A permanent establishment (‘PE’) refers to a fixed place through which an enterprise, either wholly or partly, carries out its business activity in Madagascar. Under the definition introduced by the Finance Law 2016, a fixed place of business includes:

• A management office
• A branch
• An office
• A factory
• A workshop
• A mining site, oil or gas wells, quarries, or any other places for the extraction of natural resources
• A building site, construction or installation project or related supervising activities carried on for more than 6 months
• Provision of services, including advisory services, through employees or other staff employed by the company, only if such activities are carried out in Madagascar for a total period of 183 days in a 12-month period, either starting or ending during the fiscal year involved, for the given or a related project.

However, the following places are not considered as PE of a foreign entity in Madagascar:

• Using facilities for the storage or display of goods or merchandise belonging to the enterprise;
• Using a stock of goods or merchandise belonging to the company for storage or display;
• Using an inventory of goods or merchandise belonging to the enterprise for the sole purpose of being processed by another enterprise;
• Using a fixed place of business for the sole purpose of purchasing merchandise or collecting information for the enterprise;
• Using a fixed place of business for the carrying out of activities of preparatory or auxiliary character;

Using a fixed place of business for the combined exercise of the activities listed under (a) to (d) above, on condition that the combined activity remains of a preparatory or auxiliary character