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5.5. Source Rules with Respect to Income Derived by Non-Residents

Any income earned by non-residents from sources in Madagascar is subject to tax in the country. Taxes are collected through withholding tax which is deemed to be the final tax on such income. Income subject to withholding tax includes interests, royalties, technical and management service fees, etc. Fees for services of any nature are deemed to be sourced in Madagascar if the services are materially furnished or effectively used in Madagascar.

Finance Law 2016 introduced rules pertaining to the indirect transfer of assets. Under the rules, capital gains on the disposal of shares in non-resident companies are deemed to be sourced in Madagascar if all or part of the value of such shares is directly or indirectly attributable to assets or rights on assets situated in Madagascar.