Running a business in Madagascar involves understanding and complying with a set of tax and legal obligations.
These include income and value-added taxes, social security contributions, and specific declarations required by the fiscal and labour administration.
Below is an overview of the key elements that new companies need to anticipate and prepare for.
This article is divided into 3 distinct sections for each area of obligations that companies in Madagascar must adhere to:
- Fiscal obligations
- Social obligations
- Administrative obligations
Fiscal Obligations
The Malagasy tax system includes several types of taxes, depending on the size and activity of the business. But the following are the most commonly encountered.
Business Income Tax (“Impôt sur le Revenu” or IR)
For companies with an annual turnover exceeding 400 million MGA (excluding VAT), the standard corporate income tax rate is set at 20%.
This tax must be declared and paid annually, generally before the 15th of May for the previous fiscal year, which closes on December 31st.
At registration, companies are usually expected to make a provisional payment.
Flat-Rate Tax (“Impôt Synthétique” or IS)
Smaller companies, whose turnover falls below the 400 million MGA threshold and who are not subject to VAT, fall under the simplified synthetic tax regime.
The tax rate is 5% of the annual turnover, with a minimum amount ranging between 16,000 MGA and 150,000 MGA depending on the sector.
Under this regime, the declaration is made once a year, with the deadline set for March 31st.
Value Added Tax (“Taxe sur la Valeur Ajoutée” or TVA)
The TVA, or Value Added Tax, is a tax on revenue applied at 20% for domestic sales and 0% for exports.
The monthly declaration must be submitted by the 15th of the following month. A late submission results in penalties and fines.
Since the Finance Law of 2020, all companies with an annual turnover above 400 million MGA (before taxes) must register for VAT.
Before any declaration, companies must assess which of their operations are taxable and which are exempt. The list of exemptions is outlined in Article 06.01.06 of the General Tax Code (CGI).
The amount to be declared is calculated by subtracting deductible TVA from collected TVA.
Once the amount is determined, companies can fill out and submit their monthly declaration through the tax platform.
It’s worth noting that since 2009, taxpayers registered within Analamanga region have had access to an online platform for tax filing and payment
Right of Access to Information for Tax Audit Purposes (“droit de communication”)
In addition to tax returns, Malagasy fiscal law requires an annual declaration known as the droit de communication.
This is the authority granted to the tax administration to request all necessary information for tax assessment and control. The documents and records obtained are used to verify the taxpayer’s fiscal situation.
This obligation applies to any business or individual generating annual revenues over 100 million MGA, whether or not they are subject to VAT.
The data collected may include financial records, supporting documents, and other pieces relevant to taxation.
The declaration must be submitted and validated via the designated online platform. This is a formal part of fiscal transparency and an important control mechanism used by tax authorities.
Tax on Salaries and Similar Income (“Impôt sur les Revenus Salariaux et Assimilés” or IRSA)
IRSA stands for “Impôt sur les Revenus Salariaux et Assimilés”, which translates to “Tax on Salaries and Similar Income”. It’s essentially the income tax that employers in Madagascar withhold from their employees’ salaries and pay to the government on their behalf.
But here’s something important many new business owners don’t realize:
Even if your company has no employees, you still have to file IRSA reports every month.
This applies to all companies registered as fiscal entities in Madagascar – regardless of whether they are currently operating, dormant, or hiring staff.
If you have employees, you must:
- Deduct IRSA from their salaries
- Submit a monthly report to the tax office
- Pay the amount owed
If you don’t have employees, you must:
- Still file the monthly IRSA declaration
- Indicate that there is no tax due (zero declaration)
Failing to file IRSA – even if nothing is due – can lead to penalties or administrative complications. It’s a common mistake among new business owners and one that’s easy to avoid with proper awareness.
If you’re unsure about how to prepare, declare, or submit any of the above-mentioned taxes, feel free to get in touch with Madagascar Invest – we offer a monthly compliance package whereby we take care of all the ongoing fiscal obligations of your company.
Social Obligations
National Social Security Fund (Cnaps)
Employers in Madagascar must also comply with various social obligations.
The National Social Security Fund (CNAPS) requires quarterly contributions of around 13% from the employer and 1% from the employee, calculated on gross salaries.
Each quarter’s contribution is due by the last day of the month following the end of the quarter.
Declarations can be submitted either on hard copy, or online through the dedicated platform, Télédéclaration.
Health contribution (Ostie)
In addition, health contributions must be paid to an approved health insurance provider also known as Service Médical Inter-Entreprises or SMIE (such as ESMIA, OSTIE). Employers contribute 5% of the employee’s taxable income, while employees contribute 1%.
These contributions are usually capped based on the legal minimum wage, with a maximum threshold equivalent to eight times the minimum salary per employee.
For companies operating in areas where no designated corporate health providers such as OSTIE or ESMIA are available, it is possible to establish a signed agreement with local health institutions to fulfill this obligation.
Malagasy Fund for Professional Training (FMFP)
Another requirement is the contribution to the FMFP, the Malagasy Fund for Professional Training.
The FMFP (Fonds Malgache de Formation Professionnelle) requires a quarterly contribution that is borne solely by the employer. This contribution amounts to 1% of the gross wage bill, but only the portion of salaries that falls under the capped social contribution is taken into account.
To calculate the amount to be paid, employers must apply the following formula: Total capped gross monthly salaries of employees × 1% × 3 months.
The monthly gross salary cap used for this calculation is set at eight times the minimum legal wage in Madagascar.
Payment can be made by bank transfer or direct bank deposit to one of the FMFP accounts listed on the unique form available for download on the CNAPS website. It is also possible to make the payment via mobile money services such as Orange Money or Mvola.
Administrative Obligations
Pre-employment medical visit
In Madagascar, the pre-employment medical visit is a mandatory check-up conducted by an occupational health doctor within three months of an employee taking up their position.
Its purpose is to inform the employee about the occupational risks associated with the job and to raise awareness about preventive measures.
This visit must be carried out by an occupational doctor (médecin du travail), typically within the framework of a SMIE, which brings together several companies under a shared occupational health service. It is the employer’s responsibility to ensure that this visit is arranged in due time.
Internal Rules and Regulations
Employers with more than eleven employees must establish internal regulations. This requirement, provided under Article 169 of the Labor Code, ensures that the organization clearly outlines expectations in terms of security, professionalism, ethics, and disciplinary procedures.
Rules must be written, signed by the employers and the Labour Institution, and displayed in a visible place within the workplace.
Once the workforce reaches fifty or more, a collective labour agreement replaces the internal regulations. These documents also must be signed by the labour institution and respected by all parties involved.
For companies exceeding a certain size, the law also mandates the establishment of a register of employees.
Concluding statements
In conclusion, starting a business in Madagascar may seem complicated at first, but being well-informed from the beginning can make things much easier.
When you understand your main tax duties, know the right time and way to file required declarations, and stay up to date with social contributions, you build a strong and legal foundation for your business.
With good planning and the right support, dealing with taxes and rules becomes a simple part of running a business in Madagascar. Madagascar Invest can therefore help you stay up to date with your ongoing compliance.
