Madagascar Transfer Pricing Documentation Requirements

Scope of the documentation obligation

The Master File and Local File requirement applies to any company undertaking cross-border transactions with related parties, regardless of the value of those transactions. There is no de minimis threshold, so the obligation attaches to the existence of cross-border related-party dealings. The documentation is held available by the return due date. There is no Country-by-Country reporting obligation in the regime as captured.

Distinctive features of the Madagascan regime

The defining feature of the Madagascan regime is the pairing of a thresholdless obligation with a forceful default mechanism. Because the requirement applies irrespective of the transaction amount, any company with cross-border related-party dealings is caught. A refusal or failure to produce the required documentation attracts a fine of AR 10 million and, importantly, an automatic adjustment where the verifiers’ follow-up is unsuccessful, so the absence of documentation does not merely attract a fine but can lead directly to a determination of the taxpayer’s position. Documentation may be prepared in French or Malagasy.

Benchmarking and comparables

Madagascar follows the OECD approach to documentation and comparability. Detailed local practice on the choice between local and foreign comparables, on single-year versus multi-year testing, and on the frequency of fresh searches is applied consistently with the OECD framework, and a company within scope is expected to support its pricing with a comparability analysis on that basis.