MADAGASCAR Law and Practice Contributed by: Herisoa Raharimamonjy and Mialy Solofohery, John W Ffooks & Co
3.4 Energy-Transition Minerals There are currently no Malagasy government or legislative initiatives regarding the increas - ing demand for the so-called energy-transition minerals, such as lithium, cobalt, rare earths and copper. 4. Taxation of Mining and Exploration 4.1 Mining and Exploration Duties, Royalties and Taxes The tax system for the mining industry in Mada - gascar includes three main tax obligations: • income tax; • VAT (mandatory or voluntary); and • specific taxes on mining activities – 5% of the value of the exporting mines (2% mining rebate and 3% mining royalties). 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 Madagascar. 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 min -
ing licence holder, income tax shall be applicable to the transfer or sale. These tax levies remain applicable even if the transfer 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 attrac - tive for mining investment include the following. • Stable legal framework: The government has established a stable rule of law, with protec - tions for foreign investments. Mining invest - ments are guaranteed by clear legal struc - tures that offer legal recourse and security. The recent overhaul of the Mining Code, along with its implementing regulations, aims to attract more investment in the min - ing sector. It is designed to foster a mutually beneficial partnership while ensuring social and environmental benefits. The process for acquiring mining rights is clear and well-regu - lated 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 trans - ferred, sold or mortgaged under the law, providing flexibility for investors. • Support investment protection: The Malagasy government has moved to allay investor fears of any reneging of agreements by guarantee - ing returns on their investments through guar - anteed maintenance of the legal and regula - tory regimes in force at the time of request. A “stability guarantee” is granted to any holder of a permit and is valid for a renewable
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