Corporate - Deductions

Last reviewed - 24 January 2024

Depreciation and amortisation

Companies may deduct depreciation of tangible fixed assets and amortisation of intangible fixed assets that are used in the production of income. Depreciation is generally computed on a straight-line basis although any other generally accepted method for accounting purposes is also accepted. Depreciation is not allowed on real estate used as rental property. Depreciation on the stepped-up portion of assets revalued by any method other than the inflation adjustments (see the Income determination section) is not permitted. In principle, useful lives of assets shall be consistent with the parameters used in accordance with accounting principles. Although domestic standards provide that tables with depreciation and amortisation rates to be applied by taxpayers may be provided via the Income Tax Rules, such a table has not been provided to date.


Deduction of the amortisation of goodwill is allowed for income tax purposes. Deduction of the cost basis for purposes of calculating the capital gain on the sale is also allowed for income tax purposes.

Organisational and pre-operating expenses

Domestic income tax regulations do not provide for specific guidance as to the treatment of organisational and pre-operating expenses. The accepted practice is to follow GAAP.

Interest expenses

Interest paid on a loan, the principal of which is invested to generate income, is deductible.

Bad debt

Losses arising from bad debts are deductible, provided:

  • the loan concerned was granted as part of the taxpayer’s business
  • the amount of the debt was previously included in the taxpayer’s gross revenue (except in the case of loans granted by financial institutions or by employers to their employees), and
  • either the debtor and the debtor’s guarantors are insolvent or the amount of the loan does not justify collection expenses.

Charitable contributions

Deductions for allowable charitable contributions are limited to 10% of taxable income (before deducting contributions) when taxable income does not exceed TU 10,000. When taxable income exceeds TU 10,000, charitable contributions are limited to 8% of taxable income. For oil extraction companies, the deduction is limited to 1% of the pre-contribution tax amount.

Fines and penalties

Income tax regulations do not expressly provide for the treatment of fines and penalties; however, such expenses are not deductible as they do not meet the normality and necessity requirements.


Municipal, state, and local taxes are deductible in determining taxable income. Corporate taxes are not deductible.

Other significant items

Payments required by the labour law, such as profit sharing (generally between 15 days and four months' salary) and severance indemnity accruals, are also deductible. In cases of unjustified dismissals, double severance indemnities must be paid. However, accruals for such additional indemnities are generally not deductible until paid.

Corporate tax deduction of employees' compensation and professional fees is subject to compliance with the taxpayer's obligations as employer as provided for in the Law, which entail, among others, withholding obligations.

Net operating losses

Losses may be carried forward for three years. During the three-year term, the amount of losses available to carry forward cannot exceed 25% of the tax period’s taxable income. Carryforward losses derived from the inflation adjustment have been eliminated. Losses may not be carried back. Foreign losses may be offset only against foreign profits.

Payments to foreign affiliates

A Venezuelan corporation may claim a deduction for royalties and technical assistance and for technical service fees paid to foreign affiliates, subject to the following conditions:

  • Income tax payable by the recipient is withheld at the source.
  • Transfer pricing requirements are met.
  • In the case of technical assistance and technological services fees, the expenses may be deducted if such services cannot be otherwise provided in Venezuela.

Foreign companies domiciled in Venezuela are allowed to deduct royalties paid to parent companies or foreign affiliates (see the Withholding taxes section for more information). Branches of foreign companies, however, may not deduct such payments to head offices or related parties.