Why Register a Company in Madagascar?

Madagascar is a large market by population, with more than 30 million people, and a French-speaking workforce that has made it an offshore base for customer support and back-office work serving European clients. The textile and apparel industry employs more than 400,000 people, although it is exposed to United States tariffs. Labour is cheap. The new monthly minimum wage of MGA 300,000 is roughly EUR 55 at early 2026 exchange rates, though the formal sector is small, with informal work reported at up to 95% of employment.

The legal framework is open to foreign capital. The 2023 Investment Law promises equal treatment for local and foreign investors and freedom to transfer profits, and there is no economy-wide cap on foreign ownership. Telecoms is limited to 66% foreign ownership, and banking, insurance, mining, oil and gas, medical and pharmaceutical businesses face additional rules that apply to everyone. Madagascar is also outside OHADA, the business law system used across much of francophone Africa, so its own Law 2003-036 on commercial companies governs, in the French civil law tradition.

The risks are real and belong in any decision. Weeks of protests from 25 September 2025 ended with the president leaving and Colonel Michael Randrianirina taking power. The IMF has described the economy as hit by cyclone Gezani and the Middle East war, and the government declared a 15-day energy emergency in April 2026 because of fuel shortages. The US State Department’s 2025 report adds that foreign companies regularly report what appears to be discriminatory licensing and tax scrutiny, particularly on imports and exports.

Choosing the Right Business Structure

Malagasy company law recognises general partnerships, SARLs, joint stock companies (SAs), single-partner variants and branches of foreign companies. Foreign investors mostly choose between an SARL, an SA and a branch, and the decision turns on how much liability you want to keep at parent level, how many investors are involved and whether you will export most of what you produce, which opens a special free zone regime covered in the FAQs.

Limited Liability Company (SARL)

The SARL (société à responsabilité limitée) is the usual vehicle for a foreign-owned subsidiary. It can be formed by several partners or by one (SARLU), and partners are liable only up to their contributions. A 2014 reform, Law 2014-010, removed the legal minimum capital, so the amount is whatever the statutes say. Some websites still quote a minimum of MGA 2 million and should not be relied on. Partners can contribute cash, assets or skills, and any contribution in kind must be valued by an independent commissaire aux apports. Advisers report that banks and visa files look more kindly on capital that matches the business plan, so a token figure can cause problems later.

A SARL needs a manager (gérant). It must also appoint a statutory auditor (commissaire aux comptes) if its capital exceeds MGA 20 million or if it crosses turnover or headcount thresholds set by the implementing decree of 2004, as amended in 2005, one of which is turnover above MGA 200 million.

Joint Stock Company (SA)

The SA (société anonyme) suits larger ventures or those with several investors, and it can have a single shareholder. At least a quarter of cash contributions must be paid in when shares are subscribed, and the rest within three years of registration. A statutory auditor is required from the start. The company can be run by a board of directors or by a single administrateur général. Practitioner sources quote a minimum capital of MGA 10 million, or MGA 2 million with a single shareholder, but since the 2014 reform removed minimum capital for SARLs and the SA position is quoted inconsistently, confirm the figure with EDBM before drafting statutes.

Branch of a Company

A branch (succursale) is a commercial, industrial or service establishment belonging to a company. Under the Law 2003-036 it has no legal personality of its own, so its rights and obligations sit in the parent’s estate and the parent’s assets stand behind them. It is registered in the commercial register like a company. A branch suits a defined contract or a business where the parent’s name matters more than ring-fencing liability, and it is a poor fit where the parent wants distance from local disputes.

Representative Office

EDBM groups branches, liaison offices and agencies of foreign companies together as foreign-law companies (sociétés de droit étranger). A liaison office is the nearest equivalent of a representative office and is generally understood as a non-trading presence. Published detail on what a liaison office may do in Madagascar is thin, so ask EDBM to confirm the permitted scope in writing before relying on one, and do not use it to invoice customers.

Comparison of Common Business Structures in Madagascar

Structure Common purpose Pros Cons
Limited liability company (SARL or SARLU) Most foreign-owned subsidiaries and trading companies No legal minimum capital, set in the statutes; single partner allowed; liability limited to contributions In-kind contributions need a valuation by a commissaire aux apports; an auditor is required above size thresholds
Joint stock company (SA) Larger ventures, several investors or a later share offer Can have a single shareholder; share capital can be paid in stages over up to three years Auditor required from creation; heavier governance; minimum capital is quoted inconsistently and should be confirmed
Branch (succursale) Delivering a defined contract or extending the parent brand No new company to capitalise; parent track record carries over No separate legal personality, so the parent is liable for the branch
Liaison office Non-trading presence while the market is assessed Light footprint under the foreign-law entity category Permitted activities are thinly documented and should be confirmed in writing with EDBM

So how do you choose? The SARL answers most needs, but check the following before deciding.

  • Whether the entity will contract, hire and invoice locally, which points to an SARL or SA rather than a liaison office
  • Whether the parent is comfortable carrying the liabilities of a branch
  • Whether foreign managers will relocate, because the investor visa route needs an existing company with a commercial register extract and a certificate of existence from EDBM
  • Whether at least 95% of output or services will be exported, which makes the free zone regime worth an early conversation

Madagascar's Legal and Regulatory Requirements for Companies

EDBM brings together the commercial registry at the Ministry of Justice (RCS), the tax administration, the national statistics institute INSTAT and roughly ten ministries in one guichet unique. Since 2025 it has run three online platforms, Orinasa for company registration, E-WORK for work permits for foreign employees and MADAZEF for free zone approvals.

