Tales From Madagascar

The Paper Wall: When Legislation Meets Reality in Madagascar In my time here in Antananarivo, I have learned that there is often a vast, visible distance between what is written in the law and what happens on the street. We have seen the government introduce new legislation, anti-corruption bureaus, and reform agendas. On paper, the framework for a functioning, rule-of-law society exists. But for those of us living and working here, the reality feels very different. Corruption in Madagascar is not just an occasional occurrence; it is a deep-rooted feature of the system. It has become a "hidden tax" that every citizen pays, but it hits hardest those who have the least. The Institutional Barrier When we talk about the economic challenges of this country—the struggle to pay teachers, the underfunding of clinics, the difficulty of doing business—we cannot ignore where the money is being lost.  The institutions designed to protect the public are often the very places where the sys...

​ The Productivity Paradox: Navigating Wages and Reforms in Madagascar In the twelve months I have spent living in Antananarivo, I have seen the resilience of the Malagasy people firsthand. Whether it is the dedicated teachers in our local schools or the healthcare workers striving to provide care in under-resourced clinics, there is an undeniable spirit of commitment here. Yet, beneath this commitment lies a growing tension: the struggle to maintain a decent standard of living against the backdrop of an economy that is increasingly difficult to navigate. The recent implementation of the 300,000 Ariary Minimum Hiring Wage as of March 2026 is a necessary acknowledgement of the rising cost of living. However, as anyone who has tried to run a business—or even manage a small project—in this city knows, simply raising the wage floor is only one half of the equation. We are currently caught in a "productivity paradox." Small businesses are being squeezed by operational costs, while...

​ Madagascar’s Value Added Tax (VAT), or Taxe sur la Valeur Ajoutée (TVA), currently operates at a 20% standard rate. It is a cornerstone of the national budget, designed to capture consumption across the economy. While the rate is competitive within the African context, the system faces significant structural hurdles. Tax authorities are currently pivoting toward digital modernisation —specifically mandatory electronic invoicing—to combat revenue leakage. However, the system remains burdened by a high compliance threshold for small businesses, inconsistent VAT credit refund mechanisms, and a proliferation of exemptions that complicate tax administration and erode the revenue base. Here are some policy recommendations  Rationalize VAT Exemptions Madagascar’s current tax code is cluttered with a wide array of VAT exemptions that were likely intended to support specific sectors but have ultimately weakened revenue collection. These exemptions create a "leaky" system that is dif...

​ Madagascar’s current corporate tax system is a two-tier regime: small businesses under a turnover threshold use the synthetic tax, while companies above the threshold are generally taxed under the real regime at 20% of profit. The proposed 2026 reforms keep that basic structure but tighten rules, adjust thresholds, and add new tax treatments for several corporate situations.  Current system: - Turnover below MGA 400 million: synthetic tax regime applies; PwC summarizes it as 5% of 70% of turnover, with a minimum tax depending on activity.  - Turnover above MGA 400 million: corporate income tax is 20% of profit under the real regime.  - Minimum tax floors still apply under the real regime, with different floor amounts by activity.  Proposed / 2026 reform highlights: - Companies with turnover between MGA 200 million and MGA 400 million could choose the real income-tax regime without being automatically subject to VAT, if their financial statements are certified by a ...

​ Current Personal Tax System in Madagascar 1. Tax Brackets:    - 0% for income up to MGA 350,000 per month    - 5% on income from MGA 350,001 to MGA 600,000    - 10% on income from MGA 600,001 to MGA 1,200,000    - 15% on income from MGA 1,200,001 to MGA 2,000,000    - 20% on income from MGA 2,000,001 to MGA 4,000,000    - 25% on income above MGA 4,000,000 (recently proposed but not uniformly implemented yet) 2. Tax Collection:    - Approximately 10.4% of GDP is collected through taxes, indicating a narrow tax base and reliance on indirect taxes. 3. Challenges:    - High levels of tax evasion, especially in the informal sector.    - Limited administrative capacity to enforce and collect taxes effectively.    - The system is perceived as complex and difficult to navigate for many taxpayers. Proposed Improved Tax System 1. Broaden the Tax Base:    - Reduce exemptions and streamli...

​ Property tax in Madagascar consists of the land tax (IFT) and the property tax on built properties (IFPB). The IFT represents 1% of the market value of the bare land. The property tax (IFPB) varies between 5% and 10% of the cadastral rental value of the building, with a specific calculation for owner-occupied residences, where the taxable base is estimated at the rental value level. The property tax collection rate remains very low. In some cases, only 0.01% of taxpayers actually pay it, demonstrating that this tool is underutilised as a lever for local finances. To enhance property tax revenue in Madagascar, several reforms could be considered: 1. Regular Assessments: Implementing regular property assessments to ensure that property values reflect current market conditions. This can help identify properties that are under-taxed. 2. Expanding the Tax Base: Including more properties in the tax system, such as informal and unregistered properties, could increase the number of taxable p...