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6.5. Deduction of Cross-Border Payments and Non-Deductible Expenses

Generally, all business expenses are deductible, unless specifically disallowed. The following expense types are not deductible or have limited deductibility for Madagascar tax purposes:

  • Corporation tax, third party taxes borne by the taxpayer;
  • Fines and penalties;
  • Certain specific charges and subsidies;
  • Contributions made in excess of 0.5% of annual turnover for the benefit of (educational, social, or cultural) recognized public associations; accredited bodies for scientific research; or for the promotion and creation of businesses for the achievement of planned economic and social development.

Following payments made to non-residents are not allowed as deductible expenses:

  • Overhead expenses charged by the head office to the branch in excess of 1% of the turnover of the branch;
  • Payments made to a non-resident company established in a country having a preferential tax regime subject to certain conditions.

COVID-19 Emergency Measures

In response to the COVID-19 pandemic, Madagascar has announced that donations made to authorities in the fight against COVID-19 are deductible.