Madagascar company registration

DOING BUSINESS IN MADAGASCAR IN 2023

Since 2003, Healy Consultants Group PLC has assisted our Clients with business registration in Madagascar. Our services include i) Madagascar company incorporation ii) government license registration iii) business bank account opening iv) employee recruitment v) visa strategies and vi) office rental solutions.

Summary	LLC	Fast business setup solution	Free zone LLC	Public limited company	Representative office	Branch office
Also known as	SARL	SARL	EPZ	S.A	Bureau de représentation	Succursale
Best use of company?	All products and services	Close a customer deal now	Manufacturing and export trading	To secure public funding	Marketing & research	Specific projects
How soon can you invoice Clients/sign sales contracts?	6 weeks	2 weeks	10 weeks	12 weeks	NA	6 weeks
How soon can you hire staff?	6 weeks	2 weeks	10 weeks	12 weeks	NA	6 weeks
How soon can you sign a lease agreement?	2 weeks	2 weeks	2 weeks	2 weeks	2 weeks	2 weeks
How long to supply corporate bank account numbers?	6-8 weeks	2 weeks	6 weeks	8 weeks	6 weeks	6 weeks
How long to supply company registration / tax numbers?	6 weeks	2 weeks	6 weeks	6 weeks	6 weeks	6 weeks
Corporate tax rate on annual net profits?	20%	20%	0%	20%	0%	20%
Limited liability entity?	Yes	Yes	Yes	Yes	No	No
Government grants available?	No	No	No	No	No	No
Government approval required for foreign owners?	No	No	No	No	No	No
Resident director/partner/manager/ legal representative required?	Yes	Yes	Yes	Yes	Yes	Yes
minimum paid up share capital?	none	none	none	US$ 650	none	none
Can bid for Government contracts?	Yes	Yes	Yes	Yes	No	Yes
Corporate bank account location?	Bank of Africa	MCB	Société Générale	Bank of Africa	BGFI	ABM
Can secure trade finance?	Yes	Yes	Yes	Yes	No	Yes
VAT payable on sales to local customers?	20%	20%	20%	20%	None	20%
Average total business set up engagement costs?	US$19,155	US$ 21,685	US$ 11,750	US$10,440	US$11,190	US$13,290
Average total engagement period?	3 months	2 months	3.5 months	4 months	3 months	3 months

See full table

Accounting and tax considerations	LLC	Fast business setup solution	Free zone LLC	Public limited company	Representative office	Branch office
Statutory corporate tax payable?	20%	20%	10%	20%	0%	20%
Legally tax exempt if properly structured?	No	No	No	No	No	No
Group HQ tax incentives?	No	No	No	No	No	No
Must file an annual tax return?	Yes	Yes	Yes	Yes	No	Yes
Must file annual financial statements?	Yes	Yes	Yes	Yes	Yes	Yes
Must appoint an auditor?	No	No	No	Yes	No	No
Access to double taxation treaties?	Yes	Yes	Yes	Yes	No	Yes
Withholding tax on payments to foreign shareholders?	0%	0%	0%	0%	None	0%
Company Registration	LLC	Fast business setup solution	Free zone LLC	Public limited company	Representative office	Branch office
Resident director/partner/manager/ legal representative required?	Yes	Yes	Yes	Yes	Yes	Yes
Minimum number of shareholders/partners?	1	1	1	1	Parent company	Parent company
Maximum shareholding for foreigners?	100%	100%	100%	100%	100%	100%
Minimum statutory paid up share capital?	none	none	none	US$ 650	none	none
Security deposit to be kept with Government?	No	No	No	No	No	No
Shelf companies available?	Yes	Yes	No	No	No	No
Time to incorporate a new entity?	1 month	2 weeks	1.5 month	1.5 month	2 months	2 months
Can easily convert to a PLC?	Yes	Yes	Yes	Yes	No	No
Public register of shareholders and directors?	Yes	Yes	Yes	Yes	Yes	Yes
Can have preference shareholders?	Yes	Yes	Yes	Yes	No	No
Business Considerations	LLC	Fast business setup solution	Free zone LLC	Public limited company	Representative office	Branch office
Good entity for trademark registration?	Yes	Yes	Yes	Yes	No	Yes
Can secure an import and export license?	Yes	Yes	Yes	Yes	No	Yes

Sponsorship by a local citizen required?	No
Our Client needs to travel to Madagascar for business set up?	No
Temporary physical office solutions available?	Yes
You need a local resident as bank signatory?	No
Can be wholly foreign owned?	Yes
The entity will likely be regulated by?	EDBM
Minimum number of directors/managers?	1
Monthly VAT reporting to the Government?	Yes
Must sign an office lease agreement during incorporation?	No
Shareholders & directors documents to be attested/translated?	Yes
Each foreign director needs a personal income tax number?	No
Foreign director needs a residence visa?	No
Maximum number of staff allowed?	No maximum number for any entity
Expatriate to local staff ratio?	None
Can secure residence visa for business owner?	Yes
Other useful information
What will be included in my customer sales invoice?	Click link
This country has signed free trade agreements?	Yes
This country is a member of WIPO/TRIPS?	Yes
This country is a member of the ICSID?	Yes
Average custom duties suffered?	9.20%
Government foreign investment approval required?	No
Average monthly office rental? (US$ per sq m)	20
Minimum statutory monthly salary?	53
Average monthly US$ salary for local skilled employees?	160
US$ deposit interest rate? (1 year average)	1%
Overseas remittance currency controls?	None
Banking considerations
Multi-currency bank accounts available?	Yes
Corporate visa debit cards available?	Yes
Quality of e-banking platform?	Poor
Crowd funding available in this country?	Yes

