Tax Incentive policy

Comparative advantages

- Madagascar is speeding up its legal reform including business regulatory framework. New laws on firms, collective procedures, anti-corruption campaign have been adopted
- Also, few exceptional company tax exemption is being implemented
- abolition of VAT collection for exporting and EPZ firms up to the amount of their VAT credit
- abolition of deposit payment and facilitation of income payment

In terms of taxation,
Two provisions are in force:

- the regime of the Common Rights which applies to all activities operating on the local market
- the preferential regime of Free zone, exclusively for activities directed towards export.

Regime of common law

The State grants several tax cut and taxation of the investments. As an example a tax cut about 50% is granted for each investment carried out by a company; Exemption of Income tax (IBS) for the first working year run; The tax credits IBS obtained can be deferred until exhaustion; facilities are applied for the operations of imports such as the temporary admission or Draw back.

Regime of Free zone Industrial (ZFI)

A more thorough incentive is applied. An free zone Agreement authorities:

- an exemption for 5 to 10 years of the income tax following the activity, and the payment of the income tax at 10% thereafter;
- an exemption of the professional tax;
- and exemption of the Customs duties, import tax and the Value-added tax (VAT).

For the revival of the economy, other provisions were taken by the Government:

- exceptional reduction of the taxation of companies by the abolition of VAT collection for exporting and EPZ firms up to the amount of their VAT credit
- abolition of deposit payment and facilitation of Income payment
- abolition of import tax on some goods such as cement, yarns and fabric, iron, steel, and other items for construction, agricultural material and equipment...
- abolition of VAT on the purchase of equipment goods