flag Madagascar Madagascar: Business Environment

In this page: Accounting Rules | Tax Rates | Intellectual Property | Legal Framework | Standards | Business Practices


Accounting Rules

Tax Year
The tax year is the calendar year. However, companies may opt for a tax year running from 1 July to 30 June or another tax year.
Accounting Standards
According to Act No. 2003–036 of January 30, 2004, all companies are required to prepare their financial statements in accordance with the General Accounting Plan 2005, which is based on the 2004 version of IFRS and permits companies to use IFRS or IFRS for SMEs (which are not mandatory).
Companies with an annual turnover below MGA 20 million can maintain accounting records on a cash basis in accordance with the Système Minimal de Trésorerie.
Specific accounting requirement are set for banks and insurance companies (outlined in the "Plan Comptable des établissements de crédit" and the "Insurance Accounting Plan Decree", respectively).
Accounting Regulation Bodies

Accounting Reports
According to the Plan Comptable General (PCG) of 2005, companies (except for small and micro enterprises), have to publish the following documents: a balance sheet, a profit and loss account, a statement of changes in equity, a statement of cash flows and notes to the financial statements.
Publication Requirements
Companies whose securities are traded in a stock market have to publish their financial statements within forty-five days after the approval of the general assembly (Act No. 2003–036 of January 30, 2004, art. 870).
Professional Accountancy Bodies

Certification and Auditing
Incorporated and limited liability companies are required to have their financial statements audited based on size and turnover criteria as defined in the Act No. 2003–036 on Commercial Companies.
Limited liability companies that do not make a public offering have to appoint one auditor, those who do make a public offering have to appoint at least two.
Auditors of banks and insurance companies are required to apply standards issued by the OECFM. Banks have to appoint at least two auditors, who have to be approved by the OECFM.
Accounting News

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Tax Rates

Consumption Taxes

Nature of the Tax
Value Added Tax (VAT) - Taxe sur la valeur ajoutée (Local name)
Tax Rate
Reduced Tax Rate
A 5% reduced rate applies to sales of locally produced pasta products and imports and sales of butane gas and their containers.
Exports are zero-rated.
Certain items are exempt from VAT, including lth profession; import and sale of contraceptives and condoms; import and sales of newspapers and periodicals, excluding revenue from advertising; import and sales of stamps and legal currency; sales of gold to the Central Bank of Madagascar for the constitution of the national gold reserve; import and sales of books, brochures and educational and academic nature; import and sales of corrective lenses; import and sales of inputs exclusively used for agriculture; import and sales of potato seed, corn seed, wheat seed and soybean seed; import and sale of breeding animals, agricultural materials and equipment, materials and equipment for the food industry, public sports equipment and equipment for the production of renewable energy; air and sea transport of people and goods to and from abroad; sale of maize and sale of flour and edible oil made by local industries; import and sales of wheat, rice, paddy, fluorine and iodine; milk and supplements dietetics for infants and young children; wheelchairs and other invalid vehicles; medical materials, equipment and consumables; etc.
Other Consumption Taxes
Excise duties are levied on certain products imported to or manufactured in Madagascar at rates varying between 5% and 325% or at fixed amounts per litre or per unit: tobacco, alcohol, lighters and certain services including telephone communications.
0.5% of the cost, insurance, and freight (CIF) value of goods, is applicable on the importation of goods ("Gasynet fee").

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Corporate Taxes

Company Tax
5% of 70% of turnover, with a minimum tax of MGA 16,000 to MGA 150,000 depending on the sector.
A reduction of 2% of the amount of purchases of goods and equipment subject to regular invoices is applicable. In any case, tax due cannot be less than 3% of the turnover
Tax Rate For Foreign Companies
A resident corporation is subject to tax on its worldwide income, while non-resident entities are taxed only on Madagascar-source income.
An entity generally is deemed to be a resident of Madagascar for tax purposes if its registered office or centre of activities is in Madagascar, or if it has a permanent establishment in the country.
Non-resident entities are subject to a withholding tax of 10% of any income realised in Madagascar (financial loan interest is subject to a withholding tax of 20%).
Capital Gains Taxation
Capital gains are taxed as ordinary income. Capital gains realised from the sale of shares held in a company of which the entire or partial value is derived from goods located in Madagascar, or from rights thereof, are subject to tax at a rate of 20%.
Main Allowable Deductions and Tax Credits
The rates of depreciation vary from 5% to 33%.
Interest expenses, charitable contributions (capped at 0.5% of annual turnover), payments to foreign affiliates and taxes in relation to business in Madagascar are deductible (except for corporate income tax). Moreover, exemptions for public organizations, associations and non-governmental organizations apply. Provisions for doubtful debt can be deducted in case of an amicable or judicial settlement.
Half 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.
Accumulated loss can be carried forward for five financial years, whereas the carryback of losses is not allowed.
For companies with an annual turnover of less than MGA 200 million, a tax reduction of 2% of the amount of purchases of goods and equipment subject to regular invoices is applicable. However, tax due cannot be less than 3% of the turnover.
Other Corporate Taxes

