Bill No. 005/2019 dated October 30, 2019, outlines the Finance Law 2020 applicable to Madagascar. Several sectors will experience development through the changes brought about by this Finance Bill, including the food and industrial sectors. The latter will focus on encouraging companies that bring added value to set up in Madagascar, which aligns with the social mission of Madagascar-services.com.
TAX MODIFICATIONS AND MEASURES
Those are the key changes related to the main taxes:
• Generalization of VAT* on public procurement
• Increase in excise duty (DA)* on certain products
• There is an imposition of income tax (IR)* on dividends paid to non-residents
• VAT* exemption for certain products
• Reduction of income tax (IR)* for activities related to health and education
The main control measures and systems to be implemented:
• Imposition of income tax on the sale of goods to foreign markets
• Systematic control, followed by potential cessation of activity or dissolution
• Modification of tax audit procedures
Incentive and additional tax measures:
• Extending tax reductions for the purchase of services and personnel costs, previously limited to the purchase of goods.
MAIN MODIFICATIONS BY TYPE OF TAX
The following points are relevant in the finance law 2020:
Firstly, there is the Income Tax (IR):
• Advance IR or IS at a rate of 2% (if no advance payment previously) for the export of goods
• IR at a rate of 10% (instead of 20%) for income earned by individuals or entities operating in the health and/or education sectors (art. 01.01.05)
• On dividends, the IR is at a rate of 10% (previously non-taxable) for those received by non-resident individuals or entities
• Non-deductibility of IR on capital losses and per diems exceeding the regulatory threshold
Furthermore, the Value Added Tax (VAT) should be mentionned:
• Taxation of corn and wheat
• Exemption for domestic gas and contraceptive products
• Amendment allowing for VAT omission regularization within three months
Lastly, the Excise Duty (DA) includes the following:
• Increase in excise duty on fruit juices, beer, and cigarettes
• Reinstatement of excise duty for mobile telephony at a rate of 10%
Become a client of MDG Services and benefit from informational updates on domestic taxation, including a summary of every latest Finance law and a comparative table of the last General Tax Code with the new one.