Doing Business 2020 Madagascar Economy Profile Madagascar Page 1 Doing Business 2020 Madagascar Economy Profile of Madagascar Doing Business 2020 Indicators (in order of appearance in the document) Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality control and safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of the land administration system Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as well as postfiling processes Trading across borders Time and cost to export the product of comparative advantage and import auto parts Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency Employing workers Flexibility in employment regulation and redundancy cost Page 2 Doing Business 2020 Madagascar About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of employing workers. Although Doing Business does not present rankings of economies on the employing workers indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business offers detailed subnational studies, which exhaustively cover business regulation and reform in different cities and regions within a nation. These studies provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The first Doing Business study, published in 2003, covered 5 indicator sets and 133 economies. This year’s study covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. To learn more about Doing Business please visit doingbusiness.org Page 3 Doing Business 2020 Madagascar Ease of Doing Business in DB RANK DB SCORE Region Sub-Saharan Africa Madagascar Income Category Low income Population 26,262,368 47.7 161 City Covered Antananarivo Rankings on Doing Business topics - Madagascar 80 132 134 136 135 140 140 164 182 186 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Topic Scores 88.5 35.9 24.1 44.4 40.0 36.0 62.6 61.0 50.0 34.8 Starting a Business (rank) 80 Getting Credit (rank) 132 Trading across Borders (rank) 140 Score of starting a business (0-100) 88.5 Score of getting credit (0-100) 40.0 Score of trading across borders (0-100) 61.0 Procedures (number) 5 Strength of legal rights index (0-12) 2 Time to export Time (days) 8 Depth of credit information index (0-8) 6 Documentary compliance (hours) 49 Cost (number) 30.2 Credit registry coverage (% of adults) 10.4 Border compliance (hours) 70 Paid-in min. capital (% of income per capita) 0.0 Credit bureau coverage (% of adults) 0.0 Cost to export Documentary compliance (USD) 117 Dealing with Construction Permits (rank) 182 Protecting Minority Investors (rank) 140 Border compliance (USD) 868 Score of dealing with construction permits (0-100) 35.9 Score of protecting minority investors (0-100) 36.0 Time to export Procedures (number) 17 Extent of disclosure index (0-10) 7.0 Documentary compliance (hours) 58 Time (days) 194 Extent of director liability index (0-10) 6.0 Border compliance (hours) 99 Cost (% of warehouse value) 35.2 Ease of shareholder suits index (0-10) 5.0 Cost to export Building quality control index (0-15) 6.0 Extent of shareholder rights index (0-6) 0.0 Documentary compliance (USD) 150 Extent of ownership and control index (0-7) 0.0 Border compliance (USD) 595 Getting Electricity (rank) 186 Extent of corporate transparency index (0-7) 0.0 Score of getting electricity (0-100) 24.1 Enforcing Contracts (rank) 136 Procedures (number) 6 Paying Taxes (rank) 134 Score of enforcing contracts (0-100) 50.0 Time (days) 450 Score of paying taxes (0-100) 62.6 Time (days) 811 Cost (% of income per capita) 4,336.4 Payments (number per year) 23 Cost (% of claim value) 33.6 Reliability of supply and transparency of tariff index (0-8) 0 Time (hours per year) 183 Quality of judicial processes index (0-18) 8.0 Total tax and contribution rate (% of profit) 38.3 Registering Property (rank) 164 Postfiling index (0-100) 21.8 Resolving Insolvency (rank) 135 Score of registering property (0-100) 44.4 Score of resolving insolvency (0-100) 34.8 Procedures (number) 6 Recovery rate (cents on the dollar) 12.4 Time (days) 100 Time (years) 3.0 Cost (% of property value) 9.0 Cost (% of estate) 8.5 Quality of the land administration index (0-30) 8.0 Outcome (0 as piecemeal sale and 1 as going 0 concern) Strength of insolvency framework index (0-16) 9.0 Page 4 Doing Business 2020 Madagascar Starting a Business This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and formally operate a company To make the data comparable across economies, several assumptions about the business and the (number) procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes. • Preregistration (for example, name verification or reservation, notarization) The business: • Registration in the economy’s largest business city -Is a limited liability company (or its legal equivalent). If there is more than one type of limited • Postregistration (for example, social security registration, liability company in the economy, the limited liability form most common among domestic firms is company seal) chosen. Information on the most common form is obtained from incorporation lawyers or the statistical office. • Obtaining approval from spouse to start a business or to leave -Operates in the economy’s largest business city. For 11 economies the data are also collected for the home to register the company the second largest business city. • Obtaining any gender specific document for company -Performs general industrial or commercial activities such as the production or sale to the public of registration and operation or national identification card goods or services. The business does not perform foreign trade activities and does not handle products subject to a special tax regime, for example, liquor or tobacco. It is not using heavily Time required to complete each procedure (calendar days) polluting production processes. • Does not include time spent gathering information -Does not qualify for investment incentives or any special benefits. -Is 100% domestically owned. • Each procedure starts on a separate day (2 procedures cannot -Has five business owners, none of whom is a legal entity. One business owner holds 30% of the start on the same day) company shares, two owners have 20% of shares each, and two owners have 15% of shares • Procedures fully completed online are recorded as ½ day each. -Is managed by one local director. • Procedure is considered completed once final document is received -Has between 10 and 50 employees one month after the commencement of operations, all of them domestic nationals. • No prior contact with officials -Has start-up capital of 10 times income per capita. -Has an estimated turnover of at least 100 times income per capita. Cost required to complete each procedure (% of income per -Leases the commercial plant or offices and is not a proprietor of real estate. capita) -Has an annual lease for the office space equivalent to one income per capita. • Official costs only, no bribes -Is in an office space of approximately 929 square meters (10,000 square feet). -Has a company deed that is 10 pages long. • No professional fees unless services required by law or commonly used in practice The owners: Paid-in minimum capital (% of income per capita) -Have reached the legal age of majority and are capable of making decisions as an adult. If there • Funds deposited in a bank or with third party before registration is no legal age of majority, they are assumed to be 30 years old. or up to 3 months after incorporation -Are in good health and have no criminal record. -Are married, the marriage is monogamous and registered with the authorities. -Where the answer differs according to the legal system applicable to the woman or man in question (as may be the case in economies where there is legal plurality), the answer used will be the one that applies to the majority of the population. Page 5 Doing Business 2020 Madagascar Starting a Business - Madagascar Standardized Company Legal form Socièté a Responsabilité Limitée (SARL) Paid-in minimum capital requirement No minimum City Covered Antananarivo Indicator Madagascar Sub-Saharan OECD high Best Regulatory Africa income Performance Procedure – Men (number) 5 7.4 4.9 1 (2 Economies) Time – Men (days) 8 21.5 9.2 0.5 (New Zealand) Cost – Men (% of income per capita) 30.2 36.3 3.0 0.0 (2 Economies) Procedure – Women (number) 5 7.5 4.9 1 (2 Economies) Time – Women (days) 8 21.6 9.2 0.5 (New Zealand) Cost – Women (% of income per capita) 30.2 36.3 3.0 0.0 (2 Economies) Paid-in min. capital (% of income per capita) 0.0 9.3 7.6 0.0 (120 Economies) Figure – Starting a Business in Madagascar – Score 76.5 92.5 84.9 100.0 Procedures Time Cost Paid-in min. capital Figure – Starting a Business in Madagascar and comparator economies – Ranking and Score DB 2020 Starting a Business Score 0 100 94.5: Mauritius (Rank: 20) 88.5: Madagascar (Rank: 80) 82.7: Kenya (Rank: 129) 80.1: Regional Average (Sub-Saharan Africa) 76.5: Comoros (Rank: 158) 69.3: Mozambique (Rank: 176) Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 6 Doing Business 2020 Madagascar Figure – Starting a Business in Madagascar – Procedure, Time and Cost Time (days) Cost (% of income per capita) 8 35 7 30 Cost (% of income per capita) 6 25 Time (days) 5 20 4 15 3 10 2 1 5 0 0 1 2 3 4 *5 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 7 Doing Business 2020 Madagascar Details – Starting a Business in Madagascar – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Apply for a tax identification number (NIF) and verify the necessary forms and registration 1 day no charge fees at the One-Stop Shop (EDBM) Agency : EDBM A new company can be registered at the One-Stop Shop (EDBM). Upon arrival at EDBM, the entrepreneur needs to stop at the front office to apply for a tax identification number (NIF), for verification of the documents to be submitted for registration and of the amount to the paid to the tax authority. The front office will apply for the tax identification number online for the applicant (through a process called NIFONLINE) and will verify whether the forms were correctly filled and that no information is missing. The forms are available online and the entrepreneurs can either print them at home or obtain them at the registry. 2 Register the company, pay the registration fees and apply for a license (carte 4 days see comments professionnelle), for registration at INSTAT and for the publication of a notice of company incorporation Agency : EDBM The entrepreneur must apply for company registration at EDBM, by presenting the company's articles of association, paying the registration fees in cash and applying for a license and registration at the National Statistics Institute (Institut National de la Statistique Malgache - INSTAT) at EDBM. Alternatively, the entrepreneur has the option to pay the registration fees with a nominal check previously obtained at a bank. Fee schedule: • Commercial registration fee: MGA 16,000 • Deed registration costs: MGA 2,000 • Institut National de la Statistique Malgache (INSTAT) registration costs: MGA 40,000 • Tax Authority registration cost: 0.5% of share capital • Provisional income tax: MGA 320,000 Once the registration is finalized, the entrepreneur will receive the incorporation document called the K-Bis. This is the document that compiles the relevant information regarding the company. It includes the tax ID, the registration number and the date of the newspaper publication. 3 Register employees with Social Security 1 day no charge Agency : EDBM The company must register its employees with the National Social Security Fund (Caisse Nationale de Prevoyance Sociale), and file two copies of an application form (bulletin d'adhesion nouveau membre) along with a list of names of all employees and their identity cards to enroll for health insurance. 4 Register employees for health insurance 1 day no charge Agency : OSTIE Registration with an insurance scheme is mandatory. OSTIE is the public insurance scheme and registration is free of charge. However, companies can choose to offer the services of a private insurance scheme. In case they chose to do so, the additional cost is not deductible from taxes. 5 File a declaration of start of activities to the Labor Inspectorate 1 day (simultaneous with no charge Agency : Labor Inspectorate previous procedure) As foreseen in art. 251 of the Labor Code, new companies shall submit a declaration of start of activities to the Labor Inspectorate. This declaration can be submitted after the employee registration with Social Security. Takes place simultaneously with previous procedure. Page 8 Doing Business 2020 Madagascar Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2019. