For those interested in individual business formation in Madagascar, this article outlines the availability and primary requirements of the Entreprise Individuelle (EI) status for 2025, including registration procedures, tax treatment, and relevant thresholds.
Availability of Sole Proprietorship Status in Madagascar
Madagascar formally recognizes the Entreprise Individuelle (EI) as the legal structure for individuals seeking to operate a business under their own name. This regime is actively promoted by government agencies as the most straightforward vehicle for legitimate business activity by citizens. The process is accessible, and registration requirements are well-defined for locals and residents engaged in trade, services, or small entrepreneurial ventures.
Key Features of Entreprise Individuelle (EI)
- Legal Status: The EI is not a separate legal entity; the individual and the business are considered one and the same for legal and tax purposes.
- Liability: The business owner is personally liable for all business debts and obligations.
- Registration: EI status requires registration with the Economic Development Board of Madagascar (EDBM) and the local tax authority.
- Popularity: This status is widely used by microentrepreneurs, traders, and service providers throughout the country.
Taxation and Thresholds for EIs in 2025
EI businesses benefit from a streamlined tax regime known as the Impôt Synthétique (Synthetic Tax). This system is designed for small businesses under specific turnover thresholds.
| Business Activity | Annual Turnover Threshold (MGA) | Rate (%) | Minimum Tax (MGA) |
|---|---|---|---|
| Services | MGA 200,000,000 | 5% | Minimum applies (amount set by local tax law) |
| Trade | MGA 400,000,000 | 3% | Minimum applies (amount set by local tax law) |
(As of 2025. 1 USD ≅ 4,300 MGA; MGA 200,000,000 ≈ $46,500; MGA 400,000,000 ≈ $93,000)
The Impôt Synthétique applies only to businesses below the specified thresholds. The tax is calculated as a percentage of total turnover for the year, with a minimum amount set by local law. For businesses exceeding these turnover thresholds, a different tax regime will apply, requiring further registration and compliance.
Mandatory Social Security Requirements
While social security registration is not mandatory for sole proprietors with no employees, those who hire staff must register their business and employees with the social security authorities. This ensures compliance with employment and social protection legislation in Madagascar.
Registration and Compliance Process
Registration is centralized via the EDBM (Economic Development Board of Madagascar), which coordinates initial business creation formalities. This process includes obtaining a registration certificate, registering with the tax authority, and securing any local business permits required for operation.
Summary Table: Entreprise Individuelle (EI) in Madagascar
| Criteria | Details |
|---|---|
| Status Name | Entreprise Individuelle (EI) |
| Separate Legal Entity | No (individual and business are the same) |
| Personal Liability | Unlimited (owner personally liable for debts) |
| Tax Regime | Impôt Synthétique (simplified turnover tax) |
| Turnover Thresholds | MGA 200,000,000 for services, MGA 400,000,000 for trade |
| Applicable Rates | 5% for services, 3% for trade |
| Social Security Registration | Required if hiring employees |
| Registration Authority | EDBM |
Pro Tips for Entreprise Individuelle Setup in Madagascar
- Register promptly with both the EDBM and the tax authority to ensure full compliance from your first day of operations.
- Monitor your annual turnover to avoid unexpectedly exceeding the Impôt Synthétique thresholds, as this may require switching tax regimes mid-year.
- Keep detailed and organized financial records, even under the simplified regime, to smooth the annual tax declaration and facilitate any future conversion to a more complex business structure.
- If you hire employees, don’t forget to initiate social security registration immediately to avoid penalties or delays in compliance.
Official Resources
For 2025, Madagascar continues to offer a straightforward and accessible sole proprietorship regime under the Entreprise Individuelle status. The simplified Impôt Synthétique allows small businesses to manage taxes effectively, provided turnover remains below the set thresholds. Clear registration processes and government support make Madagascar’s EI an attractive choice for local entrepreneurs pursuing legitimate, small-scale business activity.