Doing business in Madagascar
Since 2003, Healy Consultants Group 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 |
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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$13,290 |
Average total engagement period? | 3 months | 2 months | 3.5 months | 4 months | 3 months | 3 months |
Accounting and tax considerations | LLC | Fast business setup solution | Free zone LLC | Public limited company | Representative office | Branch office |
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Statutory corporate tax payable? | 20% | 20% | 10% | 20% | 0% | 20% |
Legally tax exempt if properly structured? | No | No | No | No | No | No |
Group HQ tax incentives? | No | No | No | No | No | No |
Must file an annual tax return? | Yes | Yes | Yes | Yes | No | Yes |
Must file annual financial statements? | Yes | Yes | Yes | Yes | Yes | Yes |
Must appoint an auditor? | No | No | No | Yes | No | No |
Access to double taxation treaties? | Yes | Yes | Yes | Yes | No | Yes |
Withholding tax on payments to foreign shareholders? | 0% | 0% | 0% | 0% | None | 0% |
Company Registration | LLC | Fast business setup solution | Free zone LLC | Public limited company | Representative office | Branch office |
Resident director/partner/manager/ legal representative required? | Yes | Yes | Yes | Yes | Yes | Yes |
Minimum number of shareholders/partners? | 1 | 1 | 1 | 1 | Parent company | Parent company |
Maximum shareholding for foreigners? | 100% | 100% | 100% | 100% | 100% | 100% |
Minimum statutory paid up share capital? | none | none | none | US$ 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
- 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;
- 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;
- 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
- 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;
- 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;
- 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;
- 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;
- 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.
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Best uses for a Madagascar company
- 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;
- 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%;
- 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.
Useful links for Madagascar
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