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Madagascar
We have a team of seasoned professionals ready to support your business ventures in Madagascar, ensuring a seamless experience so you can focus on growth, strategy, and expansion across East Africa and the Indian Ocean region.
WHY MADAGASCAR?
Madagascar, the fourth-largest island in the world, is strategically located in the Indian Ocean near Southern Africa and Asia. It offers abundant natural resources, a youthful and trainable workforce, and access to preferential trade markets including the European Union (EBA initiative), United States (AGOA), and regional African markets.
With a reform-oriented government, significant investment in infrastructure and energy, and a growing export base in textiles, mining, and agribusiness, Madagascar is gaining momentum as a destination for foreign direct investment in the Indian Ocean region.
ADVANTAGES
• Strategic geographic position between Asia and Africa with port access to global trade routes.
• Preferential trade access to EU (Everything But Arms), U.S. (AGOA), and COMESA markets.
• Competitive labor costs and a large, young workforce.
• Rapidly developing industrial zones, including textile-focused free zones.
• Untapped mineral and energy resources, including nickel, cobalt, ilmenite, and graphite.
• Investment-friendly legal regime, with protection for foreign investors and streamlined procedures.
• Bilingual environment (French and Malagasy), with increasing use of English in business.
SIMPLE TAX REGIME
Madagascar’s tax framework is regulated by the General Tax Code, administered by the Directorate General of Taxes (Direction Générale des Impôts). It includes corporate tax, VAT, income tax, and various withholding taxes.
Special incentives and exemptions are available for companies operating in Free Zones, as well as sectors deemed strategic under the Investment Law.
TAX SLABS
Corporate Income Tax (Impôt sur les Sociétés – IS):
- Standard rate: 20%
- Free Zone companies: Exempt for the first 5 years, then 10% thereafter
- Minimum tax: 0.5% of turnover, applicable when profits are low or negative
Value Added Tax (TVA):
- Standard rate: 20%
- Zero-rated: Exports and international transport services
- Registration threshold: MGA 200 million annual turnover
Withholding Taxes:
- Dividends: 10%
- Interest: 20%
- Royalties and professional fees: 10%
- Rent: 5–10%, depending on the recipient
INCOME TAX RATES
For Individuals (IRSA – Impôt sur les RevenusSalariaux et Assimilés):
Monthly Salary (MGA) | Rate |
0 – 350,000 | Exempt |
350,001 – 400,000 | 5% |
400,001 – 500,000 | 10% |
500,001 – 600,000 | 15% |
Above 600,000 | 20% |
Employers must deduct IRSA and remit to the tax authorities on a monthly basis.
MADAGASCAR COMPANIES
Common Types of Legal Entities in Madagascar:
- Société à ResponsabilitéLimitée (SARL) – Limited Liability Company
- Suitable for SMEs and foreign investors
- Requires 1 or more shareholders
- Minimum capital: MGA 1,000,000 (approx. USD 220)
- Société Anonyme (SA) – Public Limited Company
- Ideal for large investments and public offerings
- Requires a minimum of 2 shareholders and a board of directors
- Minimum capital: MGA 10 million
- Sole Proprietorship (EntrepriseIndividuelle)
- Simple structure with unlimited liability
- Branch Office (Succursale)
- Foreign companies may establish a local branch
- Must be registered with the Commercial Registry
- Free Zone Enterprise
- Export-oriented companies eligible for significant tax exemptions
- Must export at least 95% of production
FOREIGN INVESTMENT
Madagascar’s Investment Law No. 2007-036 and the Economic Development Board of Madagascar (EDBM) govern and promote foreign investment. There is no restriction on foreign ownership, and foreign investors receive the same treatment as nationals.
Priority investment sectors include:
- Export-oriented manufacturing (especially garments and textiles)
- Mining and extractives (nickel, ilmenite, graphite)
- Agribusiness and fisheries
- Renewable energy and infrastructure
- Ecotourism and hospitality
- ICT and digital services
The EDBM serves as a one-stop shop for investment registration, permits, and guidance.
INTELLECTUAL PROPERTY RIGHTS
Madagascar is a member of:
- World Intellectual Property Organization (WIPO)
- African Regional Intellectual Property Organization (ARIPO)
- Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)
Protected IP categories include:
- Trademarks
- Patents
- Industrial designs
- Copyrights
The Malagasy Industrial Property Office (OMAPI) manages registration and enforcement of IP rights locally.
CONCLUSION
Madagascar is an increasingly attractive frontier market in Africa—offering natural resource wealth, favorable trade access, low operational costs, and improving infrastructure. While challenges remain, including bureaucratic delays and underdeveloped logistics, the government’s efforts to attract and facilitate foreign investment are gaining traction.
For investors in textiles, mining, energy, and agribusiness, Madagascar presents strong opportunities for long-term growth, supported by legal protections and fiscal incentives.
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