Reinvested Earnings of Indirectly Owned Direct Investment Enterprises Law and Legal Definition

Reinvested Earnings of Indirectly Owned Direct Investment Enterprises are treated as follows under the Fully Consolidated System (FCS).

Assuming that (a) Company X in country 1 owns 51 percent of Company Y in country 2, which in turn owns 51 percent of Company Z in country 3; and (b) the reinvested earnings of Company Y are 500 and the reinvested earnings of Company Z are 100, the income of Company X from reinvested earnings is 28, that is: 51% of the reinvested earnings of Company Y: .51x500 = 255 51% of 51% of the reinvested earnings of Company Z: .51(.51x100) = 26 Thus, 255 + 26 = 281.