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24 April 2018

Madagascar's minimum wage increase impacts social contributions

In Madagascar, the minimum wage is increased annually by Decree. On 27 March 2018, the Government of Madagascar adopted the Decree No. 2018 – 260 (the Decree) stating the new minimum wage for employment and seniority by occupational category applicable for 2018. The effectivity date of the new minimum wage cap is 1 March 2018 (Art.1 of the Decree).

Madagascar's minimum wage increased by 8% on average compared to 2017. Adjustments must be performed for the period starting March 2018.

The minimum wage is used as a basis for the calculation of the monthly salary cap subject to social contributions to be paid to the "CNAPS" (Caisse Nationale de Prévoyance Sociale), the national social security fund in Madagascar. Therefore, an increase of the minimum wage also implies an increase of the social contributions cap.

The monthly salary cap subject to social contributions is equal to the new minimum wage multiplied by eight. The monthly social contributions caps applicable for CNAPS and for some intercompany medical services are calculated on the basis of the monthly salary caps multiplied by the social contributions rate. CNAPS' social contribution caps are presented in the following table for employers and employees:

Sector

Minimum wage 2018 in MGA
(a)

Amount of monthly salary cap subject to social contributions in MGA
(b) = (a) x 8

Social contributions rate
(c)

Social contributions cap in MGA
(d) = (b) x (c)

Non-agricultural

168,019

1,344,152

Employer (13%)

174,739.76

Employee (1%)

13,441.52

Agricultural

170,422

1,363,376

Employer (8%)

177,238.88

Employee (1%)

13,633.76

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CONTACTS

For additional information with respect to this Alert, please contact the following:

Ernst & Young SARL, Antananarivo

  • Solofo Rakotoseheno
    solofo.rakotoseheno@mu.ey.com
  • Mialinirina Rasamoelina
    mialinirina.rasamoelina@mu.ey.com

Ernst & Young Advisory Services (Pty) Ltd., Africa ITS Leader, Johannesburg

  • Marius Leivestad
    marius.leivestad@za.ey.com

Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London

  • Rendani Neluvhalani
    rendani.mabel.neluvhalani@uk.ey.com
  • Byron Thomas
    bthomas4@uk.ey.com

Ernst & Young LLP, Pan African Tax Desk, New York

  • Silke Mattern
    silke.mattern@ey.com
  • Dele A. Olaogun
    dele.olaogun@ey.com
  • Jacob Shipalane
    jacob.shipalane1@ey.com

Ernst & Young LLP, Pan African Tax Desk, Houston

  • Elvis Ngwa
    elvis.ngwa@ey.com

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ATTACHMENT

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Document ID: 2018-5567

 
 

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