Introduction of Centralised e-Invoicing Platform
Madagascar is on the verge of implementing a centralised e-Invoicing platform as part of its latest Finance Law changes. This platform aims to collect structured VAT invoices to secure tax receipts, eliminate fraud from missing transactions, and reduce compliance costs for both taxpayers and the Direction Générale des Impôts. While a specific implementation date has not been confirmed, it is expected to roll out by 2025.
Digitalisation Efforts
The introduction of the e-facturation platform is part of Madagascar’s broader digitalisation initiatives for tax compliance, which include:
- E-VAT Reporting Platform: Streamlining VAT reporting through a new system.
- Electronic Declaration and Telepayment Platforms: Improving and securing tax revenues by using electronic declaration and telepayment platforms. The “e-balance sheet” tele-transmission module for financial statements has also effectively combated tax fraud.
- VAT on Digital Services: Imposing VAT on digital services to enhance tax revenue resilience despite health and economic crises.
- Expanding to the Informal Economy: Utilizing mobile phone payment platforms for synthetic taxes to integrate the informal economy into the formal tax system.
Key Aspects to Consider
Scope and Requirements:
- The e-Invoicing mandate will apply to all B2B transactions.
- Businesses must issue and report structured VAT invoices through the centralised platform.
- The platform will ensure that invoices are correctly issued, with features to validate technical accuracy and compliance.
Compliance and Benefits:
- The e-Invoicing system aims to reduce errors and fraud, thereby improving overall tax compliance.
- Businesses will benefit from streamlined accounting processes, reduced administrative burdens, and enhanced cash flow management due to faster payment cycles and fewer errors requiring correction.
Preparation:
- Businesses should start preparing by reviewing their current invoicing and accounting systems.
- Consulting with tax advisors to ensure readiness for the new platform and understanding the detailed requirements will be crucial for smooth compliance.
Global Context
Madagascar’s move is part of a global trend towards digital tax compliance. Countries worldwide are adopting e-Invoicing and real-time reporting mandates to increase transparency, combat tax evasion, and modernize tax systems. For instance, Poland, Romania, and several EU countries have already implemented or are in the process of implementing such mandates, aiming to close the VAT gap and improve tax collection efficiency.
Businesses in Madagascar and globally should stay informed and prepare for these changes to ensure compliance and leverage the benefits of digital tax systems.
