Like many developing countries, Madagascar collects a significant share of government revenue through customs duties and value-added tax (VAT) on imports.
Customs duties range from five to 20 percent and are modified annually when the budget is developed. For further details, please visit http://www.douanes.gov.mg/tarifs-des-douanes/. The VAT on imports has held steady at 20 percent for several years. While Madagascar does not have significant formal non-tariff barriers to trade, its higher-than-average customs duties (in comparison with other developing countries) constitute an indirect tariff barrier. About 40 percent of imports are subject to a 20 percent customs duty, with beverages, fisheries, flora and fauna, and textiles being among the most protected products. During the COVID-19 pandemic, the government exempted medical equipment and accessories from import duties. Key sectors like mining and textiles receive fiscal benefits under industrial promotion schemes, including the waivers of customs import duties and VAT.
Countries that partner with Madagascar in preferential trading blocs such as the Interim Economic Partnership Agreement with the European Union (APEi), Southern African Development Community (SADC), the Indian Ocean Commission (IOC), and the Common Market for Eastern and Southern Africa (COMESA) can export their goods into Madagascar without paying customs duties. U.S. firms with manufacturing presences in member countries of those groups can obtain duty-free entry to the Malagasy market under certain conditions.