Corporate - Deductions

Last reviewed - 16 February 2024


The amount of deductible depreciation should not exceed the amount that is calculated according to the following rates of depreciation provided by the law:

Asset Depreciation rate (%)
Industrial buildings 5
Plant and machinery 10
Mining exploration and development (licence) 33
Transportation (car) 20
Transportation (utility cars, vans, trucks) 25
Computers 25
Electricity generators 10

With the exception of buildings, it is also possible to practise a graduated depreciation. In this case, the annual depreciation corresponds to 30% of the net book value of the asset.

In case of loss, depreciation of assets can be deferred and carried forward to the next financial years until absorption.


There is no provision concerning deductibility of goodwill in the Madagascar tax code.

Start-up expenses

There is no specific tax provision on start-up expenses. Accounting rules are applicable for the profit and loss recognition.

Start-up and prospecting expenses for the installation of an overseas establishment, as well as the costs of running such a foreign establishment, for the first three years are tax deductible. However, the amounts deducted must be reported, in equal amounts, to the taxable income of the five consecutive years from the fifth year following the creation of the foreign establishment.

Interest expenses

Interest expenses are deductible. However, interests on inter-company loans between companies within the same group, are subject to thin capitalisation rules (see Thin capitalisation in the Group taxation section for more information). In addition, interest on inter-company loans is not deductible if the loan agreement is not documented by a written agreement submitted according to registration procedures.

Bad debt

To be tax-deductible, provisions for doubtful debt must be subject to justification of existence of amicable or judicial settlement. The claims must be individualised.

Charitable contributions

Payments made for the benefit of educational, social, or cultural recognised public associations; accredited bodies for scientific research; or for the promotion and creation of businesses for achievement of planned economic and social development are deductible within the limits of 0.5% of annual turnover.

Donations granted to foundations recognized as being of public utility by decree are also deductible up to 75%.

Gifts in kind or in cash granted in case of natural calamities and donations in cash granted to a corporation established by decree for the interest of the nation are also deductible.

Any other charitable contributions are not deductible.

Deductible social expenses for mining companies

Donations and expenses related to the social responsibility of mining companies are deductible if they are mandatory or provided in the Cahier des charges.

Expenditures for site security and high intensity of manpower (haute intensité de main d’oeuvre or HIMO), provided that expenses were subject to WHT at a rate of 5%, are also deductible.

Deductible wages

Salaries and wages that are not included in salary income taxes or not declared to Caisse Nationale de Prévoyance Sociale are not deductible.

Only 40% of the difference between the total benefits in kind and the value of benefits in kind included in the tax base of salary income tax are deductible expenses.

Expenses linked to any form of health coverage paid by the employer for the benefit of all its employees are deductible up to 10% of the payroll.

Fines and penalties

Fines and penalties are not deductible for CIT purposes.


Except for CIT, taxes in relation to business in Madagascar are deductible.

Third-party taxes borne by the company are not tax-deductible.

Net operating losses

Accumulated loss can be carried forward for the next five financial years following the period in which the loss occurs. Carryback of losses is not permitted in Madagascar.

Payments to foreign affiliates

For branches, the deductible amount of overhead that the head office can charge to the branch is limited to 1% of the turnover of the branch.  For interest on inter-company loans, see Thin capitalisation in the Group taxation section.

Charges linked to financial transactions between companies deemed to be related as per description by decree, are deductible within the limit of:

a) 10% of the general costs of the financial year carried out in Madagascar, for the share of costs headquarters or management fees, and technical assistance costs;

b) 10% of the gross operating surplus, for brand royalties and 15% of the same aggregate for patent royalties relating to the concerned intangible assets;

c) 5% of purchases made from a centralizing entity, for commissions paid, subject to presentation of purchasing invoices ;

d) debt and undercapitalization ratios accepted by the prudential rules issued by the Banking and Financial Supervision Commission (CSBF) of Banky Foiben'i Madagasikara, for the interest paid, subject to the provisions of double taxation treaties.

Payments to foreign companies established in a country having a very favourable fiscal regime

Payments made to a foreign company established in a country having a very favourable fiscal regime are not tax deductible unless there is proof of effectiveness of the services and reasonability of the amount.