On February 16, the Chamber of Commerce and Industry of Antananarivo hosted a conference-debate on Madagascar’s 2017 Finance Law. Key participants included: Iouri Garisse Razafindrakoto (Director of the Tax Administration), Jacques Solo Ndriantody (Director of Tax Legislation and Litigation), Dina Raharijaon (Tax Advisor), and Hery Nirina Andrianaivo (Director of the CCIA).
Key Provisions of the 2017 Finance Law:
GENERAL PROVISIONS:
- Computerization of communication rights and supporting documents (within 2 months)
- Separation of declaration and payment processes
- Introduction of online and mobile payment for the Synthetic Tax (IS)
- Non-deductibility of previous year losses for companies not subject to VAT
CORPORATE INCOME TAX (IR):
- Current Account Contributions by Shareholders: Quarterly grouping under a single agreement (e.g., fund injections for operational expenses)
- Agricultural sector: 50% tax reduction
- Rental income and service revenues: Separate tax treatment required
SYNTHETIC TAX (IS):
- Replacement of the Intermittent Income Tax (IRI) by the Intermittent Synthetic Tax (ISI) for invoices from non-registered service providers. Tax rate remains at 5%
- Tax base: price of goods or services
- Introduction of minimum thresholds by sector:
- Farmers, breeders, fishermen, non-motorized transporters 16,000 Ar
- Artisans, street vendors, small producers 50,000 Ar
- Mining artisans, artists, merchants, hoteliers, service providers, restaurateurs 100,000 Ar
- Liberal professions and others 150,000 Ar
REGISTRATION FEES (DE):
- Bank loan contracts: 2,000 Ar
- Abolition of the 100,000 Ar penalty for failure to register acts (excluding lease contracts). Late penalty (Art. 20.01.52) remains unchanged.
VAT:
- Deductibility of fuel purchases for maritime transport
- VAT exemption on sales of solar batteries, non-electric solar water heaters, and stationary accumulators (2V–6V) with capacity > 200Ah.
LOCAL TAXES:
Harmonization of regulations, including:
- Civil Protection Tax: max 5,000 Ar per person (intended to provide revenue for municipalities not receiving state subsidies). Declaration due before January 15 (awaiting municipal approval for 2016).
- Residence Tax: 5,000 Ar for individuals aged 21–60, with a 50% reduction for existing income tax payers (IR, IRSA). Written declaration required at the local municipality before January 15 each year.
- License Tax: applicable to temporary activities (e.g., trade fairs).
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