Madagascar business setup summary

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Advantages and disadvantages
Advantages of Madagascar company registration
1. A limited liability company in Madagascar can be incorporated with a minimum of one shareholder and one director of any nationality. The minimum paid-up capital required for incorporation is US$1 and our Client will not have to travel to Madagascar to complete the process;
2. Business operation costs are low in Madagascar because i) the average monthly salary of the staff in Madagascar is US$50 according to the World Bank ii) office space monthly rent is approximately US$8 per square meter and iii) business between Madagascar and neighboring countries is easily facilitated by road, rail, sea and air;
3. Business incorporation in Madagascar has been streamlined by the introduction of the Economic Development Board of Madagascar(EDBM) one-stop-shop for registering a business. This has allowed the process of setting up a business to be relatively simpler than in many African countries.
Disadvantages of Madagascar company registration
1. French is the official language of Madagascar therefore all business documents must be translated into French prior to incorporation of a company. For our non-French speaking Clients, language will be a barrier when doing business in Madagascar;
2. Although company incorporation in Madagascar is straight forward due to the one-stop-shop EDBM, obtaining the proper licensing to do business can take up to an additional 12 weeks due to red tape, lack of transparency and corruption. Healy Consultants will be happy to help you handle your administrative requirements;
3. The political climate in Madagascar is unstable and this has led to some donors suspending aid and the South African Developing Community suspending membership of Madagascar. Consequently, foreign direct investments have been discouraged and this has led to very slow economic growth, recorded at only 2.1% in 2013;
4. Exchange controls exist in Madagascar where i) current operations which include financial remittances abroad and these require a declaration to a bank in Madagascar and ii) capital operations including stock transfers, shares of liquidation bonuses, sale of businesses or assets and compensations for expropriations and these require authorization from the Ministry of Finance;
5. The political climate in Madagascar is volatile and consequently is the main obstacle and risk faced by both local and foreign investors. Though there are some improvements with South African Developing Community lifting suspension on Madagascar in 2014, the country still faces challenges with corruption, which has caused a slowdown in foreign direct investments, hindering economic growth prospects.
Best uses for a Madagascar company
1. African headquarters: Madagascar is an ideal location to setup a headquarters for business in Africa as the country i) is a member of the South African Development Community (SADC), Common Market for Eastern and Southern Africa (COMESA), Communauté de l’Océan Indien (COI) and the Indian Ocean Rim Association (IORA) and therefore offers investors access to trade with these markets and ii) has six world class ports facilitating ease of import and export of goods;
2. Export company: Madagascar offers incentives such as VAT refunds to professional export companies so as to promote and stimulate operations within the export processing zone (EPZ). Companies within the EPZ are tax exempt for the first 5 years after incorporation and thereafter the corporate tax rate payable is at a reduced rate of 10%;
3. Primary industries: Madagascar boasts natural resources such as graphite, coal, salt, gemstones and quartz which are great for investment opportunities in the mining industry. The country also vast areas of beaches and unique flora and fauna, plus lots of arable land with growth potential which are great for investment in tourism and agriculture industries.

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Company purpose?
Will the LLC be a trading company or a holding company?
Will the entity be a subsidiary of a foreign company?
The LLC will be tax resident? Having local customers and local staff and local suppliers?
The entity will receive investment income or professional services fees or sales from trading with multi-national customers?
Is double taxation treaty access important?
Do you need our help to legally minimize your international tax obligations?
Do you need our help to increase e-commerce sales (click link)?
Company structure?
Will the shareholders be individuals or corporate?

In what country do you require a corporate bank account? Refer to this web page (click link) for ideas

Do you need multi-currency corporate visa debit cards?

Do you need a resident director?

Nationality of shareholders and directors?
Expected annual sales and net profits?
Does the entity need a special regulatory license or import or export license?
Additional comments?
Tell us about your existing business?
Name of your existing company?
Your business web site address?
What products and services does your company supply?
How many years are you operating this business?
Is your Firm regulated by a Government agency?
In what country are the majority of your customers?

In what country are the majority of your suppliers?
Tell us about you?
Your name?
Your email address?
What country are you based in?

Specifically, what deliverables (click link) do you need?
What is your US$ budget for the services you need?
What does quality customer service mean to you?
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For now, do you prefer Healy Consultants PLC staff to phone you, or just email reply you with some corporate solutions?
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