Madagascar personal Income tax
Individual income tax rate in Madagascar is 23%.
Basis Resident individuals are taxed on worldwide income. Nonresident individuals are liable to tax only on Madagascar-source income.
Residence Individuals who have a dwelling in Madagascar are deemed to be resident, as are those who travel abroad but remain on a Madagascar employers payroll.
Tax Filing status Joint filing of tax is not permitted; each taxpayer must file a separate tax return.
Taxable income Taxable income is comprised of employment income, income derived from the carrying on of a business and investment income.
Capital gains Gains derived from the sale of real property or real property interests is subject to a 23% tax. The tax is considered a prepayment of the income tax of the payee.
Tax Deductions and tax allowances Various tax deductions and tax allowances are granted in computing taxable income (e.g. dependent allowance, deductions for housing, etc).
Other taxes on individuals:
Capital duty No
Stamp duty No
Capital acquisitions tax No
Real property tax An annual building tax is imposed on the owner of buildings at rates ranging from 5% to 10%.
Inheritance/estate tax No
Net wealth/net worth tax No
Social security contributions Contributions to the state pension scheme are required on employee salaries. The employer must contribute 13% of salary to the scheme, while employee contributes 1%.
Administration and compliance:
Tax year Madagascar tax year is usually the calendar year, although taxpayers who carry on a business may elect a different tax year.
Tax Filing and tax payment Taxpayers earning income other than employment income must file a tax return as follows: (1) if the fiscal year is the calendar year, the return must be filed before 15 May of the following year; (2) if the taxpayers fiscal year ends on 30 June, the return must be filed before 15 November of the same year; and (3) for all other taxpayers, the return is due within 4 months of the end of the year. Individuals earning employment income must file before the 15th day of the following month after the salary is paid.
Penalties Penalties are applicable to late filing of tax, failure to file tax and for tax evasion.
Madagascar Corporate tax
Corporate income tax rate in Madagascar is 23%.
Residence A company generally is deemed resident if it is incorporated or principally managed in Madagascar.
Basis Resident companies are taxable on their domestic and foreign-source income. Nonresidents are taxed only on Madagascar source income.
Taxable income Taxable income is net profits derived during the accounting year, declared in the final accounts and reported on a tax return.
Taxation of dividends Dividends are exempt from withholding tax.
Capital gains Profits derived from the sale of capital assets are taxed under the general income tax rules at the 23% rate.
Losses Tax losses may be carried forward for 5 fiscal years. Loss carryback is not permitted.
Surtax No
Alternative minimum tax No
Foreign tax credit No
Participation exemption No
Holding company regime No
Tax Incentives Export incentives are available to encourage and stimulate operations in Madagascar (e.g. refund of VAT for export processing zone firms and professional export companies).
Withholding tax:
Dividends There is no withholding tax on dividends.
Interest Interest paid to a nonresident is subject to a 23% withholding tax.
Royalties Royalties paid to a nonresident is subject to a 10% withholding tax.
Branch remittance tax No
Other taxes on corporations:
Capital duty An increase in share capital is subject to a 0.5% tax.
Payroll tax Tax is withheld by an employer on a monthly basis at graduated rates up to 23%.
Real property tax An annual building tax is imposed on the owner of buildings at rates ranging from 5% to 10%.
Social security contributions Contributions to the state pension scheme are required on employee salaries. Employers must contribute 13% of
salary to the scheme, while employees contribute 1%. The employer is entitled to a deduction on contributions made up to 10%.
Stamp duty No
Transfer tax Registration fees are paid upon registration of title deeds or on the transfer of property or interests.
Anti-avoidance rules:
Transfer pricing Broad anti-avoidance rules apply to prevent related parties from pricing transactions in a manner that could manipulate profits.
Thin capitalisation No
Controlled foreign companies No
Disclosure requirements A declaration must be made of amounts remitted to third parties and goods sold exclusive of tax (merchants).
Administration and compliance:
Madagascar tax year Madagascar tax year is either the calendar year ending 31 December or 30 June.
Consolidated tax returns Consolidated returns are not permitted; each company must file a separate tax return.
Tax Filing requirements All companies are required to file an annual tax return, with the filing date depending on the financial yearend of the company. Companies with a December year-end must file a return before 15 May the following year and, if the taxpayers ends on 30 June, filing must be made before 15 November of the same year. Companies with a different year-end must file a return within 4 months.
Income tax is payable in 6 instalments, remitted every 2 months. The instalments are based on the prior year tax liability, with the balance of tax due on the same day as the filing of the tax return.
Penalties Penalties are imposed for late filing, the failure to file and for tax evasion.
Madagascar vat (Value Added Tax)
Rate of VAT in Madagascar is 20%.
Taxable transactions VAT is charged on the taxable supply of goods, the provision of services and on imports.
VAT is compulsory for companies (legal entities) and individuals with an annual turnover exclusive of tax higher than MGA 200 million. Companies (legal entities) and individuals with annual turnover, exclusive of tax, of less than MGA 200 million may opt to be liable to VAT.
VAT Registration There is no requirement to register for VAT or a minimum threshold of taxable supplies before an entity must submit VAT returns.
Filing and VAT payment VAT returns are due on a monthly basis.