Population: (2022 est.) 29,022,000
Monetary Unit: Malagasy ariary (MGA, Ar)
Language(s): Malagasy, French
Madagascar, officially known as the Republic of Madagascar, is an Island country in East Africa. Antananarivo is the capital and the largest city of Madagascar. Madagascar is the fourth largest island in the world and the first in Africa. It has a very rich ecosystem. More than 90% of Malagasy wildlife does not exist anywhere else on Earth. Over 28 million people live in Madagascar, and their official languages are Malagasy and French.
The public holidays in Madagascar are as follows;
- New Year’s Day (1st January)
- International Women’s Day (8th March)
- Martyrs’ Day (29th March)
- Easter Monday (18th April)
- Labor Day (1st May)
- Ascension Day (26th May)
- Eid al-Fitr (1st – 2nd May)
- Pentecost (5th June)
- Whit Monday (6th June)
- Independence Day (26th June)
- Eid Al Adha (8th – 9th July)
- Assumption of Mary (15th August)
- All Saints’ Day (1st November)
- Christmas Day (25th December)
The probationary contract cannot exceed six months. It is renewable once for the same job.
Employees typically have access to 2.5 days of paid leave each month.
In general, female employees are entitled to 14 weeks of paid maternity leave, at least 8 of which must be used immediately following the birth of the child. For workers covered by the labor law, leave is paid at 50%; for governmental employees, it is paid at 100%.
Following the birth of his kid, the male employee is entitled to ten days off work as part of his special leave for family events.
Employees are entitled to at least 5 paid sick days per year.
In Madagascar, employees are normally not entitled to severance pay, unless they are fired for economic reasons, in which case they are entitled to 10 days of salary for every year of service, up to six months, of pay.
13th / 14th Month Pay: The payment of the wage for the thirteenth or fourteenth month is not mandated by law. But it’s normal to pay the 13th month’s compensation.
It’s now simpler than ever for foreign workers to obtain a visa in Madagascar thanks to the country’s government’s efforts to promote tourism and business there. Workers typically receive their visas within 24 hours if they submit the necessary paperwork. Nevertheless, maintaining compliance and obtaining work permits for each of your employees in Madagascar might still be a concern for you.
Types of Work Visas in Madagascar
Non-immigrant visas and transformable visas are Madagascar’s two most expansive visa types. With one to three entries, non-immigrant visas permit stays of up to 90 days. A transformable 30-day visa is issued by a Malagasy embassy or consulate, enabling the holder to apply for a long-term visa while they are in Madagascar.
The majority of your staff members will require a transformable visa and fit into one of the various legal categories, which include: investors, executive officers or managers of businesses based in the nation, Employees, reunited families, religious missions, retirees, students, volunteers, Native Americans, and scientists
Requirements to Obtain Madagascar Work Visas
The qualifications for obtaining a work visa in Madagascar vary depending on the classification of your personnel. All foreign nationals looking for work must, however, have a work permit. You, as the employer, can sponsor your workers’ stays in the nation and make arrangements for their work visas. Self-employed people must submit their own work permit applications. Your employees seeking for a transformable visa will require the following in addition to a work permit supplied and signed by the Ministry of Work:
- An employment contract stamped by the Ministry of Public Service, Labor Administration Reform, and Social Laws (MFPTLS)
- A work permit delivered by the MFPTLS
- A certificate of employment issued by you, the employer
- Your company’s certificate of registration issued by the Registrar of Companies (RCS)
- Your company’s Tax Identification Number (TIN)
- Your company’s statistics cards
Visa Application Process
Although applying for a working visa in Madagascar is rather straightforward, your employees will still need to go through the procedure. In the beginning, locate the closest consulate and compile the necessary paperwork. The visa fee is payable by each applicant and varies depending on the embassy or consulate where the application is made, so it is essential to consult the website in advance.
The embassy or consulate will issue your staff their Madagascar work visas once they have submitted the required paperwork and paid the price. Get all necessary vaccinations, including those for hepatitis A and typhoid, before entering the nation.
Obtaining a work visa in Madagascar is comparatively simple, but becoming a resident is trickier. Along with the papers for each employee, you’ll also need to supply details about your business. As your employees’ visas and other documentation have set expiration dates that they must work within, timing is also crucial. Some of the most required documents are:
- A photo ID
- The reason for the residency request
- Notice information
- A declaration of honor with a notarized signature
- A certified copy of the applicant’s original passport and entry visa
- A criminal record from the employee’s country of origin
- A certificate of residence
When a contract’s term expires, an employee’s employment can be terminated in Madagascar. For the employment contract to be terminated, there must be some legitimate business reasons. The employment contract may be ruled void without prior notice while the employee is on probation. If a worker is found guilty of any moral transgressions or criminal offenses, they may be fired. Eight to ten days prior to the contract’s expiration, a notification is typically given. In light of the economic conditions, employees are entitled to severance pay.
