More Favorable Taxation to Stimulate Investment

The government is considering tax relief for the telecommunications sector. As part of the supplementary budget bill, the excise duty rate applied to telecommunications services would be reduced to 5%, down from the current 8%. This provision must, however, be examined and adopted by Parliament before it comes into effect.

According to the adjustments proposed in the supplementary budget, this reduction applies to all telecommunications services, including national and international telephone communications, internet access, messaging services, voice traffic, data transfer, and satellite connectivity solutions.

This measure partially addresses the expectations of industry stakeholders, who have been advocating for several years for more favorable taxation to stimulate investment and broaden access to digital services. It is among the main tax reforms presented by the government as part of the ongoing budget review.

For operators, this reduction in excise duty represents a significant step forward. They believe that easing the tax burden is essential to accelerate the development of digital infrastructure and improve internet access in Madagascar.

The issue was already at the heart of discussions last November, when tensions between the government and members of the Madagascar Telecommunications Group (GTM) escalated over internet pricing. At that time, operators demanded the complete elimination of excise duty, as well as the tax on mobile transactions and the levies applied to entry-level smartphones.

Representatives of the sector argued that these tax cuts would not result in any shortfall for public finances. They even suggested the possibility of increased tax revenue, estimated at nearly 400 billion ariary, thanks to the growth of economic activity and the use of digital services.

For its part, the government had indicated its openness to a review of the tax system, provided that the savings were reinvested in the sector’s development. The Minister of Digital Development, Posts and Telecommunications, Mahefa Andriamampiadana, had specifically emphasized the need to direct these resources toward improving internet quality in Madagascar.

The stated objective is to strengthen the country’s digital transformation while promoting greater digital inclusion for the population.