MADAGASCAR Law and Practice Contributed by: Mialy Solofohery and Tiavina Rakotonaivo, John W Ffooks & Co
4.2 Tax Incentives for Mining Investors and Projects Several waivers are allowed for mining investors and projects. For example, equipment and tools necessary for exploration and development that are not available in Madagascar are exempted from VAT payment. Tax stabilisation agreements are available in Mada - gascar. Mining companies can enter into agreements with the government to stabilise taxes and other fiscal obligations for a specified period, typically between five and ten years. 4.3 Transfer Tax and Capital Gains on the Sale of Mining Projects Where transfer/capital gains tax on the transfer/sale of a mining project takes the form of indirect transfer of the shares of a company that is a mining licence holder, income tax shall be applicable to the transfer or sale. These tax levies remain applicable even if the trans - fer occurs through corporate structures outside the jurisdiction. 5. Mining Investment and Finance 5.1 Attracting Investment for Mining The key features in Madagascar that are attractive for mining investment include the following. • Stable legal framework – the government has established a stable rule of law, with protections for foreign investments. Mining investments are guaranteed by clear legal structures that offer legal recourse and security. The recent overhaul of the Mining Code, along with its implementing regula - tions, aims to attract more investment in the mining sector. It is designed to foster a mutually beneficial partnership while ensuring social and environmen - tal benefits. The process for acquiring mining rights is clear and well-regulated under the 2023 Mining Code. Investors must follow a transparent process to obtain mining permits. • Mining rights and transfers – investors can acquire mining rights, which are considered a form of property. These rights can be transferred, sold or
mortgaged under the law, providing flexibility for investors. • Support investment protection – the Malagasy gov - ernment has moved to allay investor fears of any reneging of agreements by guaranteeing returns on their investments through guaranteed maintenance of the legal and regulatory regimes in force at the time of request. A “stability guarantee” is granted to any holder of a permit and is valid for a renew - able period of up to five years. Permit holders can request more favourable measures that would have come about after the date of exercising the stability option. Permit holders will not, however, be allowed to derive benefits from the stability guarantee if they fail to fulfil any of the obligations or terms outlined in their mining specifications. 5.2 Foreign Investment Restrictions and Approvals in the Exploration and Mining Sectors In Madagascar, foreign investment in the mining sec - tor is encouraged but subject to certain regulations. The Mining Code and Investment Code set the frame - work for foreign participation, with the following key points. • Foreign investment approval – while Madagascar encourages foreign investment, the government screens foreign proposals, especially in critical sectors such as mining. The Ministry of Mines and Strategic Resources is involved in reviewing appli - cations for mining permits and other rights, and the Ministry of Industry and Commerce evaluates broader investment proposals, especially those involving foreign ownership. • National interest and security – the Investment Code specifies that investments that could poten - tially affect national security or strategic resources (such as critical minerals) will be subject to addi - tional scrutiny. The government may review any significant transactions, particularly if they relate to the ownership or control of natural resources deemed vital for national development. • Environmental and social impact – the Mining Code requires mining projects to obtain environmental and social approval before proceeding, ensuring that the exploration and extraction of resources are in line with sustainable development and responsi -
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