Foreign companies are corporations or businesses that are registered, operate, or have authorization to conduct commercial activities in a country other than their country of origin. These entities are important players in the global economy and international trade.
The currency in which the financial statements of an entity are presented, which can differ from the functional currency, especially in multinational groups with subsidiaries in different countries. It often requires a common presentation currency for consolidated financial statements.
Products made by a multinational corporation's overseas units for export to the home country.
Thin capitalization refers to an arrangement where a company is financed through a high level of debt compared to equity, typically involving intercompany loans within a multinational entity. This is often structured to gain tax advantages by exploiting interest payment deductions.
Transfer prices refer to the costs at which goods and services are exchanged between divisions or subsidiaries within a conglomerate. They significantly influence the profitability of each division and can serve multiple strategic purposes including motivating managers, evaluating performance, maintaining autonomy, and moving profits.
Transfer pricing involves setting prices for transactions between affiliated entities under common ownership, often used to allocate revenue and expenses among those entities to benefit from tax advantages.
