Capital Gains Taxation in Madagascar
In Madagascar, the taxation of capital gains is governed by the General Tax Code (Code Général des Impôts), specifically Article 15. Capital gains are defined as profits realized from the disposal of movable or immovable property, including:
- Real estate
- Stocks and bonds
- Business assets
- Intellectual property
The distinction between short-term and long-term capital gains is not relevant for tax purposes.
Calculating Taxable Capital Gains
Taxable capital gains are calculated as the difference between the selling price of the asset and its acquisition cost. The formula is:
Capital Gain = Selling Price - Acquisition Cost - Expenses
Adjustments or deductions are allowed for expenses related to the sale, such as brokerage fees and legal fees, as well as improvements made to the asset during ownership.
Tax Rates
Capital gains are taxed at a flat rate of 20%. However, certain exemptions or preferential tax treatments may apply, such as:
- Gains from the sale of a principal residence are exempt up to a certain amount.
- Gains from the sale of agricultural land are taxed at a reduced rate of 10%.
Legal Framework
The legal framework governing capital gains taxation in Madagascar is outlined in the following articles of the General Tax Code:
- Article 15: Definition of capital gains and calculation of taxable gains
- Article 16: Tax rates and exemptions
These provisions aim to ensure that individuals and businesses contribute their fair share of tax on profits realized from investments and asset disposals. By applying a flat tax rate to capital gains, Madagascar seeks to simplify the tax system and promote investment.
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