Quote:
Originally Posted by fjtorres
Self-dealing can be legal in cases were the units charge each other fair market rates, say for translation rights. It is not legal when used to artificially lower royalties (Harlequin case).
It is legal but politically charged to do it for tax minimization (done by practically all manufacturing multinationals, especially car companies).
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Regarding the first - LEGALLY PERMITTED
transfer pricing - scenario - yes, I'm well aware of this (and even provided oversight for transfer pricing among the various ventures, at a regulated firm I once worked at). It does happen in manufacturing multinationals and in automotive firms (as you pointed out), as well in all
vertically integrated, and even
horizontally integrated, firms, whether they operated domestically or internationally.
Regarding the second - SEEMINGLY SHADY- scenario - I reiterate my earlier statement, because the self-dealing in this case appears underhanded and may be similar to that in the Harlequin case.