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Exemptions and zero-rating

Exempt supplies

The following supplies fall mainly outside the scope of the VAT system:

  • sales of tickets for sport events organised by nonprofessional clubs;

  • scholarships for technical, professional and general studies;

  • interest paid to the Public Treasury (‘Trésor’), banks and financial institutions;

  • medicines and health services;

  • international transportation; and

  • delivery to foreign diplomatic representatives, on condition of reciprocity.

The following operations also fall outside the scope of the VAT system:

  • salaries;

  • operations of the Central Bank of Madagascar; and

  • operations of the ‘Caisse d’Epargne’.

Zero-rated supplies

The zero rate is applicable only on exportation of goods and services. However, the VAT legislation does not contain a definition of ‘exportation of services’.

Input tax

Input tax allowed In general, input tax is allowed on:

  • VAT paid on the invoices related to non-exempted goods and services, and required for normal operation of the taxpayer, subject to the condition that the invoice mentions the Tax Identification Number of the supplier;

  • VAT paid on importation of goods



required for normal operation of the taxpayer; and

  • Generally, VAT paid on taxable


Input tax expressly denied

Restrictions apply to the recovery of input VAT incurred on the purchase of:

  • buildings other than for industrial, artisan, trading, hotel, restaurant, agriculture and mining activities;

  • personal motor vehicles, except for those used for rent;

  • restaurant expenses;

  • fixtures and fittings; and

  • domestic supplies of energy and some petroleum products such as car fuel except those which are used for fixed equipment and installation.

Partial exemption

Input VAT can only be recovered to the extent that it is attributable to the registered business’s taxable activity. When a business makes a mixed supply of taxable and exempt supplies, only the input VAT attributable to the taxable supplies is fully recoverable. Where the input VAT is attributable to both taxable and exempt supplies, only a proportion calculated on the basis of taxable turnover as a proportion of total turnover is recoverable.


Adjustments are required when taxable goods are sold at a lower value than the net value.

When an apportionment is applicable, the taxpayer calculates the input tax according to a provisory proportion based on available information for previous years regarding taxable supplies compared to total supplies. After calculation of the final proportion,

an adjustment must be made to assure that input tax for a year corresponds to the proportion of taxable turnover compared to total turnover for such year.



Import VAT is due on the importation of goods into Madagascar. VAT is payable to the Customs Department. The rate of import VAT is the same rate that applies to a domestic supply of goods. It is payable on the value of the goods, including cost, insurance and freight (CIF), and duty.

VAT incurred on the importation of goods into Madagascar may be recovered by a registered business as input VAT. The receipt issued by Customs at the time of import constitutes appropriate evidence of VAT payment.


There is no definition of imported services. Services are supposed to be performed in Madagascar, thus subject to VAT when they are executed in Madagascar, or used by a recipient, or the recipient is a taxpayer established in Madagascar.

Even if the supplier of the services is not registered for VAT in Madagascar, the reverse charge procedure applies. In that case, the recipient will be liable to account for VAT on the supply.



Goods that are exported from Madagascar are zero-rated. In order to qualify for input tax credit, the taxpayer must issue valid commercial invoices and retain evidence of export.

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