Madagascar

Taxation of residents

Resident corporate entities are subject to corporate income tax (CIT) based on realised worldwide income.

A corporate entity having an annual turnover of less than MGA 400 million is subject to CIT at a rate of 5% of 70% of turnover, with a minimum tax of MGA 16,000 to MGA 150,000 depending on the activities (i.e. synthetic tax regime). A tax reduction of 2% of the amount of purchases of goods and services and equipment under some conditions is applicable. However, tax due cannot be less than 3% of the turnover.

A corporate entity registered in Madagascar and having an annual turnover exceeding MGA 400 million is subject to CIT at a rate of 20% of the benefit (i.e. income tax or real tax regime).

Cooperative societies are exempt from income tax provided that their income from non-members does not exceed 1/4 of their turnover. Members of cooperative societies are subject to income tax or synthetic tax according to the amount of turnover. However, a reduced rate of 10% is applied to interest on shares and rebates that are distributed annually to members of cooperative societies by decision of the general assembly.

Under the real tax regime, the CIT payable cannot be less than:

• 1% of turnover plus a fixed amount of MGA 500,000 for taxable persons carrying on agricultural, artisan, transportation, industrial, hotel, or mining activities.
• 1% of turnover plus MGA 1 million for other activities.
• 7/1,000 of turnover plus MGA 1 million for other activities.
• 1/1,000 of turnover for taxpayers selling retail fuels.

Revenue sources from the public market must be managed separately from any other revenue and is subject to tax on the public market at a rate of 8%.

Taxation of non-residents

Only Madagascar-source income is taxable for non-residents.

Revenue of foreign businesses providing services to a Madagascar taxpayer that do not have a PE in Madagascar is subject to withholding tax (WHT) at a rate of 10% of any income realised in Madagascar, including dividends. However, financial loan interest is subject to WHT of 20%. See the Withholding taxes section for more information.

Local income taxes

No regional or local income taxes are applicable in Madagascar.