These are mandatory benefits as postulated by law. Health Insurance in Madagascar. Madagascar has a public/private healthcare system. Madagascar Supplementary Benefits. Common employer provided benefits include; Supplementary health insurance, Car allowance, Dependent education, Fitness allowance, Meal allowance
Bonuses: Annual, 13th month, and performance-based bonuses are all common in Madagascar.
The typical working week in Madagascar consists of 40 hours, made up of five eight-hour days.
Overtime in Madagascar is paid at 130% above the basic wage for the first eight hours, and then 150% thereafter. Evening work is paid at 130%, while weekend work is paid at 140% and at 150% if it is on a public holiday.
The notice time for termination varies from eight days to six months depending on the type of employment and length of service.
Depending on the type of income received, individuals are subject to either salary income tax, known as Impôt sur les Revenus Salariaux et Assimilés (IRSA), or business income tax, known as Impôt sur les Revenus (IR). An individual residing in Madagascar, whether they are of Malagasy or another nationality, is responsible on their worldwide income for IRSA purposes. An individual who is not a resident of Madagascar is only responsible for income derived from Malagasy sources for IR purposes.
Employee Income Tax IRSA
- Income range up to MGA 350,000: 0%
- Income range from MGA 350,001 to MGA 400,000: 5%
- Income range from MGA 400,001 to MGA 500,000: 10%
- Income range from MGA 500,001 to MGA 600,000: 15%
- Income range above MGA 600,000: 20%
In all cases, regardless of the income, the minimum salary income tax payable is MGA 3,000.
Employers are required to pay into Madagascar’s national social security fund, Caisse Nationale de Prévoyance Sociale, which covers pensions and accident insurance. The maximum contribution is 13% of eight times the employee’s annual minimum wage. Additionally, companies must pay up to 5% of eight times the legal minimum wage each month of employee compensation to the statutory health organization. Additionally, employers must make contributions to the Fonds National sur la Formation Professionnelle (FNFP). The contribution rate is 1% of the taxable compensation for employees. The contribution is capped at an amount determined by multiplying it by eight times the required minimum wage.
Employees make 1% contributions to the National Pensions Fund, up to a monthly maximum of 1% of the equivalent of eight times the legal minimum wage. Employees must also donate 1% of their monthly pay to the statutory health organization, up to a maximum of 1% of eight times the legal minimum wage every month.
Employment Expenses: For IRSA calculations, the following expenses are deducted from gross income:
- Social Security contributions at a rate of 1% of monthly salary income, with a contribution ceiling equal to 1% of eight times the monthly legal minimum wage.
- A 1% monthly wage contribution to the statutory health organization.
- A 1% monthly wage contribution to the statutory professional training funds.
- Retirement contributions with a 10% cap on the amount of the contribution-eligible salary.
- Mandatory payment of voluntarily paid rent arrears (i.e., an amount regularly owed by one person to another till death of this last person).
- Under some circumstances, alimony payments;
Personal Allowances: Taxpayers are entitled to an IRSA reduction of MGA 2,000 per dependent.
Business Deductions: When an individual receives income from a trade, business, or profession with a yearly revenue above MGA 200 million, expenses that are properly justified may be subtracted from the taxable income for internal revenue (IR) purposes. 30% of the gross revenue is deducted if the yearly revenue is less than MGA 200 million. The annual deduction, however, is limited at MGA 2 million. For acquisitions of products, services, and equipment subject to regular invoices, a tax discount of 2% is applicable. Tax obligations, however, cannot be lower than 3% of the sales.
The VAT rate is 20%. However, the VAT rate is 15% for premium fuel and diesel, and 5% for locally produced butane gas and the VAT rate on export is 0%.
WHTs are levied as follows:
- Purchases of goods and services from non-registered suppliers by a registered supplier are subject to WHT at a rate of 5% payable to the tax authorities within 15 days following the month of payment of the supplier.
- Impôt sur les revenus des capitaux mobiliers(IRCM): WHT on interest of 20% is applicable on financial loan interest. However, interest paid to banks, financial institutions, and foreign financial organisations is exempt.
- WHT of 20% is applicable on remuneration of a member of a board of directors or a single director.
- Income tax for non-resident entity: Management fees, royalties, technical and assistance fees, licence fees, equipment rental fees, and any income realised by foreign suppliers is subject to WHT at a rate of 10%.
- WHT of 10% is applicable on dividends distributed to foreign shareholders.
The applicable withholding tax rates on dividends, interest and royalties (the tax is a final tax for non-residents) are;
Dividends – 0%
Interests – 20%
Royalties – n/a
Dividends – 0%
Interests – 20%
Royalties – 10%