Exchange rate fluctuations can further complicate countertrade transactions. The presence of a second subsidiary, similar to Part B in Figure 1, also adds complexity. Those D-marks are exchanged for U.S. Dollars and remitted to the U.S. parent corporation. Numerous considerations must be addressed. Second, the transfer prices established may have tax implications since the subsidiaries may be taxed at the local country level.
Tax minimizing strategies then become important.
That determination is partially determined by the transfer prices established. Implications Countertrade transactions create unique accounting problems. Many accountants must deal with these issues on a daily basis, without authoritative guidelines for definitive support. As countertrade becomes more common, these problems will become more widespread.