Profits, income and capital gains earned abroad shall be computed in determining the actual profit of legal entities corresponding to the balance sheet drawn up on December 31st of each year. Accordingly, any investment in a controlled foreign entity must be adjusted yearly to reflect the change in the investment value corresponding to the profits or losses of the directly and/or indirectly controlled entity. The change in investment must be recognised in proportion to the Brazilian parent’s participation in its equity, and any positive adjustment relating to profits earned, calculated under the local accounting standards of the jurisdiction of the controlled entity, must be subject to IRPJ and CSLL annually.