Incentives and Taxes
-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.
Various economic reforms were brought by the government in order to promote an attractive environment for the investment (reforms of the financial sector, privatisation, facilitation of foreign exchanges, etc.). Madagascar knows an economic growth rate (5% into 2000) largely exceeding the demographic growth rate (2,8%).
For the regime of common right 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.
For the 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 .