Madagascar Enhances its Flat Tax

To improve the investment climate in the African island nation of Madagascar, located off the southeast coast of the African continent, the government’s 2010 budget reduced the flat-rate personal income tax from 24% to 23%, with a personal allowance of MGA 250,000 (US$1 = Malagasy Ariary 1,942), about $125 per month, or $1,500 a year.  Corporation tax was incorporated into the income tax code at the same 23% rate.

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Andorra Implements Non-Residents 10% Flat Tax

Andorra historically had no income or capital gains taxes on residents and non-residents.  In 2007, to slow property inflation, the government levied a 15% capital gains tax.

In late December 2010, Andorra published the Taxation of Non-Residents Act, 2010.  It subjects non-resident companies and individuals to a 10% flat tax on local-source profits and income, minus permitted expenses and deductions.  It plans to reduce capital gains tax on property from 15% to 10% in the near future.

The government plans on introducing a value-added tax to replace the existing consumption tax.  Following the imposition of a 5% VAT, the government next intends to apply the 10% flat tax to resident companies and individuals.

Malta Implements Non-Resident 15% Flat Tax

The publication of Legal Notice 106 - Highly Qualified Persons Rules - implemented a 15% flat tax for non-residents, effective January 1, 2010 (assessed in 2011) in specific eligible offices of employment in Malta for an initial period of five years.

The regulation lists categories of eligible positions and qualifying employment conditions.  The 15% flat rate does not apply to resident Maltese.

To benefit from the 15% flat rate, a qualified employee must earn income of at least €75,000, which is to be adjusted annually in line with the Retail Price Index.  A particular attractive feature of the scheme is that excess income over €5,000,000 is free of tax.

The Flat Tax is Alive and Well

Today, April 18, 2011, is the federal income tax filing deadline for 2011.  Sad to say, there is no simple postcard-size flat tax in our immediate future.  A flat tax is not in the cards anytime soon in North America or old Europe.

Elsewhere the flat tax thrives.  The IMF uses every tool at its disposal to persuade countries to abandon the flat tax to close budget deficits or improve their definition of fairness.  These entreaties continue to be rejected.  Commentators who smell any weakening of commitment to the flat tax are quick to rush into print, wrongly in every case, to proclaim the beginning of the movement to dismantle the flat tax.

I hope to report this year new entrants into the flat tax club.  Stay tuned!