Offshore Tax with HTJ.tax

In Madagascar, the Caisse Nationale de Prévoyance Sociale (CNaPS) oversees social security contributions for both private and public sector employees. Contributions are based on a percentage of gross salary, shared by employer and employee, and subject to a monthly ceiling. These funds support four key areas: family benefits, pensions, occupational risks, and health insurance.

Madagascar does not use a progressive income tax system like many Western countries. Instead, it relies on withholding and presumptive taxes.

Employees are taxed through IRSA (withholding on salaries), while self-employed individuals and small businesses often fall under a presumptive regime. Investment income is subject to flat withholding rates—10% on dividends and 15% on interest.

Capital gains on real estate and other assets are taxable, and rental income must be declared separately. All rules are defined in Madagascar’s General Tax Code (CGI).

Episode Description:

VAT—known locally as Taxe sur la Valeur Ajoutée (TVA)—is one of the most important indirect taxes in Madagascar. In this episode, we break down how VAT works, who needs to register, and what businesses need to know to stay compliant.

What You’ll Learn in This Episode:

💡 Standard VAT Rate & Principles

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• Rate: 20% on most goods and services.
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• Scope: Applies to supplies of goods and services made in Madagascar, as well as imports.
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• Calculation: Based on the value of goods/services, including all costs and taxes—but excluding VAT itself.
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📝 VAT Registration & Compliance

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• Mandatory Registration Thresholds:
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• Sale of goods: Annual turnover ≥ MGA 100,000,000.
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• Provision of services: Annual turnover ≥ MGA 50,000,000.
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• Optional Registration: Businesses under the threshold may register voluntarily, often to reclaim input VAT on expenses.
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🎯 Why This Matters:

Understanding VAT is crucial for businesses operating in Madagascar. Knowing when registration is required, and how VAT applies to transactions, ensures compliance while helping companies avoid penalties and take advantage of input tax recovery where applicable.

Understanding Madagascar’s corporate tax framework is essential for both local entrepreneurs and international investors. In this episode, we break down the corporate income tax (CIT) rules, the synthetic tax regime (IS), and how compliance works in practice—so you can plan, operate, and grow with clarity.

What You’ll Learn in This Episode:

💼 General Corporate Income Tax (CIT)

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• Standard Rate: 20% of net profits for companies with turnover ≥ 200M MGA.
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• Scope: Resident companies taxed on worldwide income; non-residents taxed on Madagascar-sourced income only.
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• Capital Gains: Taxed at the standard 20% CIT rate.
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• Filing Deadlines: Tax returns due by the 15th day of the fourth month after year-end (e.g., May 15 for calendar-year companies).
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📊 Synthetic Tax Regime (Impôt Synthétique – IS)

• Who It Applies To: Mandatory for companies with turnover < 200M MGA (with option to use standard CIT).
• Rate: 5% of annual turnover.
• Reduction: A 2% reduction is available for purchases of goods/equipment, though liability cannot drop below 3% of turnover.

Why This Matters:

Whether you’re running a small startup or a large enterprise, knowing which regime applies—and how to file correctly—helps you avoid costly mistakes, benefit from available reductions, and stay on the right side of Madagascar’s tax authorities.

Operating a Société Anonyme (SA) in Madagascar comes with a comprehensive compliance framework. In this episode, we break down the legal, financial, and administrative obligations that SA companies must meet—covering audits, tax reporting, and governance requirements—to help business owners stay compliant and avoid costly penalties.

What You’ll Learn in This Episode:

📊 Audit and Financial Reporting

• Mandatory Audit: Appointment of an approved independent auditor for annual statutory audits.
• Financial Reporting Standards: Use of the national accounting framework (PCG 2005) aligned with IFRS 2004.
• Dual Reporting: Some companies maintain both PCG-compliant and full IFRS statements for local and international needs.
• Language Requirement: All company accounts must be maintained in French.

💰 Tax Compliance

• Corporate Income Tax (CIT): 20% on net profits for SA companies with annual turnover over 200M MGA.
• Minimum Tax: 0.5% of annual turnover plus a fixed amount for certain activities.
• Tax Filing Deadlines: May 15 for calendar-year companies; fourth month after fiscal year-end for others.
• Other Taxes: VAT at 20% and potential withholding taxes on payments to non-residents.

📑 Administrative and Legal Requirements

• Local Representation: Appointment of a resident representative to receive official documents.
• Statutory Documents: Articles of Association, tax identification number (NIF), and registration with the Trade and Companies Registry (RCS).
• Staff Registration: Employees must be registered with social and health security systems; notify the Labor Inspectorate at the start of operations.
• Ongoing Reporting: Strong governance and transparency are expected, especially for publicly traded companies.

Why Listen:

If you’re managing or planning to establish an SA in Madagascar, this episode provides a clear roadmap of compliance requirements—from audits and taxes to legal and administrative obligations—ensuring your company operates smoothly and legally in the local context.

Choosing the right business structure in Madagascar can make a huge difference for growth, liability, and compliance. In this episode, we compare SARL (Limited Liability Company) and SA (Public Limited Company), breaking down their key differences, advantages, and when each is most suitable.