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse (number) To make the data comparable across economies, several assumptions about the construction company, the warehouse project and the utility connections are used. • Submitting all relevant documents and obtaining all necessary clearances, licenses, permits and certificates The construction company (BuildCo): • Submitting all required notifications and receiving all necessary - Is a limited liability company (or its legal equivalent) and operates in the economy’s largest inspections business city. For 11 economies the data are also collected for the second largest business city. • Obtaining utility connections for water and sewerage - Is 100% domestically and privately owned; has five owners, none of whom is a legal entity. Has a licensed architect and a licensed engineer, both registered with the local association of architects • Registering and selling the warehouse after its completion or engineers. BuildCo is not assumed to have any other employees who are technical or licensed Time required to complete each procedure (calendar days) experts, such as geological or topographical experts. - Owns the land on which the warehouse will be built and will sell the warehouse upon its • Does not include time spent gathering information completion. • Each procedure starts on a separate day—though procedures that can be fully completed online are an exception to this rule The warehouse: • Procedure is considered completed once final document is - Will be used for general storage activities, such as storage of books or stationery. received - Will have two stories, both above ground, with a total constructed area of approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 meters (9 feet, 10 inches) high and will be • No prior contact with officials located on a land plot of approximately 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the warehouse is valued at 50 times income per capita. Cost required to complete each procedure (% of income per - Will have complete architectural and technical plans prepared by a licensed architect. If capita) preparation of the plans requires such steps as obtaining further documentation or getting prior • Official costs only, no bribes approvals from external agencies, these are counted as procedures. - Will take 30 weeks to construct (excluding all delays due to administrative and regulatory Building quality control index (0-15) requirements). • Quality of building regulations (0-2) The water and sewerage connections: • Quality control before construction (0-1) - Will be 150 meters (492 feet) from the existing water source and sewer tap. If there is no water • Quality control during construction (0-3) delivery infrastructure in the economy, a borehole will be dug. If there is no sewerage • Quality control after construction (0-3) infrastructure, a septic tank in the smallest size available will be installed or built. - Will have an average water use of 662 liters (175 gallons) a day and an average wastewater flow • Liability and insurance regimes (0-2) of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and • Professional certifications (0-4) a peak wastewater flow of 1,136 liters (300 gallons) a day. - Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Page 9 Doing Business 2020 Madagascar Dealing with Construction Permits - Madagascar Standardized Warehouse Estimated value of warehouse MGA 75,099,980.50 City Covered Antananarivo Indicator Madagascar Sub-Saharan OECD high Best Regulatory Africa income Performance Procedures (number) 17 15.1 12.7 None in 2018/19 Time (days) 194 145.4 152.3 None in 2018/19 Cost (% of warehouse value) 35.2 8.9 1.5 None in 2018/19 Building quality control index (0-15) 6.0 8.9 11.6 15.0 (6 Economies) Figure – Dealing with Construction Permits in Madagascar – Score 52.0 51.6 0.0 40.0 Procedures Time Cost Building quality control index Figure – Dealing with Construction Permits in Madagascar and comparator economies – Ranking and Score DB 2020 Dealing with Construction Permits Score 0 100 85.8: Mauritius (Rank: 8) 73.2: Mozambique (Rank: 61) 68.0: Comoros (Rank: 101) 67.6: Kenya (Rank: 105) 58.5: Regional Average (Sub-Saharan Africa) 35.9: Madagascar (Rank: 182) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Page 10 Doing Business 2020 Madagascar Figure – Dealing with Construction Permits in Madagascar – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 25 Cost (% of warehouse value) 20 150 Time (days) 15 100 10 50 5 0 0 1 *2 *3 4 5 6 7 8 9 10 11 12 * 13 14 15 16 * 17 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 11 Doing Business 2020 Madagascar Figure – Dealing with Construction Permits in Madagascar and comparator economies – Measure of Quality 16 14.0 14 12 11.0 Index score 10.0 10 8.9 8 6.0 6 4.0 4 2 0 Madagascar Comoros Kenya Mauritius Mozambique Sub-Saharan Africa Details – Dealing with Construction Permits in Madagascar – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain property registration certificates 21 days MGA 8,000 Agency : Land Administration Department (Service des Domaines) BuildCo must obtain four copies of all the property registration documents. 2 Obtain official topographical plan of the plot 21 days MGA 20,000 Agency : Topographical Services (Service Topographique) Four copies of the official topographical plan for the property with coordinates are needed. 3 Obtain geo-technical study of the land 11 days MGA 17,353,125 Agency : Private licensed company A soil test is a necessary step for the development of the project. The soil investigation helps to determine the bearing capacity of the land, which helps to determine the load capability, the type and depth of foundation, in order to make sure to select a suitable construction technique. 4 Request an alignment permit from the Commune of Antananarivo 1 day no charge Agency : Commune of Antananarivo The alignment permit is a mandatory document to obtain a building permit. The request for this permit is made on a standard form and is submitted by the owner, in duplicate, to the City Council (Commune d’Antananarivo), along with proof of ownership. The planning officer will prepare a sketch of alignment and a report (procès verbal) detailing the constraints of alignment with the road allowances of the Master Plan (delimitation of the unbuildable portion). The file is then sent to the Régional de l’Aménagement du Territoire et de la Ville, which verifies that the file is in conformity with the rules of urban planning and the provisions of the Master Plan of the Commune. The file is then returned to the Town Hall. A receipt showing that the request was made will be given back to BuildCo and at the same time, an appointment date will be provided for the site visit with the owner and 2 inspectors. 5 Receive inspection from SRAT 5 days no charge Agency : SRAT (Provincial Service of Land) The inspection is carried out by the Provincial Service of Land (Développement Aménagement du Territoire, SRAT) and the land owner. These inspections are necessary to obtain SRAT’s approval of the building permit. In addition to the first inspection before the start of construction work, SRAT may carry out several other random inspections. Technical directives for construction work include, among other things, a check of the center line of the street, the street boundaries, blind walls, and openings in walls. 6 Obtain the alignment permit from the Commune of Antananarivo 20 days MGA 97,500 Agency : Commune of Antananarivo The Urban Commune checks the design plans and supporting documents to ensure that no documents are missing. 7 Request and obtain the planning requirements from SRAT 7 days no charge Agency : Service Regional de l'Amenagement du Territoire (SRAT) Once the alignment permit has been obtained, BuildCo must obtain the planning requirements (presciption d’urbanisme). This planning requirement document is obtained from the Service Regional de l'Amenagement du Territoire (SRAT) in one week. This document is necessary to show that the entrepreneur has the right to build on that land. The required documents are: - Official plan of the land with laborde coordinates (1 copy) - Certificate of legal status that is less than 3 months old (1 copy) - Duly complete form to request the prescription d'urbanisme obtained at the City Hall Analakely (1 copy) - Alignment authorization (issued by the CUA) - Alignment Sketch (issued by the CUA) Page 12 Doing Business 2020 Madagascar 8 Request and obtain building permit 45 days MGA 3,951,800 Agency : Commune of Antananarivo The building permit is now completed in 3 steps: (i) obtain the alignment permit (ii) obtain the planning permission certificate Once these two steps are completed, BuildCo may now request the building permit and submit all necessary documents. Only completed applications are accepted at the Commune Urbaine d'Antananarivo (CUA- one-stop shop). The cost is calculated based on the volume of the building before SPAT issues its opinion. The cost can vary from MGA 1,000.00 to MGA 2,000.00 per cubic meter. Documents to be provided are: - Alignment permit issued by the CUA - Official survey plan of the land with laborde coordinates obtained from the Topographic Service Anosy (1 copy) - Proof of ownership that is less than 3 months old (1 copy) - Alignment with prescription planning permission (1 copy) Documents for the applicant: - Technical data sheet completed and signed by architect (1 copy) - Certified copy of the ID (carte d’identite nationale) (1 copy) - 2 stamped and addressed envelopes - Pictures of the land and its surroundings - All required plans including the site plan with the septic tank location clearly marked The fee for a building permit is fixed by the "arrêté municopal numéro 120/CUA/CAB/15 portant fixation des droits et taxes fiscaux et parafiscaux de la Commune urbaine d'Antananarivo pour l'année 2018": The cost per square meter is MGA 3,000 besides a general fee of MGA 25,000 of administrative fees and MGA 25,000 for encroachment permits (permission de voirie). Therefore, the cost breakdown is as follow: MGA 3,000 * 1300,6 +50,000. 9 Inform SRAT upon completion of construction 1 day no charge Agency : Service Regional de l'Amenagement du Territoire (SRAT) BuildCo must inform Service Regional de l'Amenagement du Territoire (SRAT) in person upon completion of construction and request the final inspection in order to obtain the Occupancy permit. (Certificat d'Habiter). At that time, a certified copy of the building permit as well as a certified copy of the Nationl ID must also be provided in order to make that request 10 Receive final inspection at the end of construction by SRAT 1 day no charge Agency : SRAT (Provincial Service of Land) The final inspection and approval by SRAT are required to obtain the certificate of occupancy. 11 Receive inspection by fire protection service 1 day no charge Agency : Fire Service (Pompiers) 12 Obtain occupancy certificate 30 days MGA 235,000 Agency : Commission This authorization is mandatory and must be obtained prior to occupying a new building. It is also useful for obtaining an official number for the building and ensuring that a building permit has been issued for the said building. Apply for water connection 1 day no charge 13 Agency : JIRAMA 14 JIRAMA inspects the building to prepare an estimate 1 day no charge Agency : JIRAMA BuildCo receives the cost estimates 2 weeks after JIRAMA inspects the building and can pay them immediately and acquire the connection one week later. 15 Request and obtain permission for water connection from Commune of Antananarivo 30 days MGA 285,000 Agency : Commune of Antananarivo Once JIRAMA has provided both the cost estimate and the survey plan (plan croquis de JIRAMA), BuildCo must request an authorization from the Municipality to connect to water. Without this authorization, JIRAMA cannot proceed with the connection work. 16 Build septic tank 30 days MGA 2,000,000 Agency : Private firm Obtain water connection 21 days MGA 2,500,000 17 Agency : JIRAMA The fee for water connection is around MGA 2.5 million. Takes place simultaneously with previous procedure. Page 13 Doing Business 2020 Madagascar Details – Dealing with Construction Permits in Madagascar – Measure of Quality Answer Score Building quality control index (0-15) 6.