Real estate ownership tax is imposed annually at the rate of 5% to 10% on the rental value of the property.
Registration fees are applicable at rates ranging from 0.5% to 5%, depending on the nature of the transaction.
Insurance contracts are taxed at a rate ranging from 3% to 20% of the insurance premiums.
A payroll tax is levied at a rate of up to 20% on the total taxable remuneration of employees, including salaries, allowances, and benefits in kind. Employers contribute up to 13% of eight times the legal minimum salary per employee for social security ("Caisse Nationale de Prévoyance Sociale"), plus 5% of the total amount of taxable remuneration for health contributions.

Several local taxes (also called para-fiscal taxes) are levied, including:

  • Civil protection tax: MGA 5,000 per domestic animal or bladed weapon ("arme blanche")
  • Advertising tax: MGA 30 to MGA 30,000/square metre
  • Residence tax for development: MGA 5,000
  • Tax on antennas, relays, or masts: MGA 600,000
  • Tax on pylons: MGA 1 million
  • Tax on mineral waters: MGA 5/litre
  • Tourist tax (or stay tax): MGA 500 to MGA 2,000 per night/room
  • Tax on radio and television games: MGA 10/sms; MGA 20/call
  • Tax on entering parties, shows, and various events: 3% to 5%
  • Tax on water and/or electricity: 10%.
Other Domestic Resources
Directorate-General for Taxation
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Country Comparison For Corporate Taxation

  Madagascar Sub-Saharan Africa United States Germany
Number of Payments of Taxes per Year 23.0 36.6 10.6 9.0
Time Taken For Administrative Formalities (Hours) 183.0 284.8 175.0 218.0
Total Share of Taxes (% of Profit) 38.3 47.3 36.6 48.8

Source: Doing Business - Latest available data.

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Individual Taxes

Tax Rate

Salary income tax (IRSA - Impôt sur les Revenus Salariaux et Assimilés)
Turnover up to MGA 350,000 0%, with a minimum tax of MGA 2,000
MGA 350,001 to 400,000 5%
MGA 400,001 to 500,000 10%
MGA 500,001 to 600,000 15%
Turnover above MGA 600,000 20%
Individual business income tax (IR - Impôt sur les Revenus)
Turnover up to MGA 200 million 5% (with a possible reduction of 70%) of the annual turnover (with a minimum tax of MGA 16,000 or 150,000 according to the activity)
Turnover above MGA 200 million Taxed in the same way as corporations
Allowable Deductions and Tax Credits
Several items are deductible from salary income tax (IRSA - Impôt sur les Revenus Salariaux et Assimilés), including:
- contributions to the social security system at 1% of the monthly salary income (capped at 1% of eight times the monthly legal minimum salary)
- contributions to the statutory health organisation at 1% of the monthly salary income
- retirement contributions (up to 10% of the remuneration subject to the contribution)
- statutory professional training funds contributions at 1% of the monthly salary income
- mandatory payment of freely paid arrears on rents (i.e. an amount periodically payable by a person to another person until the death of this last person)
- alimony payments, under certain conditions.
Furthermore, taxpayers are entitled to an IRSA reduction of MGA 2,000 per dependant.

Where an individual derives income from a trade, business, or profession having an annual turnover exceeding MGA 200 million, expenses duly justified can be deducted from the taxable revenue for IR purposes.
For annual revenues below MGA 200 million, an automatic deduction of 30% is applicable on the gross revenue, although the annual deduction cannot exceed MGA 2 million.
A tax reduction of 2% of the amount of purchases of goods and equipment subject to regular invoices is applicable. However, tax payable has to be at least 3% of the turnover.
If an individual has more than half of the share capital of société à responsabilité limitée (Sarl) and is manager of the same company, only a deduction of MGA 4,2 million is applicable on the gross remuneration.
Special Expatriate Tax Regime
Resident individuals are taxed on their worldwide income. Non-resident individuals are taxed only on Madagascar-source income.
An individual is considered a resident if he/she has his/her home or abode in the country.
There is no special expatriate regime in Madagascar.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
The list of tax treaties signed by Madagascar.
Withholding Taxes
Dividends: 10%; Interests: 0% (interest paid to banks and foreign financial institutions)/20% (financial loan interest or "Impôt sur les revenus des capitaux mobiliers"); Royalties: 10%.
Bilateral Agreement
Madagascar and Mauritius concluded a Double Taxation Agreement.

