Group taxation is not possible in Venezuela.
Taxpayers that carry out operations with related parties abroad must calculate their income, costs, and deductions by applying a defined methodology of transfer pricing. This regime is applicable to imports, exports, and interest paid to recipients abroad as well as technical assistance, technological services, and royalty fees.
Thin capitalisation rules limit the deduction of interest from debt with related parties in excess of a 1:1 debt-to-equity ratio. Under these rules, if the average of a taxpayer’s debt (with related and unrelated parties) exceeds the average amount of its equity for the respective fiscal year, the excess debt is treated as equity for income tax purposes. Consequently, the ability to deduct interest on related-party loans may be affected.
Controlled foreign companies (CFCs)
Venezuelan tax legislation does not provide for CFC rules but does provide for international fiscal transparency rules where income from investments in a JLFT must be recognised on an accrual basis (see Foreign income in the Income determination section).