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; Free 1.0 of charge. Which requirements for obtaining a building permit are clearly specified in the building regulations or on any List of required 1.0 accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in compliance with existing Licensed architect; 1.0 building regulations? (0-1) Civil servant reviews plans. Quality control during construction index (0-3) 0.0 What types of inspections (if any) are required by law to be carried out during construction? (0-2) No inspections are 0.0 legally required during construction.. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 0.0 inspections are not always done in practice during construction. Quality control after construction index (0-3) 2.0 Is there a final inspection required by law to verify that the building was built in accordance with the approved Yes, final inspection 2.0 plans and regulations? (0-2) is done by government agency. Do legally mandated final inspections occur in practice? (0-1) Final inspection does 0.0 not always occur in practice; Final inspection occurs most of the time. Liability and insurance regimes index (0-2) 1.0 Which parties (if any) are held liable by law for structural flaws or problems in the building once it is in use Architect or engineer; 1.0 (Latent Defect Liability or Decennial Liability)? (0-1) Construction company. Which parties (if any) are required by law to obtain an insurance policy to cover possible structural flaws or No party is required 0.0 problems in the building once it is in use (Latent Defect Liability Insurance or Decennial Insurance)? (0-1) by law to obtain insurance . Professional certifications index (0-4) 0.0 What are the qualification requirements for the professional responsible for verifying that the architectural plans University degree in 0.0 or drawings are in compliance with existing building regulations? (0-2) architecture or engineering. What are the qualification requirements for the professional who supervises the construction on the ground? (0- University degree in 0.0 2) engineering, construction or construction management. Page 14 Doing Business 2020 Madagascar Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection (number) To make the data comparable across economies, several assumptions about the warehouse, the electricity connection and the monthly consumption are used. • Submitting all relevant documents and obtaining all necessary clearances and permits The warehouse: • Completing all required notifications and receiving all necessary - Is owned by a local entrepreneur and is used for storage of goods. inspections - Is located in the economy’s largest business city. For 11 economies the data are also collected for • Obtaining external installation works and possibly purchasing the second largest business city. material for these works - Is located in an area where similar warehouses are typically located and is in an area with no physical constraints. For example, the property is not near a railway. • Concluding any necessary supply contract and obtaining final - Is a new construction and is being connected to electricity for the first time. supply - Has two stories with a total surface area of approximately 1,300.6 square meters (14,000 square Time required to complete each procedure (calendar days) feet). The plot of land on which it is built is 929 square meters (10,000 square feet). • Is at least 1 calendar day The electricity connection: • Each procedure starts on a separate day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed capacity of 140- • Does not include time spent gathering information kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 kilowatt (kW). - Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution • Reflects the time spent in practice, with little follow-up and no network and is either overhead or underground, whichever is more common in the area where the prior contact with officials warehouse is located and requires works that involve the crossing of a 10-meter road (such as by excavation or overhead lines) but are all carried out on public land. There is no crossing of other Cost required to complete each procedure (% of income per owners’ private property because the warehouse has access to a road. capita) - Does not require work to install the internal wiring of the warehouse. This has already been • Official costs only, no bribes completed up to and including the customer’s service panel or switchboard and the meter base. • Value added tax excluded The monthly consumption: The reliability of supply and transparency of tariffs index (0-8) - It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 p.m. (8 hours • Duration and frequency of power outages (0–3) a day), with equipment utilized at 80% of capacity on average and that there are no electricity cuts • Tools to monitor power outages (0–1) (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours (kWh); hourly consumption is 112 kWh. • Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest supplier. • Regulatory monitoring of utilities’ performance (0–1) - Tariffs effective in January of the current year are used for calculation of the price of electricity for the warehouse. Although January has 31 days, for calculation purposes only 30 days are used. • Financial deterrents limiting outages (0–1) • Transparency and accessibility of tariffs (0–1) Price of electricity (cents per kilowatt-hour)* • Price based on monthly bill for commercial warehouse in case study *Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor in the ranking on the ease of getting electricity. Page 15 Doing Business 2020 Madagascar Getting Electricity - Madagascar Standardized Connection Name of utility Jiro sy rano malagasy (JIRAMA) Price of electricity (US cents per kWh) 11.3 City Covered Antananarivo Indicator Madagascar Sub-Saharan OECD high Best Regulatory Africa income Performance Procedures (number) 6 5.2 4.4 3 (28 Economies) Time (days) 450 109.6 74.8 18 (3 Economies) Cost (% of income per capita) 4336.4 3,187.5 61.0 0.0 (3 Economies) Reliability of supply and transparency of tariff index (0-8) 0 1.6 7.4 8 (26 Economies) Figure – Getting Electricity in Madagascar – Score 50.0 0.0 46.5 0.0 Reliability of supply and transparency of Procedures Time Cost tariff index Figure – Getting Electricity in Madagascar and comparator economies – Ranking and Score DB 2020 Getting Electricity Score 0 100 88.0: Mauritius (Rank: 28) 80.1: Kenya (Rank: 70) 71.7: Mozambique (Rank: 103) 60.2: Comoros (Rank: 136) 50.4: Regional Average (Sub-Saharan Africa) 24.1: Madagascar (Rank: 186) Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Figure – Getting Electricity in Madagascar – Procedure, Time and Cost Time (days) Cost (% of income per capita) 450 4000 400 3500 Cost (% of income per capita) 350 3000 300 Time (days) 2500 250 2000 200 1500 150 1000 100 50 500 0 0 1 *2 3 *4 5 6 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures Page 16 Doing Business 2020 Madagascar reflected here, see the summary below. Figure – Getting Electricity in Madagascar and comparator economies – Measure of Quality 7 6 6 5 5 Index score 4 4 3 2 1.6 1 0 0 0 Madagascar Comoros Kenya Mauritius Mozambique Sub-Saharan Africa Page 17 Doing Business 2020 Madagascar Details – Getting Electricity in Madagascar – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Submit application to JIRAMA and await estimate 15 calendar days MGA 0 Agency : Jiro sy rano malagasy (JIRAMA) The application can be submitted by mail, letter, or in person at one of the utility’s agencies. The client will need to attach some documents to the application, with the client’s personal and professional details, a description of the works and of the electrical installation, as well as a notarized Signing Authority (“pouvoir de signature”). 2 Receive external inspection by JIRAMA 1 calendar day MGA 0 Agency : Jiro sy rano malagasy (JIRAMA) When the utility has received the application, it inspects the client’s site to determine the specifics of the connection and prepare an estimate of the connection fees. 3 Obtain right of way from local authority 50 calendar days MGA 60,000 Agency : Local authority (Commune) The customer needs to obtain a right of way from the 'Commune' before paying the estimate so that the utility can carry out the external works of expanding the overhead network. 4 Buy material for external works from local store 18 calendar days MGA 0 Agency : Local store The material for a 140-kVA connection is usually not available in the utility’s stock. The client can then choose to either buy the material from a local store or ask the utility to obtain it. Preference is to buy material on the local market. 5 Obtain testing of material and await completion of external works 19 calendar days MGA 55,748,923 Agency : Jiro sy rano malagasy (JIRAMA) Only the utility is in charge of the external works. The client needs to pay the connection fees at the utility’s offices for the works to start. In this case an expansion of the network (installation of a unit substation) is necessary. JIRAMA tests the client's material before carrying out the works to check they are conform to its standards. The material is inspected to ensure its conformity to the utility's technical standards before the works start. 6 Sign supply contract and await final connection 366 calendar days MGA 9,323,963.58 Agency : Jiro sy rano malagasy (JIRAMA) The final connection is carried out after the client has signed a supply contract and paid an advance on consumption. The installation of the meter is carried out by the utility. Madagascar had suffered from some capacity issues over the last few years. New power projects completed recently (JIRAMA installed an extra 66MW on Tana interconnected network) did however, increase the existing capacity so that more customers can obtain supply. Despite the availability of supply, JIRAMA still needs to deal with a back-log of applications submitted over the many years when obtaining a connection was not yet possible. The utility also accepts new applications and prepares estimates of connection costs for those. Delays are due to treating old and new applications and the lack of meters. Takes place simultaneously with previous procedure. Page 18 Doing Business 2020 Madagascar Details – Getting Electricity in Madagascar – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 0 Total duration and frequency of outages per customer a year (0-3) 0 System average interruption duration index (SAIDI) .. System average interruption frequency index (SAIFI) .. What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI N/A Mechanisms for monitoring outages (0-1) 0 Does the distribution utility use automated tools to monitor outages? No Mechanisms for restoring service (0-1) 0 Does the distribution utility use automated tools to restore service? No Regulatory monitoring (0-1) 0 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of supply? No Financial deterrents aimed at limiting outages (0-1) 0 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages exceed a certain cap? No Communication of tariffs and tariff changes (0-1) 1 Are effective tariffs available online? Yes Link to the website, if available online http://www.ore.mg/ Are customers notified of a change in tariff ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 19 Doing Business 2020 Madagascar Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on immovable property To make the data comparable across economies, several assumptions about the parties to the (number) transaction, the property and the procedures are used. • Preregistration procedures (for example, checking for liens, The parties (buyer and seller): notarizing sales agreement, paying property transfer taxes) - Are limited liability companies (or the legal equivalent). • Registration procedures in the economy's largest business city. - Are located in the periurban (that is, on the outskirts of the city but still within its official limits) • Postregistration procedures (for example, filling title with area of the economy’s largest business city. For 11 economies the data are also collected for the municipality) second largest business city. - Are 100% domestically and privately owned. Time required to complete each procedure (calendar days) - Perform general commercial activities. • Does not include time spent gathering information The property (fully owned by the seller): • Each procedure starts on a separate day - though procedures - Has a value of 50 times income per capita, which equals the