According to the Constitution of the Fourth Republic of Madagascar, established in 2010 (the « Constitution« ), the State of Madagascar is based on a system of decentralized territorial units (« Collectivités Territoriales Décentralisées » or « CTDs« ), composed of Communes, Regions and Provinces, whose administrative and financial autonomy is guaranteed by the Constitution.
Communes are the basic decentralized local authorities, and are grouped in Regions, themselves grouped in Provinces. We can also mention the « Fokontany« , which do not constitute decentralized territorial units per se, but are local administrative districts that are the very foundation of decentralization.
The responsibilities, functioning, organization and financing modalities of CTDs are defined by two main texts adopted in 2014 in order to give effect to the principles of decentralization set out in the Constitution, namely (i) Organic Law No. 2014-018 of 14 August 2014 relating to the responsibilities, the modalities of organization and functioning of decentralized territorial units, and (ii) Law No. 2014-020 of 27 September 2014 relating to the resources of decentralized territorial units, the election procedures, and the organization, functioning and powers of their organs, as amended by Law No. 2015-008 of 20 March 2015.
These texts define the own competencies of CTDs, which are distinct from those of the State, and are reflected in particular by the fact that CTDs has a regulatory power, the legality of which is subject to a posteriori review of legality. These competencies are different depending on the kind of CTDs, but generally involve administrative, economic, social and cultural, or environmental matters. However, they exclude the sovereign powers of the state, namely the money creation and issuance, national defense, diplomatic relations, the management of strategic resources, justice and the maintenance of law and order as well as public security.
The Executive Heads of CTDs, which will be the main local interlocutors for the investors seeking to operate in the CTDs concerned, are the Mayors (« Maires« ) for Communes, Heads of Region (« Chefs de Région« ) for Regions, and Heads of Province (« Chefs de Province« ) for Provinces.
In terms of CTDs financing, we can note that CTDs receive (i) a share of the taxes collected in favor of the State budget, using allocation keys with defined percentages to be received by the CTDs concerned, as well as (ii) taxes voted by their Board, the nature and maximum rates of which are determined by law. Thus, if it is not in the power of a CTD to create a tax ex nihilo, it may choose to apply a tax provided by law, up to a maximum rate also defined by law (which can potentially lead to a situation where different levels of tax burden will be noted through the national territory, depending on the CTDs concerned).
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