The standard corporate tax (‘CIT’) rate for companies with an annual turnover exceeding MGA 200 million (increased from MGA 100 million effective 1 January 2019) is 20%.
However, a number of other rates apply as follows:
- Capital gains on the sale of shares and sale of assets or from the sale of rights therein are subject to tax at the rate of 20%.
- Companies having an annual turnover of less than MGA 200 million (threshold increased from MGA 100 million effective from 1 January 2019) are subject to a so-called ‘Synthetic Tax’ (‘ST’). ST is levied at the rate of 5% on 70% of turnover, but the tax cannot be less than MGA 16,000. Further, deduction of expenses to the extent of 2% of the amount of purchases of goods and equipment is allowable, provided regular invoices of purchases are available. However, the ST cannot be less than 3% of the turnover.
- Companies owning mining permits are subject to lower CIT of 10%
- Income of Transformation Entities is subject to CIT of 25%
- An Intermittent tax is withheld at source (WHT) from unregistered resident suppliers of goods and services at the rate of 5%
- Micro-finance companies are exempt from the corporate tax during the first 5 years of their existence. In addition, mutual micro-finance entities benefit from a 50% rate reduction during the following 5 years.
- Companies eligible for tax incentives are subject to reduced CIT (see Sec. 10 below).
The minimum tax is MGA 100,000 plus 0.5% of annual turnover (including capital gains) for companies engaged in agricultural, craft, mining, industrial, tourism, and transport business. The minimum tax for fuel filling station companies is 0.1% of annual turnover. Companies engaged in other activities are required to pay a minimum tax of MGA 320,000 plus 0.5% of annual turnover. The minimum tax is due only if the relevant entity was in existence as on 1 January of the tax year.
Companies engaged in public market activities are exempt from paying minimum tax. Also, micro-finance entities are exempt from the minimum tax during the first 5 years of their existence.