Madagascar

Employment expenses

The following items are deductible from gross income for IRSA purposes:

• Contributions to the social security system at 1% of the monthly salary income, with a capped amount of contribution corresponding to 1% of eight times the monthly legal minimum salary.
• Contributions to the statutory health organisation at 1% of the monthly salary income.
• Contributions to the statutory professional training funds at 1% of the monthly salary income.
• Retirement contributions, capped at 10% of the remuneration subject to the contribution.
• Mandatory payment of freely paid arrears on rents (i.e. an amount periodically payable by a person to another person until death of this last person).
• Alimony payments, under certain conditions.

Personal allowances

In Madagascar, personal allowances from IRSA take the form of tax credits per dependant (see the Other tax credits and incentives section for more information).

Business deductions

Where an individual derives income from a trade, business, or profession having an annual turnover exceeding MGA 400 million, expenses duly justified can be deducted from the taxable revenue for IR purposes.

If the annual revenue is less than MGA 400 million, a deduction of 30% is applicable on the gross revenue. However, the annual deduction cannot exceed MGA 2 million.

A tax reduction of 2% of the amount of purchases of goods and services and equipment subject to regular invoices and having been the subject of a declaration in the right of communication, of salaries and other employer charges, of health coverage expenditure within the limit of 5% of the payroll, and of donations in-kind or in-cash for the benefit of foundations recognised as being of public utility is applicable. However, tax due cannot be less than 3% of the turnover.

Please note that when an individual has more than 50% of the share capital of a company set up as a société à responsabilité limitée (Sarl) under the corporate law and at the same time is manager of the same company, only a deduction of MGA 4,2 million is applicable on the gross remuneration. The tax due cannot be less than MGA 1 million. A Sarl is a company set up by one or more shareholders and managed by one or more managers having, according to the law (unless limitation by the deed of appointment), separate and full power to sign on behalf of the company.