also Discuss your transfer pricing strategy by stating whether an entity (subsidiary) should sell to and buy from another entity (subsidiary) at a low transfer price or a high transfer price without showing any supporting computation.

18. ABC Company has subsidiaries in Countries X, Y, and Z. Each subsidiary manufactures one product at a cost of $10 per unit that it sells to each of its sister subsidiaries. Each buyer then distributes the product in its local market at a price of $15 per unit. The following information applies: Income tax rate Import duty. Country X 20% 20% Country Y 3096 10% Country Z 40% 0% Import duties are levied on the invoice price and are deductible for income tax purposes. Requited: Formulate a transfer pricing strategy for each of the six intercompany sales between the three subsidiaries, X, Y, and Z, that would minimize the amount of income taxes and import duties paid by ABC Company