Free Zones in Madagascar

The Free Zones and Companies (“Zones et Entreprises Franches”) regime established in Madagascar is governed by Law No. 2007-037 of 14 January 2008 on Free Zones and Companies in Madagascar.

This regime applies to investments made by domestic or foreign promoters (or a combination of both), in export oriented activities (understood as sales abroad – or to other Free Zones and Companies – of goods or services originating from Madagascar).

Free Companies comprise three categories of companies, namely individual processing companies, service companies, and basic intensive production companies. In turn, Free Zones are materially defined areas within which are grouped several Free Companies.

The certificate of a Free Zone or Company is issued by the Economic Development Board of Madagascar (EDBM,, an organization on which you can find more information on our page relating to Investment Law in Madagascar.

This regime, which excludes the application of any other exceptional investment regime in Madagascar, allows Free Zones and Companies to benefit from a preferential treatment in labor, tax or customs matters, among which the following measures (this list is not exhaustive):

1) In Labor matters:

– The non-application of the provisions of the Labour Code relating to women’s night work, and
– Free overtime, with a simple declaration, to the limit of five hours per week.

2) In tax matters:

– Application of the Tax on Company Profit (“Impôt sur les Bénéfices des Sociétés”) at the rate of 10% and a Minimum Tax (“Minimum de Perception”) at the rate of 5 ‰,
– As of the actual operation date (ie 12 months after the issue of the certificate), an exemption from the Tax on Company Profit and the Minimum Tax during the first 15 years for the Free Zones, during the first 5 years for Free industrial processing companies, and during the first 2 years for Free services companies,
– Application of a tax reduction for investments in depreciable assets made after the period of tax exemption,
– Capping at 30% of the tax base for the expatriates wage and salaries tax, and
– The free registration of acts entered into by Free companies when those acts are subject to registration formalities.

3) In Customs matters:

– The non-application of VAT to imports, and the application of a 0% VAT to exports of goods and services, or to the sale of goods and services to other Free Companies,
– Stability guarantee of the tax regime established by Law No. 2007-037 of 14 January 2008, except for more favorable provisions,
– The exemption from any customs duties and import tax for defined materials used as part of the preparation, development and operation of Free Zones and Companies,
– Exemption from Customs duties and any export tax for goods and services exported abroad, or for goods and services sold to other Free Companies, and
– The ability to sell products and services on the national territory, within the limit of 5% of the actually exported production (these sales being subject to the application of VAT).

In the dispute resolution area, the provisions are similar to those provided by Law No. 2007-036 of 14 January 2008 on investments in Madagascar, namely (i) for disputes between domestic investors and the Malagasy State, the jurisdiction of the Malagasy courts (unless the parties agree on an alternative mode of dispute settlement) and (ii) for disputes between foreign investors and the Malagasy State, the application of a procedure arising from the application of either the Washington Convention of 1965 for the settlement of investment disputes between States and Nationals of other States (of which Madagascar is a signatory), or the application of a bilateral investment treaty between Madagascar and the State of origin of the investor, if any. These texts are available on our page relating to Investment Law in Madagascar.

| Download the applicable texts |

Law No. 2007-037 of 14 January 2008 on Free Zones and Companies in Madagascar (French Version).