What You’ll Learn in This Episode:

📌 SARL (Société à Responsabilité Limitée – Limited Liability Company)

• Popular for small and medium-sized businesses.
• Requires 1+ shareholder and 1 director, maximum 100 partners; open to any nationality.
• Liability limited to capital contributions; personal assets protected.
• No minimum capital required.
• Managed by a director, with strategic decisions made by partners.
• Statutory auditor required if thresholds are met (capital ≥ 20M MGA, turnover ≥ 200M MGA, workforce > 50).

📌 SA (Société Anonyme – Public Limited Company)

• Designed for larger businesses or those seeking significant capital from multiple investors.
• Requires 1+ shareholder and 1 director; no maximum limit.
• Liability limited to capital contributions.
• Minimum share capital: 10M MGA (2M MGA for single shareholder).
• Managed by a general administrator or a board of directors.
• Statutory auditor mandatory; accounts maintained in French; structured for potential public offerings.

Why Listen:

If you’re planning to start or expand a business in Madagascar, this episode helps you understand which legal structure aligns with your goals, resources, and long-term growth strategy.

Starting a business in Madagascar begins with choosing the right legal structure. In this episode, we break down the three most common company types—SARL, SA, and SCI—highlighting their advantages, requirements, and compliance obligations so you can make an informed decision.

What You’ll Learn in This Episode:

📌 SARL (Société à Responsabilité Limitée – Limited Liability Company)

• Ideal for small and medium-sized enterprises (SMEs).
• Requires at least one shareholder and director; liability limited to capital contributions.
• No minimum capital required.
• Auditor required if certain thresholds are met (capital, turnover, or workforce)

📌 SA (Société Anonyme – Public Limited Company)

• Designed for larger businesses or those raising significant capital.
• Requires at least one shareholder; no maximum limit.
• Minimum share capital: 10 million MGA (or 2 million for single-shareholder SA).
• Auditor appointment is mandatory; records must be in French.
• Suitable for future stock exchange listings.

📌 SCI (Société Civile Immobilière – Real Estate Company)

• Specialized for real estate ownership and management.
• Requires at least two partners with unlimited, joint liability.
• Offers tax flexibility: taxed under personal income (IR) or corporate income (IS).
• Useful for property co-ownership and succession planning.

Why Listen

Whether you’re an entrepreneur, investor, or expat exploring opportunities in Madagascar, understanding these company structures is critical for long-term success. This episode gives you the clarity you need to choose the right business vehicle.

Applying for Madagascar’s investor visa is just the first step—staying compliant with local regulations is where many expats face their biggest challenges. In this episode, we highlight the critical risks of going it alone and why working with qualified accountants and advisors is essential for protecting your investment.

What You’ll Learn in This Episode:

💰 Financial Risks

• How non-compliance can lead to heavy penalties, surcharges, and interest.

📑 Tax Audits (Vérification Fiscale)

• What happens during an audit and why preparation is vital.

⚠️ Operational Disruption

• The real possibility of frozen bank accounts, seized assets, or forced business closures.
• 👤 Legal Liability
• Why company directors can be held personally responsible for unpaid taxes or social security contributions.

Why Listen:

If you’re considering applying for Madagascar’s investor visa, this episode offers practical, expert-informed insights on compliance and risk management—so you can build a sustainable business without costly mistakes.

Doing business in Madagascar as a foreigner comes with unique financial, tax, and compliance challenges. In this episode, we explore the critical role accountants play in guiding international companies—ensuring compliance, maintaining transparency, and supporting strategic growth.

What You’ll Learn in This Episode:

📊 Financial Reporting

• How accountants prepare statements under Madagascar’s PCG 2005 while also aligning with IFRS for international reporting.
• Why many foreign subsidiaries maintain dual financial reports for local and global requirements.

💰 Tax & Compliance

• Key tax responsibilities: corporate income tax (20%), synthetic tax for small businesses, payroll and withholding taxes.
• Importance of deadlines (e.g., annual tax filing by May 15).
• Proper expense documentation and deductions.

🔍 Audit & Oversight

• How accountants support audit readiness and establish internal controls.
• Efforts by OECFM (national accounting body) to align with global standards and implement quality assurance frameworks.

📈 Budgeting & Analysis

• Accountants’ role in budgeting, forecasting, and financial planning to aid strategic decision-making.

🗂 Record-Keeping

• The importance of meticulous financial records, stock cards, and VAT compliance.
• Risks and fines for poor documentation.

Why Listen:

If you’re a foreign investor, entrepreneur, or business owner in Madagascar, this episode demystifies the financial and regulatory landscape—and highlights how the right accounting support is key to building a sustainable operation.

What You’ll Learn in This Episode:

🏠 Ownership Restrictions

• Foreigners cannot own land outright (freehold) in Madagascar.
• Why property ownership remains politically and legally sensitive.

📜 Option 1: 99-Year Emphyteutic Lease

• The most common solution for foreign investors.
• How this long-term, renewable lease offers security similar to ownership.

🏢 Option 2: Local Company Ownership

• Setting up a Malagasy company as a legal entity.
• How property can be acquired under the company’s name, giving the investor indirect control.