and Taiwan inc. The corporate tax rate is 20% in Ecuador and 40% in Taiwan. It costs Ecuador $25 to assemble each widget. Ecuador Inc. sells all 1,000 widgets of its production to Taiwan Inc. at a negotiated priced of $65 per unit. Taiwan inc. sold all 1,000 widgets to independent customers for $90 per unit.

-How much is the group's (i.e single economic unit's) world-wide gross profit

-Is the group's (i.e single economic unit's) world- wide gross profit arm's length

-What us the group's (i.e., single economic unit's) overall tax rate

-If Too wants to minimize world- wide taxes, it should direct

-What will the group's overall gross profit be if Taiwan paid $80 per unit?

-What taxing jurisdiction would contest the discretionary transfer price of $80?

Reference no: EM132972318

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