The attributes of the Finance Bill for the fiscal year 2022

Following the current aspirations, both nationally and internationally, the Malagasy Administration, through its representatives adopted the Finance Bill (PLF) for the year 2022. Inspired by and advocating a « strong economic and social recovery » which they believe would be based on the end of the state of health emergency.

Indeed, the various provisions modified and created in this PLFI 2022 were taken against the background of the normalization of the health situation, the strategic commitment of the government in structuring investments, the return of the confidence of the economic actors and the significant recovery of the economic activities in synergy with the reforms undertaken in particular by the orientation more and more towards digitalization.

In order to promote economic recovery, certain provisions have been modified:

On IRSA (tax on salaried and similar income):

The IRSA is a tax deducted at source, following a declaration made by any employer entering 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 a higher step by setting the threshold value at Ar 3 000.

For companies operating in the free zone sector:

Some changes have affected free zone companies. Nevertheless, the promulgation of the law relating to it will mark the application of these new modalities.
Thus, in terms of Free Zones, the following points can be noted:

  • Reduction of the income tax exemption period for newly established free trade zones and companies at the beginning of the fiscal year to 1 year, 3 years and 10 years depending on the type of company ;
  • Lowering of the investment tax reduction rate from 75% to 25% ;
  • Limitation of the stability guarantee for a specific period of time.

The Value Added Tax regime VAT :

The 2022 Finance Bill has brought in VAT exemptions:

  • Cancellation of the reduction of the VAT rate on the sale of pasta from 5% to the standard rate of 20%. The VAT rate on exports of goods and services remains at 0% ;
  • Exemption from VAT of international transshipment operations of goods ;
  • Exemption from VAT of insurance contracts for small farmers.
  • The right to deduct VAT on fuel purchases by air transport professionals according to the corresponding customs tariffs

For companies with specifically determined activities with regulated prices, a withholding tax mechanism has been developed for their VAT. The same applies to income tax..

Those who find that their turnover for the current year exceeds Ar 400,000,000 must file a VAT return before the end of the year.

Regarding the excise duty, the export of gold or gold platinum, in raw or semi-finished form, or in powder form will be taxed with excise duty at the rate of 15%.

As for administrative measures, online eServices will be provided from December 2021 to 2022: the eHetra platform (eDeclaration and ePayment) in the Regional Business Services, the improvement of the eBalance sheet platform, the reimbursement of VAT credit with the eVAT Credit, the eEmployees platform for the possible adjustment of taxes, the registration of acts through eRegistration, etc.

These modalities are among many others, according to the statements of the Finance Bill. Although the promulgation is not yet effective, it is known that no amendments have been made to this project.

For all activities that are subject to tax obligations, please contact MDG Services