Establishing a Business in Madagascar

Client Overview

A client sought to establish a new business operation in Madagascar. The nature of this venture would involve using imported consumables and specialised, high-value equipment, which would be imported and remain in Madagascar indefinitely. The client required advice on structuring the business to ensure regulatory compliance while managing tax costs effectively.

Specialist Services Used:

Goals

  • Establish a legal structure allowing for efficient importation and control of expensive equipment and consumables in Madagascar.
  • Minimise the impact of Madagascar’s income tax, withholding tax, and VAT on business operations.
  • Maintain control over the business while aligning with local regulations and tax obligations. 

Our Recommendations

After a detailed analysis of the structuring options, we advised the client to proceed with the following approach:

01.

Creating a branch in Madagascar under an existing UAE-based company. This structure allows the client to operate in Madagascar with simplified administrative and tax requirements.

02.

Guidance on managing imports of consumables and equipment, focusing on compliance with local tax regulations to optimise VAT input claims and control costs.

03.

Tax-efficiency as this branch structure mitigates exposure to certain taxes, such as withholding tax on profit repatriation, while maintaining the client’s operational control.

Outcomes (To Date)

Establishing the Madagascar branch has enabled the client to import necessary equipment and manage ongoing operations efficiently while minimising tax exposure.

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