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Intellectual Property

National Organisations
The OMAPI (Malagasy office of industrial property) (Office Malgache de la Propriété Industrielle - in French)
Regional Organisations
Madagascar is a member of WIPO.
International Membership
Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property

National Regulation and International Agreements

Type of property and law Validity International Agreements Signed
Ordinance N° 89-019 of July 31, 1989 instituting a law for the protection of industrial property
20 years from the date of registration Patent Cooperation Treaty (PCT)
Ordinance N° 89-019 of July 31, 1989 instituting a law for the protection of industrial property
10 years from the date of registration. Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks
Ordinance N° 89-019 of July 31, 1989 instituting a law for the protection of industrial property
5 years starting from the date of registration (could be prolonged, by request, for two consecutive periods of five years each)  
Law No. 57-298 of March 11, 1957 for copyright (J.O. March 14, 1957)
During the life of the author and 70 years after the death of the author. Berne convention For the Protection of Literary and Artistic Works
Industrial Models
Ordinance N° 89-019 of July 31, 1989 instituting a law for the protection of industrial property
5 years starting from the date of registration (could be prolonged by request for two consecutive periods of five years each)  

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Legal Framework

Independence of Justice
Although Madagascar’s Constitution states the independency of judicial system to the executive branch, the latter often interferes with the former (also through the reassignment of judges). According to Freedom House, trial outcomes are frequently predetermined and corruption is widespread (especially in local tribunals). Furthermore, a lack of training, resources, and personnel hampers the effectiveness of the criminal justice system. The police and military are unable to assert authority over the entire country.
Hygienic and healthcare conditions for detainees are often harsh due to overcrowding in detention facilities.
Equal Treatment of Nationals and Foreigners
The law formally prohibits discrimination based on race, gender, disability, and social status. However, in practice foreigner may not always expect an equal trial (same as for minorities, like Muslims, or women).
The Language of Justice
French and Malagasy.
Recourse to an Interpreter
It is possible and easy to have recourse to an interpreter in Madagascar.
Sources of the Law and Legal Similarities
Madagascar's law is a mixture of the laws that already existed at time of the arrival of the French to the territory with the French law, ways and customs used to judge daily conflicts.
Checking National Laws Online
Library of the U.S. Congress - Laws of Madagascar
Droit Afrique - Madagascar

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National Standards Organisations
National Standards Body (BNM - Bureau de Normes de Madagascar)
Integration in the International Standards Network
The National Standards Body is a correspondent member of the International Organisation for Standardisation (ISO).
Classification of Standards
Online Consultation of Standards
ISO website - Madagascar standards consultation.
Certification Organisations
National Standards Body (BNM - Bureau de Normes de Madagascar) Responsible for the certification

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Business Practices

General Information
Culture Crossing, Site specialized in intercultural communication.
Opening Hours and Days
The typical business hours in Madagascar are from 8:30am to 5pm. Monday to Friday, with a lunch break between noon and 1pm. Most offices work from 9am to noon on Saturdays.
Banks generally work from 8am to 4pm, Monday to Friday.

Public Holidays

New Year's Day Janurary 1st
Women's Day March 8th
Commemoration of the Anti-Colonial Revolt of 1947 March 29
Easter Sunday-Easter Monday April 21st-22nd
Labor Day May 1st
Africa's Day 
Organization of African Unity (O.A.U.)
May 25
Ascension Day May 30
Whit Monday 50 days after Easter
Id al Fitr June 4
Independence Day June 26
Id al Adha August 11
Ascension Day August 15
All Saint's Day November 1st
Christmas Day December 25
Holiday Compensation
The law does not provide for a compensation day in case a holiday falls on a non-working day.
If a person has to work during a holiday, he/she is generally entitled to 150% of the normal pay (140% in case of weekly day off).

Periods When Companies Usually Close

Christmas/End of the year holidays from December 25 to the beginning of January
Closure for Easter end of March/Early April

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Latest Update: May 2024