Madagascar

Overview

There are no specific provisions for VAT on electronically supplied services (ESS) for non-residents. General rules on VAT on services are applicable.

All services performed in Madagascar are subject to VAT. Services are considered to be performed in Madagascar if such services are executed, used or enjoyed in Madagascar.

If the supplier of services is resident outside of Madagascar, they should appoint a tax representative to collect and pay VAT to the tax authority on its behalf. In the absence of such a tax representative, the recipient will be liable to account for VAT on the supply.

The recipient taxpayer or the tax representative must have a bank account in Madagascar for VAT payment purposes.

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Key provisions applicable to VAT on ESS
Services in scope
Registration and compliance
Invoicing
VAT on costs
Other considerations

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Release date: April 2024

Key provisions applicable to VAT on ESS

Table 1

Services in scope

All services are performed in Madagascar when physically performed and/or consumed there. If the services provided cannot be physically located, they will be subject to VAT in Madagascar when the service is rendered, the right assigned, the rented object used or exploited in Madagascar.

Registration and compliance

A non-resident supplier is not required to register for VAT in Madagascar but must appoint a tax representative to collect and pay VAT on its behalf. Failing this, the service recipient is liable to pay VAT directly to the tax administration on behalf of the non-resident supplier.

The tax representative must file VAT returns and pay the VAT due at the territorially competent tax office (online and/or via physical deposit), depending on the applicable internal rules of the tax office), no later than the 15th day of the month following the payment of the invoice. For example, if the invoice is paid during March, the VAT must be paid to the tax authorities on or before 15 April.

Depending on the tax centre, VAT must be paid via tele-payment or bank transfer.

Invoicing

There is no provision in the tax law regarding invoicing requirements for non-resident suppliers. The tax authority accepts electronic invoices if the supplier is a nonresident.

There are no particular requirements in respect of the currency for nonresident invoices. The currencies usually used by banks in Madagascar are the Malagasy Ariary (MGA), EUR and USD.

There are no requirements regarding the language used on a non-resident invoice. However, as the official languages in Madagascar are Malagasy and French, the invoice should show a translation in French or Malagasy. In practice, the tax authority generally accepts invoices in English without translation. In case of a tax audit, translation into French may be required.

VAT on costs

Non-residents cannot recover VAT on costs incurred.

Other considerations

The risk of permanent establishment exists if the service provider has a presence in Madagascar directly via an employee or indirectly via proxy for a period or periods totalling more than 90 days in a one-year period beginning or ending during the relevant fiscal year.

Particulars	Description
Scope	VAT is applicable on all transactions (both B2C and B2B) related to any services performed in Madagascar by non-resident suppliers.
Liability to remit VAT	If the supplier of the services is not resident in Madagascar and has appointed a tax representative to collect and pay VAT on its behalf, then the tax representative is liable to collect and remit the VAT. If the non-resident supplier has not appointed a tax representative, then the recipient or business consumer in Madagascar is liable to account for VAT on the services as per the reverse charge mechanism.
VAT rate	The standard rate of VAT is 20%.
Taxable value	The taxable value is the amount of the service invoice.
Effective date	Not applicable — a non-resident supplier is not required to register for VAT.
VAT registration threshold	There is no VAT registration threshold for a non-resident supplier as it is not required to register for VAT in Madagascar, but the supplier should appoint a tax representative. If a non-resident supplier does not appoint a tax representative, the beneficiary of the services is liable for payment of VAT to the tax authority.
Tax invoice	The non-resident supplier needs to provide an invoice. Electronic invoices are acceptable.

Download publication (pdf - 4.20mb) VAT in Africa Digital Services

This report is a special edition of our annual VAT Guide in Africa, focusing on new rules and measures that have been introduced to tax the digital economy unilaterally by countries in Africa.

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