Yes, it is theoretically possible to hide the true source of profits through cross-jurisdictional accounting within a company. This practice is often referred to as "internal transaction manipulation" or "internal price shifting within a multinational corporation." Here is how it might happen: 1. **Internal price shifting**: A company operating across multiple jurisdictions might allocate profits by manipulating transaction prices between its affiliated companies. For example, a company might sell a product at an artificially low price to its subsidiary in a low-tax jurisdiction, which then sells the product to a third-party customer at normal market prices. In this way, the company can shift earnings to the low-tax jurisdiction and reduce its overall tax burden. 2. **Nesting of transactions**: A company might create complex nested structures of transactions in which multiple entities are involved in transactions in different jurisdictions. By manipulating these transactions, the company can hide the true source of profits and make it more difficult to track the flow of money. 3. **Cost sharing arrangements**: A company might use cost sharing arrangements to allocate costs and expenses between different entities based on internal agreements. By manipulating these allocations, the company can influence the allocation of profits and potentially attribute profits to specific jurisdictions. 4. **Round trips**: Companies may engage in round trips, where they post fictitious sales or purchases of additional goods or services to artificially increase revenue or expenses, thereby manipulating profits. The possible impacts of hiding the source of profits: 1. **Tax evasion**: By manipulating internal transactions, companies may evade paying taxes due in high-tax jurisdictions, resulting in loss of tax revenue and potential legal liability. 2. **Improper disclosure**: Hiding the source of profits may result in improper disclosure of financial statements, making it difficult for investors, analysts and regulators to understand the company's actual performance. 3. **Improper allocation**: Manipulation of internal transactions may result in improper allocation of profits, costs or tax burdens, which may not be in the interests of the company or harm certain stakeholders, such as employees, customers or suppliers. Regulatory measures and practices used to detect and prevent such manipulation include: 1. **Transfer pricing regulations**: Many countries have implemented transfer pricing regulations that require companies to follow the arm's length principle when conducting transactions between related parties. 2. **Country-by-country reporting**: Companies are required to submit detailed financial information to tax authorities under country-by-country reporting, which helps track the source of profits. 3. **Enhanced transparency**: Regulators now require companies to disclose more information about internal transactions and accounting practices, making it easier to identify potential manipulation. 4. **Audit and compliance**: A company's internal control, audit and compliance programs help detect and prevent manipulation of internal transactions. In short, accounting treatment across regions within a company may reveal the true source of profits, making financial transparency and regulatory oversight essential to ensure that a company's accounting practices are accurate and fair.