sale price. that can be fully completed online are an exception to this rule - Is fully owned by the seller. • Procedure is considered completed once final document is - Has no mortgages attached and has been under the same ownership for the past 10 years. received - Is registered in the land registry or cadastre, or both, and is free of title disputes. • No prior contact with officials - Is located in a periurban commercial zone (that is, on the outskirts of the city but still within its official limits), and no rezoning is required. Cost required to complete each procedure (% of property - Consists of land and a building. The land area is 557.4 square meters (6,000 square feet). A two- value) story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse is 10 years old, is in good condition, has no heating system and complies with all safety standards, • Official costs only (such as administrative fees, duties and building codes and legal requirements. The property, consisting of land and building, will be taxes). transferred in its entirety. • Value Added Tax, Capital Gains Tax and illicit payments are - Will not be subject to renovations or additional construction following the purchase. excluded - Has no trees, natural water sources, natural reserves or historical monuments of any kind. - Will not be used for special purposes, and no special permits, such as for residential use, Quality of land administration index (0-30) industrial plants, waste storage or certain types of agricultural activities, are required. • Reliability of infrastructure index (0-8) - Has no occupants, and no other party holds a legal interest in it. • Transparency of information index (0–6) • Geographic coverage index (0–8) • Land dispute resolution index (0–8) • Equal access to property rights index (-2–0) Page 20 Doing Business 2020 Madagascar Registering Property - Madagascar Indicator Madagascar Sub-Saharan OECD high Best Regulatory Africa income Performance Procedures (number) 6 6.1 4.7 1 (5 Economies) Time (days) 100 51.6 23.6 1 (2 Economies) Cost (% of property value) 9.0 7.3 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 8.0 9.0 23.2 None in 2018/19 Figure – Registering Property in Madagascar – Score 58.3 52.6 40.0 26.7 Procedures Time Cost Quality of the land administration index Figure – Registering Property in Madagascar and comparator economies – Ranking and Score DB 2020 Registering Property Score 0 100 82.5: Mauritius (Rank: 23) 58.4: Comoros (Rank: 113) 53.8: Kenya (Rank: 134) 53.6: Regional Average (Sub-Saharan Africa) 53.4: Mozambique (Rank: 136) 44.4: Madagascar (Rank: 164) Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Page 21 Doing Business 2020 Madagascar Figure – Registering Property in Madagascar – Procedure, Time and Cost Time (days) Cost (% of property value) 100 6 5 Cost (% of property value) 80 4 Time (days) 60 3 40 2 20 1 0 0 1 *2 3 4 5 6 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 22 Doing Business 2020 Madagascar Figure – Registering Property in Madagascar and comparator economies – Measure of Quality 25 22.5 20 Index score 15.0 15 10 9.0 8.0 7.5 7.0 5 0 Madagascar Comoros Kenya Mauritius Mozambique Sub-Saharan Africa Details – Registering Property in Madagascar – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Request two copies of the certificate of registration and the legal situation of the land at 21 days MGA 4,000; (MGA 2,000 the Land Registry per copy (2 copies)) Agency : Land Registry (Service des Domaines et de la Conservation Foncière) This certificate is an extract from the property registry books and must be obtained in the past three months maximum. It gives the history of previous registrations on the Registry books and indicates the identity of the current owner of the land. It also shows any encumbrances on the property. According to Article I of the Decree No. 21 020/2012-VPDAT/SG/DGSF of the Deputy Prime Minister in charge of Development and Planning, effective August 2, 2012, the cost of a copy of the certificate is MGA 2,000. 2 Request two topographical extracts with coordinates at the ‘Service de la Topographie’ 21 days MGA 10,000; (MGA 5,000 Agency : Topographic service (Service de la Topographie) per plan (2 plans)) The coordinates allow the marking of the property and are expressed in ‘x’ and ‘y’. The plan has to be signed by both parties and is annexed to the request for authorization of the real estate transaction. This extract can also be traced by a sworn surveyor to delimit the part of the land to be ceded, in case the operation does not cede the entire property. According to Article 14 of Decree No. 21 021/2012-VPDAT/SG/DGSF of the Deputy Prime Minister in charge of Development and Planning, effective August 2, 2012, the rates are: -1,000 MGA by plan size 720 mmx 1020 mm, - 1,000 MGA by plan size 520 mm X 720 mm, - 1000 MGA by plan size 420 mm X 620 mm -500 MGA per plane for size 320mm X 420 mm -500 MGA per plane for the format 210 X 297 mm Nevertheless, the cost and time noted here are for a simple plan, intended for a transfer whereby the buyer is not planning on making changes or constructions to the property. For more complex uses of the property, a more detailed plan would have to be drawn, costing up to MGA 5000 (which is more aligned with the case study assumptions). 3 Request authorization to conduct a real estate transaction at the Regional Planning Service 11 days no charge (Ambatomena Antananarivo) Agency : Regional Planning Service (Ambatomena Antananarivo) This is an administrative document that indicates, in relation to the Master Plan, whether the land is in specific areas and whether it is struck with urban servitude. It is necessary to attach the certificate of real rights and legal status of the land (less than three months old) and five copies of the plan. The plan must always have the Laborde X and Y coordinates. Only the director of the planning department is authorized to approve the file. In case of absence, it takes longer. 4 Notary drafts and notarizes the sale agreement 3 days MGA 1,476,499.71; Agency : Notary (Notary fees are assessed In 2007, Madagascar adopted a new law: "Loi 2007.026 du 12/12/2007 portant statut du notariat a in installments for the Madagascar". This law, published in the Official gazette Nº 3181 on April 14th, 2008, makes it administration account mandatory to use the services of a notary for all property transaction for a value above 15 000 000 multiplied by the coefficient MGA. 1 or CA1: 3% from 0 to 10,000,000 Notary fees are assessed as follows according to the Arrêté n°30 286/2011 of October 17, 2011. MGA The rate varies depending on the administration account multiplied by a coefficient which is 2.5% from 10,000,001 calculated as follows: MGA to 20,000,000 MGA 1) for the administration account multiplied by the coefficient 1 or CA1: 2% from 20,000,001 MGA - from 0 to 10,000,000 MGA: 3% to 40,000,000 MGA - from 10,000,001 MGA to 20,000,000 MGA and up 2.5% 1.5% above 40 million - from 20,000,001 MGA to 40,000,000 MGA and up 2% MGA) - above 40 million MGA: 1.5% 2) for the administration account multiplied by the coefficient 2 or CA2: - from 0 to 10,000,000 MGA: 5% - from 10,000,001 MGA to 20,000,000 MGA: 4% - from 20,000,001 MGA to 40,000,000 MGA: 3.5% - above 40 million MGA: 2% The cost of notarizing the sale agreement corresponds to the CA1 range calculation. Page 23 Doing Business 2020 Madagascar 5 Registration of sale agreement at the Office of Property Registry 4 days MGA 3,754,999.03; (5 % Agency : Tax Authority property value for Fiscal procedure for paying the registration fees on the property and the tax on the appreciation of registration fees) the property. Fees are determined by the General Tax Code 2013 Article 2.2.39 Capital gains tax for companies transferring property is no longer applicable according to the Loi des Finances 2007. 6 Request transfer to be recorded in the books at the Land Registry 60 days MGA 1,516,999.61; (2% Agency : Land Registry (Service des Domaines et de la Conservation Foncière) property value (transfer The property right is not transferred until it has been transcribed on the books at the Land tax) + MGA 15,000 (fixed Registry. When the notary or the buyer file for registration at the Land Registry, the "Duplicata" fee)) must be attached to the sale and purchase agreement duly notarized. Once the transcription is done, the Registrar will give the "Duplicata" to the new buyer with his name written as the new owner of the property. According to Article I of the Decree No. 21 020/2012-VPDAT/SG/DGSF of the Deputy Prime Minister in charge of Development and Planning, effective August 2, 2012, the cost is 2% + fixed fee of 15,000 MGA. Takes place simultaneously with previous procedure. Page 24 Doing Business 2020 Madagascar Details – Registering Property in Madagascar – Measure of Quality Answer Score Quality of the land administration index (0-30) 8.0 Reliability of infrastructure index (0-8) 1.0 Type of land registration system in the economy: Title Registration System What is the institution in charge of immovable property registration? Service des Domaines et de la Conservation Foncière In what format are past and newly issued land records kept at the immovable property registry of the largest Paper 0.0 business city of the economy —in a paper format or in a computerized format (scanned or fully digital)? Is there a comprehensive and functional electronic database for checking for encumbrances (liens, mortgages, No 0.0 restrictions and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Service de Circonscription Topographique In what format are past and newly issued cadastral plans kept at the mapping agency of the largest business Paper 0.0 city of the economy—in a paper format or in a computerized format (scanned or fully digital)? Is there an electronic database for recording boundaries, checking plans and providing cadastral information No 0.0 (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral or mapping agency Separate databases 0.0 kept in a single database, in different but linked databases or in separate databases? Do the immovable property registration agency and cadastral or mapping agency use the same identification Yes 1.0 number for properties? Transparency of information index (0–6) 4.0 Who is able to obtain information on land ownership at the agency in charge of immovable property registration Anyone who pays the 1.0 in the largest business city? official fee Is the list of documents that are required to complete any type of property transaction made publicly available– Yes, on public boards 0.5 and if so, how? Link for online access: Is the applicable fee schedule for any type of property transaction at the agency in charge of immovable property Yes, on public boards 0.5 registration in the largest business city made publicly available–and if so, how? Link for online access: Does the agency in charge of immovable property registration agency formally commit to deliver a legally Yes, on public boards 0.5 binding document that proves property ownership within a specific timeframe –and if so, how does it communicate the service standard? Link for online access: Is there a specific and independent mechanism for filing complaints about a problem that occurred at the agency No 0.0 in charge of immovable property registration? Contact information: Are there publicly available official statistics tracking the number of transactions at the immovable property No 0.0 registration agency? Number of property transfers in the largest business city in 2018: Who is able to consult maps of land plots in the largest business city? Anyone who pays the 0.5 official fee Is the applicable fee schedule for accessing maps of land plots made publicly available—and if so, how? Yes, on public boards 0.5 Link for online access: Does the cadastral/mapping agency formally specifies the timeframe to deliver an updated cadastral plan—and Yes, on public boards 0.5 if so, how does it communicate the service standard? Page 25 Doing Business 2020 Madagascar Link for online access: Is there a specific and independent mechanism for filing complaints about a problem that occurred at the No 0.0 cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 0.0 Are all privately held land plots in the largest business city formally registered at the immovable property No 0.0 registry? Are all privately held land plots in the economy formally registered at the immovable property registry? No 0.0 Are