Madagascar Reduces Import Tariff on Equipments to 5%

As reported by a local media, the Finance Law of Madagascar in 2011 stipulates that the import tariff on equipments shall be reduced to 5% from original 10%, but the value-added tax (VAT) shall remain at 20%. In addition, import tariff will be exempted on equipments for investing renewable energy and farming animal husbandry.

Over the years, entrepreneurs engaged in industrial investment in Madagascar have been working on the tariff relief for equipment imports; the aforementioned measures are clearly not enough to meet their expectations.

According to these entrepreneurs, Madagascar's tariff levied on imported equipments is much higher than other neighboring countries, even the 5% tariff after reduction and the 20% VAT are also at a high level, which gives investors a heavy burden.

As per Claude, executive chairman of Madagascar's industrial enterprises association, the heavy tax burden makes banks reluctant to lend, resulting in reduced industrial investment and less State revenues. On the contrary, tax relief can contribute to domestic income increase.