1. Do you consider transfer pricing to be an ethical means of reducing a businesses’ tax liability? Why, and why not?

2. At what level would a transfer price cease to become reasonable, and become unethical and probably illegal?

3. Does transfer pricing impose an ethically unfair tax burden on non-multinationals that cannot engage in such a scheme because they do not have international operations?
 4. Do governments have an ethical responsibility to harmonize tax rates around the world?

Multinationals are headquartered in one country but have operations worldwide. Generally, each multinational pays income taxes in the jurisdiction in which it generates its profits. For example, a German company with operations in the United States and Switzerland would pay income taxes to the U.S. government on the profits that its American subsidiary earned in the United States, and its Swiss subsidiary would pay taxes to the Swiss government for the profits it earned in Switzerland.