Resident and nonresident individuals are subject to personal income tax called IRSA on their Malagasy-source income, including employment income.
Individuals are deemed to be residents of Madagascar if they meet either of the following criteria:
- They own, use or rent a residential house in Madagascar.
- They have Madagascar as their principal place of residence, regardless of the existence of a residential house.
Individuals who are not nationals of Madagascar are also deemed to be resident if they have a permanent or long-stay visa and a work permit.
The domestic law does not provide a 183-days’ rule.
Nonresident individuals are also subject to tax on certain specified types of income, such as income allocated to Madagascar by a multilateral or bilateral tax treaty.
Income subject to tax. Income subject to income tax includes the following:
- All types of remuneration received for public or private employment
- Allowances received by employees that are intended to supplement wages, regardless of the names of the allowances
- Indemnities and allowances paid to leaders of companies
- Fringe benefits including the following:
— Canteen expenses, up to MGA6,000 (USD3) for executives and up to MGA2,000 (USD1) for staff employees
— Cars dedicated to personal and professional use, up to 15% of the actual expenses borne by the employer (insurance, fuel, repair and maintenance expenses)
— Accommodation expenses up to 50% of the rent and limited to 25% of the salary
— Telephone expenses up to 15% of the actual expenses incurred by the employer
The total amount of fringe benefits taxable is capped at 20% of cash remuneration. Fringe benefits not listed above are fully taxable.
Employers must withhold tax from their employees’ wages.
Certain types of income are exempt from income tax, including canteen expenses not reaching the threshold fixed above, medical expenses, retirement allowances not exceeding one year’s salary, family allowances, military and civil disability pensions and military retirement pensions.
Deductions. Certain expenses are deductible, including the following:
- Payments to the Caisse Nationale de Prévoyance Sociale (CNAPS), the government fund for social security, and for government or private medical insurance (see Section B)
- Compulsory alimony payments
Rates. The first MGA250,000 of monthly income is subject to a flat tax of MGA2,000. Monthly income exceeding MGA250,000 is subject to a proportional tax of 20%.
Employers and employees must make contributions to the CNAPS, which uses the contributions to make payments for various items including pensions and compensation for industrial accidents and occupational diseases. The contribution rates are 13% for employers and 1% for employees. The rates are applied to the gross monthly remuneration of each employee up to MGA1,152,024. Employers withhold the employees’ contributions from the employees’ wages.
Employers and employees must also make monthly contributions to one of the “Service Medical Inter-Entreprises” (SMIEs). The major official SMIEs currently in Madagascar are OSTIE, AMIT, ESIA and FUNHECE. These entities provide medical insurance. The contribution rates are 5% for employers and 1% for employees. The rates are applied to the gross monthly remuneration of each employee up to MGA1,152,024 for OSTIE, ESIA and FUNHECE. Employers may purchase medical insurance from private companies in addition to mandatory insurance from SMIEs.
Tax filing and payment procedures
Employers must remit withholding tax on wages monthly between the 1st and 15th days of the month following the month in which the wages are paid.
Double tax relief and tax treaties
Madagascar has entered into tax treaties with France and Mauritius.
Foreigners who want to enter Madagascar must obtain a tourism visa or business visa for a stay of less than three months. A tourism visa can be obtained at the airport on arrival in Madagascar. A business visa can be obtained at the Malagasy embassy or consulate in the foreigner’s home country. These types of visas do not allow foreigners to work in Madagascar.
Foreigners who want to work in Madagascar must obtain a transformable visa, which is valid for one month. The fee for this visa is MGA140,000. It can be obtained at a Malagasy embassy or consulate in the foreigner’s home country. The transformable visa must be changed to a long-stay visa for a foreign worker within one month after he or she enters Madagascar.
If no Malagasy embassy or consulate is located in the home country, an entry visa for workers, called a “boarding agreement,” may be obtained by email from the Ministry of Foreign Affairs in Madagascar before departure. After the foreigner arrives in Madagascar, the authorities can provide the foreigner with a transformable visa.
To work in Madagascar, foreign nationals must satisfy the following requirements:
- They must obtain a work permit. For this purpose, a local labor contract must be concluded with a local entity and receive the prior approval of the Labor Ministry. The fee for the issuance of a work permit is EUR100.
- They must provide a certificate of incorporation and a board of directors’ resolution for the Malagasy company for which they intend to work.
A foreigner who wants to stay in Madagascar for a period of more than three months must obtain a long-stay visa and a biometric residence permit from the Ministry of the Interior (Home Office). To obtain these documents, the foreigner must submit the following:
- Transformable visa
- Local labor contract
- Police clearance from the home country
- Residence certificate delivered by the local authority (Fokontany) for the location where the foreigner resides in Madagascar
- Foreigner’s census issued by the district of residence of the foreigner in Madagascar
- A work permit delivered in Madagascar by the Department of Labour
- An employment certificate from the employer in Madagascar
- Tax Identification Number Card (Carte de Numéro d’Identification Fiscale, or CNIF) of the employer
- A copy of the previous Resident Card (for renewal of Resident Cards)
- Long-stay visa fees ranging from MGA150,000 to MGA250,000, depending on the length of stay
- Biometric residence permit issuance fees ranging from EUR300 to EUR838.47, depending on the length of stay
After the submission, the foreigner must undergo a morality investigation by the Ministry of the Interior. The long-stay visa and biometric residence permit are issued within three months.