all privately held land plots in the largest business city mapped? No 0.0 Are all privately held land plots in the economy mapped? No 0.0 Land dispute resolution index (0–8) 3.0 Does the law require that all property sale transactions be registered at the immovable property registry to make Yes 1.5 them opposable to third parties? Legal basis: Art 9 de l'ordonnance 60-146 du 03 octobre 1960 relative au régime foncier de l'immatriculation, modifiée par la loi 2003-029 du 27 août 2003 Is the system of immovable property registration subject to a state or private guarantee? Yes 0.5 Type of guarantee: State guarantee Legal basis: Art 34 de la Constitution de la Quatrième République de Madagascar; Art 1 de l'ordonnance 60-146 du 03 octobre 1960 relative au régime foncier de l'imatriculation, modifiée par la loi 2003-029 du 27 août 2003. Is there a is a specific, out-of-court compensation mechanism to cover for losses incurred by parties who No 0.0 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Legal basis: Does the legal system require a control of legality of the documents necessary for a property transaction (e.g., Yes 0.5 checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Notary; Does the legal system require verification of the identity of the parties to a property transaction? Yes 0.5 If yes, who is responsible for verifying the identity of the parties? Registrar; Notary; Is there a national database to verify the accuracy of government issued identity documents? No 0.0 What is the Court of first instance in charge of a case involving a standard land dispute between two local Land section of the businesses over tenure rights for a property worth 50 times gross national income (GNI) per capita and located First Instance in the largest business city? Tribunal of Antananarivo How long does it take on average to obtain a decision from the first-instance court for such a case (without More than 3 years 0.0 appeal)? Are there publicly available statistics on the number of land disputes at the economy level in the first instance No 0.0 court? Number of land disputes in the economy in 2018: Page 26 Doing Business 2020 Madagascar Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 27 Doing Business 2020 Madagascar Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of indicators. The depth of credit • Rights of borrowers and lenders through collateral laws (0-10) information index measures rules and practices affecting the coverage, scope and accessibility of • Protection of secured creditors’ rights through bankruptcy laws credit information available through a credit registry or a credit bureau. The strength of legal rights (0-2) index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined whether a unitary Depth of credit information index (0–8) secured transactions system exists. Then two case scenarios, case A and case B, are used to • Scope and accessibility of credit information distributed by determine how a nonpossessory security interest is created, publicized and enforced according to credit bureaus and credit registries (0-8) the law. Special emphasis is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a Credit bureau coverage (% of adults) secured lender, BizBank. • Number of individuals and firms listed in largest credit bureau In some economies the legal framework for secured transactions will allow only case A or case B as a percentage of adult population (not both) to apply. Both cases examine the same set of legal provisions relating to the use of movable collateral. Credit registry coverage (% of adults) • Number of individuals and firms listed in credit registry as a Several assumptions about the secured borrower (ABC) and lender (BizBank) are used: percentage of adult population - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. Page 28 Doing Business 2020 Madagascar Getting Credit - Madagascar Indicator Madagascar Sub-Saharan OECD high Best Regulatory Africa income Performance Strength of legal rights index (0-12) 2 5.1 6.1 12 (5 Economies) Depth of credit information index (0-8) 6 3.9 6.8 8 (53 Economies) Credit registry coverage (% of adults) 10.4 8.3 24.4 100.0 (2 Economies) Credit bureau coverage (% of adults) 0.0 11.0 66.7 100.0 (14 Economies) Figure – Getting Credit in Madagascar – Score 40.0 Score - Getting Credit Figure – Getting Credit in Madagascar and comparator economies – Ranking and Score DB 2020 Getting Credit Score 0 100 95.0: Kenya (Rank: 4) 65.0: Mauritius (Rank: 67) 45.2: Regional Average (Sub-Saharan Africa) 40.0: Comoros (Rank: 132) 40.0: Madagascar (Rank: 132) 25.0: Mozambique (Rank: 165) Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Page 29 Doing Business 2020 Madagascar Figure – Legal Rights in Madagascar and comparator economies 12 11 10 Index Score 8 6 6 6 5.1 4 2 2 1 0 Madagascar Comoros Kenya Mauritius Mozambique Sub-Saharan Africa Page 30 Doing Business 2020 Madagascar Details – Legal Rights in Madagascar Strength of legal rights index (0-12) 2 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents No to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description No of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of Yes collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and replacements of the No original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; Yes and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an No electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? No Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any interested third No party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency procedure? No Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? No Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law No protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell No the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Madagascar and comparator economies 9 8 8 7 7 6 Index Score 6 5 4 3.9 4 3 2 2 1 0 Madagascar Comoros Kenya Mauritius Mozambique Sub-Saharan Africa Page 31 Doing Business 2020 Madagascar Details – Credit Information in Madagascar Depth of credit information index (0-8) Credit bureau Credit registry Score Are data on both firms and individuals distributed? No Yes 1 Are both positive and negative credit data distributed? No Yes 1 Are data from retailers or utility companies - in addition to data from banks and No No 0 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries No Yes 1 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? No Yes 1 By law, do borrowers have the right to access their data in the credit bureau or No Yes 1 credit registry? Can banks and financial institutions access borrowers’ credit information online No Yes 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help No No 0 banks and financial institutions assess the creditworthiness of borrowers? Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 0 1,503,624 Number of firms 0 33,938 Total 0 1,537,562 Percentage of adult population 0.0 10.4 Page 32 Doing Business 2020 Madagascar Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions • Extent of disclosure index (0–10): Disclosure, review, and To make the data comparable across economies, a case study uses several assumptions about approval requirements for related-party transactions the business and the transaction. • Extent of director liability index (0–10): Ability of minority shareholders to sue and hold interested directors liable for The business (Buyer): prejudicial related-party transactions; Available legal - Is a publicly traded corporation listed on the economy’s most important stock exchange. remedies (damages, disgorgement of profits, disqualification - Has a board of directors and a chief executive officer (CEO) who may legally act on behalf of from managerial position(s) for one year or more, rescission of Buyer where permitted, even if this is not specifically required by law. the transaction) - Has a supervisory board in economies with a two-tier board system on which Mr. James • Ease of shareholder suits index (0–10): Access to internal appointed 60% of the shareholder-elected members. corporate documents; Evidence obtainable during trial and - Has not adopted bylaws or articles of association that go beyond the minimum requirements. allocation of legal expenses Does not follow codes, principles, recommendations or guidelines that are not mandatory. - Is a manufacturing company with its own distribution network. • Extent of conflict of interest regulation index (0-30): Sum of the extent of disclosure, extent of director liability and ease of The transaction involves the following details: shareholder suits indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two directors to • Extent of shareholder rights index (0-6): Shareholders’ rights Buyer’s five-member board. and role in major corporate decisions - Mr. James also owns 90% of Seller, a company that operates a chain of retail hardware stores. Seller recently closed a large number of its stores. • Extent of ownership and control index (0-7): Governance - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Buyer’s safeguards protecting shareholders from undue board control distribution of its food products, a proposal to which Buyer agrees. The price is equal to 10% of and entrenchment Buyer’s assets and is higher than the market value. • Extent of corporate transparency index (0-7): Corporate - The proposed transaction is part of the company’s principal activity and is not outside the transparency on ownership stakes, compensation, audits and authority of the company. financial prospects - Buyer enters into the transaction. All required approvals are obtained, and all required disclosures • Extent of shareholder governance index (0–20): Sum of the made—that is, the transaction was not entered into fraudulently. extent of shareholders rights, extent of ownership and control - The transaction causes damages to Buyer. Shareholders sue Mr. James and the executives and and extent of corporate transparency indices directors that approved the transaction. • Strength of minority investor protection index (0–50): Sum of the extent of conflict of interest regulation and extent of shareholder governance indices Page 33 Doing Business 2020 Madagascar Protecting Minority Investors - Madagascar Stock exchange information Stock exchange Stock exchange URL Listed firms with equity securities 0 City Covered Antananarivo Indicator Madagascar Sub-Saharan OECD high Best Regulatory Africa income Performance Extent of disclosure index (0-10) 7.0 5.5 6.5 10 (13 Economies) Extent of director liability index (0-10) 6.0 3.5 5.3 10 (3 Economies) Ease of shareholder suits index (0-10) 5.0 5.5 7.3 10 (Djibouti) Extent of shareholder rights index (0-6) 0.0 1.8 4.7 6 (19 Economies) Extent of ownership and control index (0-7) 0.0 1.4 4.5 7 (9 Economies) Extent of corporate transparency index (0-7) 0.0 1.5 5.7 7 (13 Economies) Figure – Protecting Minority in Madagascar – Score 36.0 Score - Protecting Minority Investors Figure – Protecting Minority Investors in Madagascar and comparator economies – Ranking and Score DB 2020 Protecting Minority Investors Score 0 100 92.0: Kenya (Rank: 1) 78.0: Mauritius (Rank: 18) 38.5: Regional Average (Sub-Saharan Africa) 36.0: Madagascar (Rank: 140) 32.0: Mozambique (Rank: 147) 26.0: Comoros (Rank: 162) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Page 34 Doing Business 2020 Madagascar Figure – Protecting Minority Investors in Madagascar and comparator economies – Measure of Quality Madagascar 0 6 7 0 5 Comoros 0 1 7 0 5 Kenya 5 10 10 6 6 9 Mauritius 5 8 7 5 5 9 Mozambique 0 4 5 0 7 OECD high income 5.6 5.6 6.6 4.3 4.5 7.4 Sub-Saharan Africa 1.7 3.6 5.6 1.5 1.9 5.6 0 5 10 15 20 25 30 35 40 45 50 Sub-Indicator Score Extent of corporate transparency index (0-7) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-7) Extent of shareholder rights index (0-6) Ease of shareholder suits index (0-10) Page 35 Doing Business 2020 Madagascar Details – Protecting Minority Investors in Madagascar – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-30) Extent of disclosure index (0-10) 7.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) Shareholders 3.0 excluding interested parties Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of all 2.0 material facts Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) No disclosure 0.0 obligation Extent of director liability index (0-10) 6.