Business Taxation in Madagascar – Practical Guide

Published on May 5, 2026 and written by Cyril Jarnias

Madagascar offers an attractive tax framework for businesses, with competitive tax rates and incentives for certain sectors. However, the tax system remains complex, and companies must fully understand their obligations to remain compliant. Here is a comprehensive overview of business taxation on the Big Island.

Main Taxes Applicable to Malagasy Businesses

The Malagasy tax system includes several taxes and duties that businesses must pay:

Corporate Income Tax (CIT): This is the main tax on business profits. The standard rate is 20%, which is relatively low compared to other African countries. Certain sectors, such as mining or telecommunications, may have higher rates.

VAT: The standard rate is 20%. Some essential goods benefit from a reduced rate of 5% or are exempt. Businesses with annual turnover exceeding 400 million ariary (approximately 100,000 euros) must register for VAT.

Tax on Salaries and Similar Income (IRSA): This is the equivalent of income tax, withheld at source by the employer. Rates are progressive, ranging from 0% to 20%.

Social Security Contributions: The employer must pay approximately 13% of the payroll for social security contributions.

Business Tax: It is calculated based on the rental value of professional premises.

Customs Duties: For imports, they generally range from 0% to 20% depending on the products.

Registering with the Malagasy Tax Authorities: Key Steps to Start Your Business

Tax registration is a crucial step for any new business in Madagascar. Here is the procedure to follow:

1. Obtain a statistical card from INSTAT (National Institute of Statistics).

2. Register with the Trade and Companies Register (RCS) at the Commercial Court.

3. Apply for a Tax Identification Number (NIF) from the General Directorate of Taxes. This number is essential for all tax procedures.

4. Register for VAT if the projected turnover exceeds the threshold of 400 million ariary.

5. Register with CNaPS (National Social Security Fund) for social contributions.

The one-stop shop at EDBM (Economic Development Board of Madagascar) centralizes these procedures and allows them to be completed more quickly.

Meeting Your Tax Obligations: A Must to Avoid Penalties

Malagasy businesses must comply with several recurring tax obligations:

– Monthly VAT declaration and payment (by the 15th of the following month) – Monthly IRSA and social contribution declaration and payment – Annual corporate income tax declaration (by May 15 for fiscal years ending December 31) – Payment of provisional CIT installments (in April, August, and December) – Annual declaration of salaries paid – Maintaining accounting records in accordance with the 2005 General Accounting Plan

Businesses must retain their accounting and tax documents for 10 years.

Failure to meet these obligations can result in penalties ranging from 40% to 150% of the evaded taxes, and even criminal prosecution in the most serious cases.

Avoiding Double Taxation: Tax Agreements Signed by Madagascar

Madagascar has signed tax treaties with several countries to avoid double taxation of income. These agreements are particularly important for foreign investors. The main countries involved are:

– France – Mauritius – Canada – Norway

These treaties generally provide for reduced withholding tax rates on dividends, interest, and royalties paid to non-residents.

For example, the withholding tax rate on dividends paid to a French company is limited to 15% instead of the standard rate of 20%.

Madagascar vs. Other Offshore Jurisdictions: Strengths and Weaknesses

Compared to other popular offshore jurisdictions, Madagascar has certain advantages but also drawbacks:

Strengths: – Relatively low CIT rate (20%) – Cheap and French-speaking labor force – Abundant natural resources – Attractive preferential regimes (free trade zones)

Weaknesses: – Recurring political instability – Underdeveloped infrastructure – Still complex administrative procedures – High corruption

Compared to neighboring Mauritius, Madagascar offers lower labor costs but a less favorable business environment. The Seychelles or Dubai offer more advantageous tax regimes but with higher setup costs.

Conclusion

Madagascar offers interesting potential for investors with its moderate taxation and abundant resources. However, setting up in the country requires a good understanding of the tax system and local support to navigate administrative procedures. With ongoing reforms, the country aims to become a preferred destination for investments in Africa.