The 1994 income tax law allows consolidated returns when groups of companies meet certain conditions so that they qualify as economic units, but the provision has not been regulated yet.

Expenses charged to a resident company by a foreign parent company are deductible only if they have been specifically incurred in Venezuela to benefit the Venezuelan operation and are adequately documented. Accordingly, such expenses must comprise reimbursements and not original income in the foreign company's hands. Allocations of general administrative expenses of the foreign parent company or of other foreign subsidiaries are in practice deductible only with difficulty.

Losses may not be transferred between companies. Asset transfers between companies in a group are subject to normal rules. Intragroup trading must be conducted at arm's-length prices.

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