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the transaction caused to Yes 1.0 Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0-2) Liable if negligent 1.0 Can shareholders hold the other directors liable for the damage the transaction caused to Buyer? (0-2) Liable if negligent 1.0 Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by shareholders? (0-1) Yes 1.0 Must Mr. James repay profits made from the transaction upon a successful claim by shareholders? (0-1) No 0.0 Is Mr. James disqualified upon a successful claim by shareholders? (0-1) Yes 1.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Voidable if negligently 1.0 concluded Ease of shareholder suits index (0-10) 5.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the transaction documents? Yes 1.0 (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0 document Can the plaintiff request categories of documents from the defendant without identifying specific ones? (0-1) No 0.0 Can the plaintiff directly question the defendant and witnesses at trial? (0-2) No 0.0 Is the level of proof required for civil suits lower than that of criminal cases? (0-1) No 0.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-20) Extent of shareholder rights index (0-6) 0.0 Does the sale of 51% of Buyer's assets require shareholder approval? No 0.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of shareholders? Yes 1.0 Must Buyer obtain its shareholders’ approval every time it issues new shares? No 0.0 Do shareholders automatically receive preemption rights every time Buyer issues new shares? Yes 1.0 Do shareholders elect and dismiss the external auditor? Yes 1.0 Are changes to the rights of a class of shares only possible if the holders of the affected shares approve? Yes 1.0 Extent of ownership and control index (0-7) 0.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of directors? No 0.0 Page 36 Doing Business 2020 Madagascar Must the board of directors include independent and nonexecutive board members? No 0.0 Can shareholders remove members of the board of directors without cause before the end of their term? Yes 1.0 Must the board of directors include a separate audit committee exclusively comprising board members? No 0.0 Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Buyer? No 0.0 Must Buyer pay declared dividends within a maximum period set by law? Yes 1.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? Yes 1.0 Extent of corporate transparency index (0-7) 0.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? No 0.0 Must Buyer disclose information about board members’ primary employment and directorships in other No 0.0 companies? Must Buyer disclose the compensation of individual managers? No 0.0 Must a detailed notice of general meeting be sent 21 days before the meeting? No 0.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting agenda? No 0.0 Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Page 37 Doing Business 2020 Madagascar Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2019 covering for the Paying Taxes indicator calendar year 2018 (January 1, 2018 – December 31, 2018). See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in 2018 (number Using a case scenario, Doing Business records taxes and mandatory contributions a medium size per year adjusted for electronic and joint filing and payment) company must pay in a year, and measures the administrative burden of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of • Total number of taxes and contributions paid or withheld, filing and payments, time taken to comply with tax laws, time taken to comply with the including consumption taxes (value added tax, sales tax or requirements of postfiling processes and time waiting. goods and service tax) • Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: - TaxpayerCo is a medium-size business that started operations on January 1, 2017. It produces Time required to comply with 3 major taxes (hours per year) ceramic flowerpots and sells them at retail. All taxes and contributions recorded are paid in the • Collecting information, computing tax payable second year of operation (calendar year 2018). Taxes and mandatory contributions are measured at all levels of government. • Preparing separate tax accounting books, if required • Completing tax return, filing with agencies The VAT refund process: - In June 2018, TaxpayerCo. makes a large capital purchase: the value of the machine is 65 times • Arranging payment or withholding income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are equally expensed per month (875 times income Total tax and contribution rate (% of commercial profits) per capita divided by 12). The machinery seller is registered for VAT and excess input VAT incurred • Profit or corporate income tax in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs, sales and the machine and the tax reporting period is every month. Input VAT will exceed Output • Social contributions, labor taxes paid by employer VAT in June 2018. • Property and property transfer taxes The corporate income tax audit process: • Dividend, capital gains, financial transactions taxes - An error in calculation of income tax liability (for example, use of incorrect tax depreciation rates, • Waste collection, vehicle, road and other taxes or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. discovered the error and voluntarily notified the Postfiling Index tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax • Time to comply with VAT refund (hours) liability due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period. • Time to obtain VAT refund (weeks) • Time to comply with a corporate income tax correction (hours) • Time to complete a corporate income tax correction (weeks) Page 38 Doing Business 2020 Madagascar Paying Taxes - Madagascar Indicator Madagascar Sub-Saharan OECD high Best Regulatory Africa income Performance Payments (number per year) 23 36.6 10.3 3 (2 Economies) Time (hours per year) 183 280.6 158.8 49 (3 Economies) Total tax and contribution rate (% of profit) 38.3 47.3 39.9 26.1 (33 Economies) Postfiling index (0-100) 21.8 54.7 86.7 None in 2018/19 Figure – Paying Taxes in Madagascar – Score 66.7 79.3 82.7 21.8 Payments Time Total tax and contribution rate Postfiling index Figure – Paying Taxes in Madagascar and comparator economies – Ranking and Score DB 2020 Paying Taxes Score 0 100 94.0: Mauritius (Rank: 5) 72.8: Kenya (Rank: 94) 64.0: Mozambique (Rank: 127) 62.6: Madagascar (Rank: 134) 57.8: Regional Average (Sub-Saharan Africa) 49.9: Comoros (Rank: 168) Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Page 39 Doing Business 2020 Madagascar Figure – Paying Taxes in Madagascar and comparator economies – Measure of Quality 120 98.3 100 Index score 80 62.0 57.3 54.7 60 50.2 40 21.8 20 0 Madagascar Comoros Kenya Mauritius Mozambique Sub-Saharan Africa Page 40 Doing Business 2020 Madagascar Details – Paying Taxes in Madagascar Tax or Payments Notes on Time (hours) Statutory tax Tax base Total tax and Notes on TTCR mandatory (number) Payments rate contribution contribution rate (% of profit) Corporate 1.0 jointly 9.0 20% or 0.5% of taxable profits or 16.56 income tax annual gross turnover revenue + MGA 100,000 Social security 4.0 72.0 13% gross salaries 14.66 contributions Health insurance 4.0 5% gross salaries 5.64 contributions Property tax 1.0 10% rental value 1.48 Tax on interest 0.0 jointly 20% interest income 0.51 included in other taxes Social security 0.0 jointly various rates gross salaries 0.00 contributions on employee Fuel tax 1.0 included in the 0.00 small amount fuel price Value added tax 12.0 jointly 102.0 20% value added and 0.00 (VAT) land sale Totals 23 183 38.3 Page 41 Doing Business 2020 Madagascar Details – Paying Taxes in Madagascar – Tax by Type Taxes by type Answer Profit tax (% of profit) 16.6 Labor tax and contributions (% of profit) 20.3 Other taxes (% of profit) 1.5 Page 42 Doing Business 2020 Madagascar Details – Paying Taxes in Madagascar – Measure of Quality Answer Score Postfiling index (0-100) 21.8 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? No Restrictions on VAT refund process Restricted to international traders and others Percentage of cases exposed to a VAT audit (%) Not applicable Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) No VAT refund per 0.0 case study scenario Time to obtain VAT refund (weeks) No VAT refund per 0.0 case study scenario Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 50% - 74% Time to comply with a corporate income tax correction (hours) 13.5 78.0 Time to complete a corporate income tax correction (weeks) 29.0 9.4 Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 43 Doing Business 2020 Madagascar Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: • Obtaining, preparing and submitting documents during transport, clearance, inspections and port or border handling in Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are recorded as origin economy 22×24=528 hours). If customs clearance takes 7.5 hours, the data are recorded as is. Alternatively, • Obtaining, preparing and submitting documents required by suppose documents are submitted to a customs agency at 8:00a.m., are processed overnight and destination economy and any transit economies can be picked up at 8:00a.m. the next day. The time for customs clearance would be recorded as 24 hours because the actual procedure took 24 hours. • Covers all documents required by law and in practice, including electronic submissions of information Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the Border compliance costs recorded. Costs are reported in U.S. dollars. Contributors are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. • Customs clearance and inspections Contributors are private sector experts in international trade logistics and are informed about • Inspections by other agencies (if applied to more than 20% of exchange rates. shipments) Assumptions of the case study: • Handling and inspections that take place at the economy’s port - For all 190 economies covered by Doing Business, it is assumed a shipment is in a warehouse in or border the largest business city of the exporting economy and travels to a warehouse in the largest business city of the importing economy. Domestic transport - It is assumed each economy imports 15 metric tons of containerized auto parts (HS 8708) from • Loading or unloading of the shipment at the warehouse or its natural import partner—the economy from which it imports the largest value (price times port/border quantity) of auto parts. It is assumed each economy exports the product of its comparative advantage (defined by the largest export value) to its natural export partner—the economy that is • Transport between warehouse and port/border the largest purchaser of this product. Shipment value is assumed to be $50,000. • Traffic delays and road police checks while shipment is en - The mode of transport is the one most widely used for the chosen export or import product and route the trading partner, as is the seaport or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 44 Doing Business 2020 Madagascar Trading across Borders - Madagascar Indicator Madagascar Sub-Saharan OECD high Best Regulatory Africa income Performance Time to export: Border compliance (hours) 70 97.1 12.7 1 (19 Economies) Cost to export: Border compliance (USD) 868 603.1 136.8 0 (19 Economies) Time to export: Documentary compliance (hours) 49 71.9 2.3 1 (26 Economies) Cost to export: Documentary compliance (USD) 117 172.5 33.4 0 (20 Economies) Time to import: Border compliance (hours) 99 126.2 8.5 1 (25 Economies) Cost to import: Border compliance (USD) 595 690.6 98.1 0 (28 Economies) Time to import: Documentary compliance (hours) 58 96.1 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 150 287.2 23.5 0 (30 Economies) Figure – Trading across Borders in Madagascar – Score 56.7 18.1 71.7 70.8 65.0 50.4 76.3 78.6 Time Cost Time Cost Time Cost Time Cost to to to to to to to to export: export: export: export: import: import: import: import: Border Border Documentary Documentary Border Border Documentary Documentary compliance compliance compliance compliance compliance compliance compliance compliance Figure – Trading across Borders in Madagascar and comparator economies – Ranking and Score DB 2020 Trading Across Borders Score 0 100 81.0: Mauritius (Rank: 72) 73.8: Mozambique (Rank: 94) 67.4: Kenya (Rank: 117) 66.9: Comoros (Rank: 120) 61.0: Madagascar (Rank: 140) 53.6: Regional Average (Sub-Saharan Africa) Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Page 