Investment incentives in Madagascar

Madagascar provides investment incentives as below.

1.   Export processing zones (EPZ)

Incentives  

  • Tax exemption upon company registration
  • Exemption from professional taxes
  • 10 per cent only as tax on dividends
  • Income tax exemption for the first five years, then 10% tax thereafter
  • Exemption from customs duties and taxes on imported equipment and inputs
  • Ability to claim VAT refunds
  • Free transfer of funds upon termination of activities
    • A reduced profit tax rate of 10%, effective for 5 years from the time actual operations begin (5 years for service companies and 15 for Private Development Companies);

2.   Mining Sector

Incentives

  • Reduced rate of income tax of 10% while the company has an internal rate of return (IRR) of less than 20%. However, if the IRR exceeds this, the rate increases to 35%. If the IRR exceeds 25% then the tax rate rises to 40%
  • No minimum income tax for the first 5 years the mine is in operation
  • Inclusion of research costs and environmental impact study in depreciable assets;
  • Exemption from withholding tax on the payment of interest, insurance premiums, costs and fees of foreign loans entered into for funding Madagascan investment
  • Reduction in professional tax rates from 1/150th in the first year, gradually increasing to 1/30th in the fifth year and beyond
  • Land and building taxes reduced to a rate of 1%, each capped at Ariary 200,000,000
  • VAT exemption granted on interest and other expenses relating to loans specified in the investment plan and on importation of an employee’s personal belongings. VAT exemption also granted for imported equipment and goods which are specified in the investment plan
  • Reduction of withholding taxes on interest, dividends and directors’ fees to 10%.

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