Following the current aspirations, both at national and international level, the Malagasy Administration, through its representatives, has adopted the Finance Bill (PLF) for the year 2022. By taking inspiration and advocating a “strong economic and social recovery” that would be based on the end of the health emergency.
Indeed, the various provisions modified and created in this 2022 PLFI were taken on the basis of the normalization of the health situation, the strategic commitment of the government in structuring investments, the return of confidence among economic players and the significant recovery of economic activities in synergy with the reforms undertaken, notably through the increasing focus on digitalisation.
In order to promote economic recovery, certain provisions have been amended:
On IRSA (tax on wage and similar income):
IRSA is a tax deducted at source, according to a declaration made by any employer who enters into a contractual relationship in the performance of his company’s activities.
The old measures set a minimum threshold of Ar 2,000 for any taxpayer. But this new law has taken on a greater importance by setting the threshold at Ar 3,000.
For companies operating in the free zones sector:
Some changes have affected the free zone companies. Nevertheless, the enactment of the relevant law will mark the application of these new modalities.
Thus, in terms of free zones, we note the following points:
Reduction of the period of exemption from the Income Tax of newly constituted free zones and enterprises at the beginning of the financial year, to 1 year, 3 years and 10 years depending on the type of enterprise;
Lowering the rate of the investment tax reduction from 75% to 25%;
Limitation of the guarantee of stability for a fixed period.
Value Added Tax System VAT:
The 2022 Finance Bill introduced VAT exemptions:
The cancellation of the reduction of the VAT rate on the sale of pasta by 5% to return to the normal rate of 20%. The VAT rate on exports of goods and services remains 0%;
VAT exemption for international transhipment of goods;
VAT exemption for insurance contracts for smallholder farmers.
The right to deduct VAT on fuel purchases by air transport professionals in accordance with the corresponding customs tariffs.
Those who find that their turnover for the current financial year exceeds 400,000,000 must file a declaration of VAT liability before the end of the financial year.
With regard to excise duty, the export of gold or platinum-plated gold, in raw or semi-manufactured forms, or in powder form will be taxed with excise duty at a rate of 15%.
As for administrative measures, online eServices will be planned from December 2021 until 2022: the eHetra platform (eDeclaration and ePayment) in the Regional Business Service, the improvement of the eBilan platform, the VAT credit refund with eCredit TVA, the eSalaried platform for the possible adjustment of taxes, registration of documents by e-Enregistrement, etc. etc
These terms are among many others, according to the statements of the Finance Bill. Although promulgation is not yet effective, we know that no amendments have been made to this project.
For all activities opening to tax obligations, feel free to contact MDG Services.