45 Doing Business 2020 Madagascar Figure – Trading across Borders in Madagascar – Time and Cost Time (hours) Cost (USD) 120 1000 868 99 100 800 Time (hours) Cost (USD) 80 70 595 600 58 60 49 400 40 117 150 200 20 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 46 Doing Business 2020 Madagascar Details – Trading across Borders in Madagascar Characteristics Export Import Product HS 61 : Articles of apparel and clothing accessories, HS 8708: Parts and accessories of motor vehicles knitted or crocheted Trade partner Germany China Border Toamasina port Toamasina port Distance (km) 356 356 Domestic transport time (hours) 13 14 Domestic transport cost (USD) 610 680 Details – Trading across Borders in Madagascar – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required by 12.5 479.5 customs authorities Export: Clearance and inspections required by 0.0 0.0 agencies other than customs Export: Port or border handling 69.8 388.2 Import: Clearance and inspections required by 14.7 160.0 customs authorities Import: Clearance and inspections required by 48.0 140.0 agencies other than customs Import: Port or border handling 98.7 295.0 Page 47 Doing Business 2020 Madagascar Details – Trading across Borders in Madagascar – Trade Documents Export Import Bill of lading Bill of lading Certificate of origin Certificate of origin Commercial invoice Commercial invoice Customs Export Declaration Customs import declaration Inspection report Electronic cargo tracking note (BESC) Packing list Gate Pass SOLAS certificate Import permit Packing list SOLAS certificate Page 48 Doing Business 2020 Madagascar Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the courts The dispute in the case study involves the breach of a sales contract between two domestic (calendar days) businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt enforcement. • Time to file and serve the case • Time for trial and to obtain the judgment To make the data on the time and comparable across economies, several assumptions about the case are used: • Time to enforce the judgment - The dispute concerns a lawful transaction between two businesses (Seller and Buyer), both Cost required to enforce a contract through the courts (% of located in the economy’s largest business city. For 11 economies the data are also collected for the claim value) second largest business city. - The Buyer orders custom-made furniture, then fails to pay alleging that the goods are not of • Average attorney fees adequate quality. • Court costs - The value of the dispute is 200% of the income per capita or the equivalent in local currency of USD 5,000, whichever is greater. • Enforcement costs - The Seller sues the Buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000 whichever is greater. Quality of judicial processes index (0-18) - The Seller requests the pretrial attachment of the defendant’s movable assets to secure the • Court structure and proceedings (-1-5) claim. - The claim is disputed on the merits because of Buyer’s allegation that the quality of the goods • Case management (0-6) was not adequate. • Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. • Alternative dispute resolution (0-3) - The Seller enforces the judgment through a public sale of the Buyer’s movable assets. Page 49 Doing Business 2020 Madagascar Enforcing Contracts - Madagascar Standardized Case Claim value MGA 16,851,060 Court name First Instance Court City Covered Antananarivo Indicator Madagascar Sub-Saharan OECD high Best Regulatory Africa income Performance Time (days) 811 654.9 589.6 120 (Singapore) Cost (% of claim value) 33.6 41.6 21.5 0.1 (Bhutan) Quality of judicial processes index (0-18) 8.0 6.9 11.7 None in 2018/19 Figure – Enforcing Contracts in Madagascar – Score 43.4 62.3 44.4 Time Cost Quality of judicial processes index Figure – Enforcing Contracts in Madagascar and comparator economies – Ranking and Score DB 2020 Enforcing Contracts Score 0 100 72.2: Mauritius (Rank: 20) 58.3: Kenya (Rank: 89) 50.0: Madagascar (Rank: 136) 49.6: Regional Average (Sub-Saharan Africa) 39.8: Mozambique (Rank: 168) 33.0: Comoros (Rank: 179) Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Page 50 Doing Business 2020 Madagascar Figure – Enforcing Contracts in Madagascar – Time and Cost Time (days) Cost (% of claim value) 1000 950 100 89.4 Cost (% of claim value) 811 800 80 654.9 Time (days) 589.6 600 53.3 60 506 490 465 41.8 41.6 400 33.6 40 25.0 21.5 200 20 0 0 Comoros Kenya Madagascar Mauritius Mozambique OECD Sub-Saharan high Africa income Page 51 Doing Business 2020 Madagascar Figure – Enforcing Contracts in Madagascar and comparator economies – Measure of Quality Madagascar 2.5 2 0 3.5 Comoros 2.5 0 3 Kenya 2 2 0.5 4.5 Mauritius 2.5 3 3 5 Mozambique 2.5 2 0 4 OECD high income 2.5 3.2 2.4 3.6 Sub-Saharan Africa 2.2 1.3 0.3 3.2 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Madagascar Indicator Time (days) 811 Filing and service 21 Trial and judgment 640 Enforcement of judgment 150 Cost (% of claim value) 33.6 Attorney fees 11 Court fees 7 Enforcement fees 15.6 Quality of judicial processes index (0-18) 8.0 Court structure and proceedings (-1-5) 3.5 Case management (0-6) 2.0 Court automation (0-4) 0.0 Alternative dispute resolution (0-3) 2.5 Page 52 Doing Business 2020 Madagascar Details – Enforcing Contracts in Madagascar – Measure of Quality Answer Score Quality of judicial processes index (0-18) 8.0 Court structure and proceedings (-1-5) 3.5 1. Is there a court or division of a court dedicated solely to hearing commercial cases? Yes 1.5 2. Small claims court 0.0 2.a. Is there a small claims court or a fast-track procedure for small claims? No 2.b. If yes, is self-representation allowed? n.a. 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, automatic 1.0 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 2.0 1. Time standards 0.0 1.a. Are there laws setting overall time standards for key court events in a civil case? Yes 1.b. If yes, are the time standards set for at least three court events? No 1.c. Are these time standards respected in more than 50% of cases? Yes 2. Adjournments 0.0 2.a. Does the law regulate the maximum number of adjournments that can be granted? No 2.b. Are adjournments limited to unforeseen and exceptional circumstances? No 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? n.a. 3. Can two of the following four reports be generated about the competent court: (i) time to disposition report; (ii) Yes 1.0 clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the competent court? No 0.0 5. Are there any electronic case management tools in place within the competent court for use by judges? Yes 1.0 6. Are there any electronic case management tools in place within the competent court for use by lawyers? No 0.0 Court automation (0-4) 0.0 1. Can the initial complaint be filed electronically through a dedicated platform within the competent court? No 0.0 2. Is it possible to carry out service of process electronically for claims filed before the competent court? No 0.0 3. Can court fees be paid electronically within the competent court? No 0.0 4. Publication of judgments 0.0 4.a Are judgments rendered in commercial cases at all levels made available to the general public No through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme court level made No available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 2.5 1. Arbitration 1.5 1.a. Is domestic commercial arbitration governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public order or public policy— No that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes Page 53 Doing Business 2020 Madagascar 2. Mediation/Conciliation 1.0 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all their aspects (for example, definition, aim and scope of application, desig 2.c. Are there financial incentives for parties to attempt mediation or conciliation (i.e., if mediation or No conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 54 Doing Business 2020 Madagascar Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used: • Measured in calendar years • Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties. Cost required to recover debt (% of debtor’s estate) - The value of the hotel is 100% of the income per capita or the equivalent in local currency of USD 200,000, whichever is greater. • Measured as percentage of estate value - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s real estate. • Court fees The hotel cannot pay back the loan, but makes enough money to operate otherwise. • Fees of insolvency administrators In addition, Doing Business evaluates the quality of legal framework applicable to judicial • Lawyers’ fees liquidation and reorganization proceedings and the extent to which best insolvency practices have • Assessors’ and auctioneers’ fees been implemented in each economy covered. • Other related fees Outcome • Whether business continues operating as a going concern or business assets are sold piecemeal Recovery rate for creditors • Measures the cents on the dollar recovered by secured creditors • Outcome for the business (survival or not) determines the maximum value that can be recovered • Official costs of the insolvency proceedings are deducted • Depreciation of furniture is taken into account • Present value of debt recovered Strength of insolvency framework index (0- 16) • Sum of the scores of four component indices: • Commencement of proceedings index (0-3) • Management of debtor’s assets index (0-6) • Reorganization proceedings index (0-3) • Creditor participation index (0-4) Page 55 Doing Business 2020 Madagascar Resolving Insolvency - Madagascar Indicator Madagascar Sub-Saharan OECD high Best Regulatory Africa income Performance Recovery rate (cents on the dollar) 12.4 20.5 70.2 92.9 (Norway) Time (years) 3.0 2.9 1.7 0.4 (Ireland) Cost (% of estate) 8.5 22.8 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going concern) 0 .. .. .. Strength of insolvency framework index (0-16) 9.0 6.5 11.9 None in 2018/19 Figure – Resolving Insolvency in Madagascar – Score 13.3 56.3 Recovery rate Strength of insolvency framework index Figure – Resolving Insolvency in Madagascar and comparator economies – Ranking and Score DB 2020 Resolving Insolvency Score 0 100 73.8: Mauritius (Rank: 28) 62.4: Kenya (Rank: 50) 47.8: Mozambique (Rank: 86) 34.8: Madagascar (Rank: 135) 31.3: Regional Average (Sub-Saharan Africa) 0.0: Comoros (Rank: 168) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Page 56 Doing Business 2020 Madagascar Figure – Resolving Insolvency in Madagascar – Time and Cost Time (years) Cost (% of estate) 5 22.8 25 4.5 22.0 20.5 Cost (% of estate) 4 20 Time (years) 3.0 14.5 2.9 3 15 2 8.5 1.7 1.7 9.3 10 1.5 1 5 0 0 No Kenya Madagascar Mauritius Mozambique OECD Sub-Saharan Practice high Africa Comoros income Page 57 Doing Business 2020 Madagascar Figure – Resolving Insolvency in Madagascar and comparator economies – Measure of Quality Madagascar 5.5 2 1 0.5 Comoros 5.5 2 1 0.5 Kenya 5.5 3 3 3 Mauritius 5.5 3 3 0.5 Mozambique 4 2.5 2 1.5 OECD high income 5.3 2.8 2.1 1.9 Sub-Saharan Africa 4.1 2.3 1 0.5 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Madagascar and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 80 70 67.4 60 50 40 31.8 30.8 30 20.5 20 12.4 10 0 No Practice Madagascar Comoros Kenya Mauritius Mozambique Sub-Saharan Africa Page 58 Doing Business 2020 Madagascar Details – Resolving Insolvency in Madagascar Indicator Answer Score Proceeding foreclosure Mirage cannot repay the money owed to BizBank, so the bank will start foreclosure proceedings at the Commercial Court under articles 490 and following of the Code of Civil Procedure. At the end of the procedure, the hotel building will be sold and BizBank will obtain payment. Outcome piecemeal sale Foreclosure is the most common procedure in Madagascar. At the end of the procedure, the hotel will stop operating and the assets will be sold piecemeal. Time (in years) 3.0 The foreclosure proceedings will take approximately 36 months in Antananarivo. The procedure can take 24 months until the judgment and the seizure of the building if there are appeals. Then, the sale of the asset will take approximately 12 months because it is difficult to find a buyer. Cost (% of estate) 8.5 Foreclosure proceedings will cost approximately 8.5% of the value of Mirage. The main cost components are lawyer fees (1%), adjudication (4%) and transfer fees (2%), court fees (1%), as well as other fees such as notary fees to write the specifications, etc. (0.5%). Recovery rate 12.4 (cents on the dollar) Page 59 Doing Business 2020 Madagascar Details – Resolving Insolvency in Madagascar – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 9.0 Commencement of proceedings index (0-3) 2.0 What procedures are available to a DEBTOR when commencing insolvency proceedings? (c) Debtor may file for 0.5 reorganization only Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a creditor 0.5 may file for liquidation only What basis for commencement of the insolvency proceedings is allowed under the insolvency framework? (a) (a) Debtor is 1.0 Debtor is generally unable to pay its debts as they mature (b) The value of debtor's liabilities exceeds the value generally unable to of its assets pay its debts as they mature Management of debtor's assets index (0-6) 5.5 Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the Yes 1.0 debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome contracts? Yes 1.0 Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after commencement of Yes 1.0 insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (a) Yes over all pre- 0.5 commencement creditors, secured or unsecured Reorganization proceedings index (0-3) 0.5 Which creditors vote on the proposed reorganization plan? (a) All creditors 0.5 Does the insolvency framework require that dissenting creditors in reorganization receive at least as much as No 0.0 what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, does each class vote No 0.0 separately and are creditors in the same class treated equally? Creditor participation index (0-4) 1.0 Does the insolvency framework require approval by the creditors for selection or appointment of the insolvency No 0.0 representative? Does the insolvency framework require approval by the creditors for sale of substantial assets of the debtor? No 0.0 Does the insolvency framework provide that a creditor has the right to request information from the insolvency No 0.0 representative? Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting Yes 1.0 creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 60 Doing Business 2020 Madagascar Employing Workers Doing Business presents detailed data for the employing workers indicators on the Doing Business website (http://www.doingbusiness.org). The study does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions about the worker and the (i) whether fixed-term contracts are prohibited for permanent business are used. tasks; (ii) maximum cumulative duration of fixed-term contracts; (iii) length of the maximum probationary period; (iv) minimum The worker: wage;(v) ratio of minimum wage to the average value added per - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. worker. - Is a full-time employee. - Is not a member of the labor union, unless membership is mandatory. Working hours (i) maximum number of working days allowed per week; (ii) The business: premiums for work: at night, on a weekly rest day and overtime; - Is a limited liability company (or the equivalent in the economy). (iii) whether there are restrictions on work at night, work on a - Operates a supermarket or grocery store in the economy’s largest business city. For 11 weekly rest day and for overtime work; (iv) length of paid annual economies the data are also collected for the second largest business city. leave. - Has 60 employees. - Is subject to collective bargaining agreements if such agreements cover more than 50% of the Redundancy rules food retail sector and they apply even to firms that are not party to them. (i) whether redundancy can be basis for terminating workers; (ii) - Abides by every law and regulation but does not grant workers more benefits than those whether employer needs to notify and/or get approval from third mandated by law, regulation or (if applicable) collective bargaining agreements. party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether the law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments, and (iii) penalties due when terminating a redundant worker. Data on the availability of unemployment protection for a worker with one year of employment is also collected. Page 61 Doing Business 2020 Madagascar Employing Workers - Madagascar Details – Employing Workers in Madagascar Answer Hiring Fixed-term contracts prohibited for permanent tasks? Yes Maximum length of a single fixed-term contract (months) 24.0 Maximum length of fixed-term contracts, including renewals (months) 24.0 Minimum wage applicable to the worker assumed in the case study (US$/month) 54.4 Ratio of minimum wage to value added per worker 0.8 Maximum length of probationary period (months) 3.0 Working hours Standard workday 8.0 Maximum number of working days per week 6.0 Premium for night work (% of hourly pay) 30.0 Premium for work on weekly rest day (% of hourly pay) 40.0 Premium for overtime work (% of hourly pay) 30.0 Restrictions on night work? No Restrictions on weekly holiday? No Restrictions on overtime work? No Paid annual leave for a worker with 1 year of tenure (working days) 24.0 Paid annual leave for a worker with 5 years of tenure (working days) 24.0 Paid annual leave for a worker with 10 years of tenure (working days) 24.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 24.0 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? No Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? Yes Third-party approval if nine workers are dismissed? Yes Retraining or reassignment obligation before redundancy? No Priority rules for redundancies? Yes Priority rules for reemployment? Yes Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 4.3 Notice period for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 6.5 Notice period for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 6.5 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 5.8 Severance pay for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 1.7 Severance pay for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 8.3 Page 62 Doing Business 2020 Madagascar Severance pay for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 16.7 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 8.9 Unemployment protection after one year of employment? No Page 63 Doing Business 2020 Madagascar Business Reforms in Madagascar From May 2, 2018 to May 1, 2019, 115 economies implemented 294 business regulatory reforms across the 10 areas measured by Doing Business. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. =Doing Business reform making it easier to do business. = Change making it more difficult to do business. DB2020 Enforcing Contracts: Madagascar made enforcing contracts easier by publishing performance measurement and progress reports for the commercial court. DB2019 Dealing with Construction Permits: Madagascar strengthened construction quality control by appointing an independent architect in the commission tasked with reviewing building permit applications and reduced the cost to obtain a building permit. Getting Credit: Madagascar improved access to credit information through the introduction of a new law governing the establishment, licensing and functioning of credit bureaus. Enforcing Contracts: Madagascar made enforcing contracts easier by introducing an automated system that randomly assigns cases to judges and that allows judges to manage cases electronically. DB2018 Starting a Business: Madagascar made starting a business easier by publishing the notice of company incorporation online free of charge and by allowing the payment of registration fees directly at the one-stop shop. Getting Credit: Madagascar improved access to credit information by increasing the coverage of the credit registry. DB2017 Starting a Business: Madagascar made starting a business easier by reducing the number of procedures needed to register a company. Dealing with Construction Permits: Madagascar increased the transparency of dealing with construction permits by publishing construction-related regulations online and free of charge. Trading across Borders: Madagascar made trading across borders easier by simplifying and streamlining customs procedures and implementing an electronic data interchange system, which reduced the time for preparation and submission of trade documents for both exporting and importing. DB2016 Starting a Business: Madagascar made starting a business more difficult by requiring a bank-certified check to pay the tax authority. Registering Property: Madagascar made transferring property less costly by lowering the property transfer tax. Getting Credit: Madagascar improved access to credit by broadening the range of assets that can be used as collateral (including future assets), by allowing a general description of assets granted as collateral and by allowing a general description of debts and obligations. Protecting Minority Investors: Madagascar strengthened minority investor protections by requiring that directors with a conflict of interest fully disclose the nature of their interest to the board of directors. Trading across Borders: Madagascar reduced the time for border compliance for both exporting and importing by upgrading port infrastructure—and also reduced the time for documentary compliance for importing. DB2015 Dealing with Construction Permits: Madagascar made dealing with construction permits easier by reducing the time needed to obtain a building permit. DB2014 Starting a Business: Madagascar made starting a business more difficult by increasing the cost to register with the National Center for Statistics. Paying Taxes: Madagascar made paying taxes easier and less costly for companies by training taxpayers in the use of the online system for value added tax declarations and by reducing the corporate income tax rate. Trading across Borders: Madagascar made trading across borders easier by rolling out an online platform linking trade operators with government agencies involved in the trade process and customs clearance. DB2013 Starting a Business: Madagascar made starting a business easier by allowing the one-stop shop to deal with the publication of the notice of incorporation. Page 64 Doing Business 2020 Madagascar DB2012 Starting a Business: Madagascar eased the process of starting a business by eliminating the minimum capital requirement, but also made it more difficult by introducing the requirement of obtaining a tax identification number. Getting Credit: Madagascar improved its credit information system by eliminating the minimum threshold for loans included in the database and making it mandatory for banks to share credit information with the credit bureau. DB2011 Paying Taxes: Madagascar continued to reduce corporate tax rates. Trading across Borders: Madagascar improved communication and coordination between customs and the terminal port operators through its single-window system (GASYNET), reducing both the time and the cost to export and import. DB2010 Starting a Business: Madagascar made starting a business easier by streamlining procedures at the one-stop shop and eliminating the stamp duty and the minimum capital requirement. Registering Property: Madagascar made transferring property more costly by making the use of a notary mandatory for property transactions. DB2009 Starting a Business: Madagascar made business start-up faster and less costly by abolishing the professional tax and introducing online publication of the incorporation notice. Registering Property: Madagascar made registering property easier by reorganizing its land registry and adding more staff, computers and offices—and made it less costly by abolishing 2 taxes and removing the mandatory stamp duty on documents. Paying Taxes: Madagascar made paying taxes easier and less costly for companies by abolishing the capital gains tax and several other taxes and reducing the corporate income tax rate—though it also increased the value added tax rate. Trading across Borders: Madagascar reduced the time for exporting and importing by implementing an electronic data interchange system, a single-window system, risk-based inspections and improvements in port infrastructure. DB2008 Starting a Business: Madagascar reduced the time required for business registration by streamlining operations at the one-stop shop. Trading across Borders: Madagascar made trading across borders easier by implementing an electronic data interchange system, improving port infrastructure and streamlining documentation requirements. Page 65 Doing Business 2020 Madagascar Page 66