Key Business Regulations in Madagascar

  • Law 2003-036 on commercial companies, amended by Law 2014-010 and implemented by decree, together with the 2023 Investment Law that governs incentives, land access and investor protections.
  • Registration in the commercial register (RCS), which gives the company legal existence, plus a tax identification number and a statistical number from INSTAT.
  • Extra rules for telecoms, banking, insurance, mining, oil and gas, medical and pharmaceutical activities, which apply to local and foreign investors alike.
  • Registration with the national social security fund, CNaPS, and with an approved health service organisation before staff start work.
  • Work authorisation from the labour ministry, a long-stay visa and a residence card for any foreign employee or manager.
  • The Labour Code of 2024, Law 2024-014, which replaced the 2003 code, although older implementing decrees stay in force until they are replaced.

Tips for Staying Compliant with Madagascar Laws

  • Sort premises first. The US State Department reports that companies need a physical local address with a signed lease before they attempt to register.
  • Diary the corporate income tax calendar. For a 31 December year end the return and balance are due before 15 May, with provisional instalments every two months in between. Suspending instalments triggers an 80% penalty if final tax turns out higher than the previous year’s.
  • Check payroll against the new minimum wage decree. Employers owe back pay from 1 March 2026, and the labour ministry has announced a campaign to check that the decree is applied.
  • Withhold 10% on payments to foreign service providers and pay it over by the 15th of the following month. It is a final tax that falls on the company making the payment.

Step-by-Step Process to Set Up a Company in Madagascar

The sequence is consistent for an SARL or SA. Most of the friction sits before the filing, in premises, statutes and capital, and after it, in employer and immigration registrations.

1

Reserve Your Company Name With OMPIC

Choose the legal form and lock down premises, since a signed lease is needed before you can register. The lease or a domiciliation certificate also supports the statutes, which must state where the company operates. EDBM can route larger investment projects to the Council of Ministers and the Office of the President for approval, which the US State Department says often causes significant delay, so ask early whether yours will be treated that way.

2

Draft the Statutes and Gather Identity Documents

The statutes are initialled on every page and signed on the last page by all partners. They fix the company name, activity, seat, capital and management. EDBM’s checklist asks for the national ID card of each manager or, for a foreigner, a passport copy. A foreign corporate partner should expect to provide a current extract from its home register. Foreign documents usually need legalising and translating into French, so ask EDBM which format it accepts for your country before you spend time on formalities. Any in-kind contribution needs its valuation report at this stage.

3

Deposit Your Share Capital 

Cash capital is paid into a blocked account at a Malagasy bank, and the bank issues a certificate confirming the deposit, which goes into the file. For an SA a quarter of cash contributions must be paid at subscription. For an SARL the amount is whatever the statutes say, and because banks and visa files look at it, aim for a figure consistent with your plan.

4

Submit your File Through EDBM

The EDBM one-stop shop also handles social security and health insurance registration. The company registers with CNaPS, which covers pensions, family benefits and work accidents, and joins an approved health service organisation such as OSTIE or FUNHECE. Do this before hiring, because contributions are calculated from the first payroll.

5

Register as an Employer with CNaPS and a Health Organization

The file can be built on the Orinasa platform, sent as scans by email or delivered to the one-stop shop in Antananarivo. Once it is submitted, the administrations involved study it, and EDBM describes this review as taking around 24 hours on working days. When approved, the company has its commercial register entry, tax identification number and INSTAT statistical number. EDBM’s director general puts average registration at 48 hours, while practitioners quote two to five working days or longer, so plan for the longer figure if any document needs correcting.

6

Open the Operating Account and Set Up Tax Filings

Finish setting up the bank account once the register entry is issued. The tax administration then places the company on the real regime or the synthetic regime according to turnover, which decides how income tax and VAT are calculated and filed. Companies with revenue above MGA 200 million must file financial statements online.

5

Arrange Work Authorisation, Visas and Residence for Foreign Staff

Work authorisation is requested through EDBM’s E-WORK platform from the labour ministry, and EDBM says average processing fell from 30 days to 10. The person then needs a transformable long-stay visa, which is issued by a Malagasy consulate, or through EDBM where there is no Malagasy representation in the person’s country, and can lead to residence. Short-stay tourist and business visas cannot be converted, so people should not arrive on one and expect to switch. An investor visa file typically asks for the commercial register extract, an EDBM certificate of existence, a company bank attestation and a recent criminal record extract with a sworn translation into French or English. After arrival, the person has one month to apply for a residence card from the Ministry of Interior’s immigration service.

Hiring and Managing Employees

Employment is governed by the 2024 Labour Code, Law 2024-014, which replaced the 2003 code and applies to existing contracts automatically. The legal working week is 40 hours in non-agricultural work, and paid leave is 30 days a year, accruing at two and a half days per month of service. A worker dismissed for economic reasons is entitled to severance of 10 days’ pay per year of service, capped at six months’ pay. The new code left many implementing decrees unreplaced, so certain figures, such as notice periods that vary by professional category, still rest on older decrees.

Minimum pay follows the decree published on 29 June 2026, which set the lowest-category monthly minimum at MGA 300,000 from 1 March 2026 and MGA 315,000 from October, the first time in about 60 years that the minimum has risen twice in one year according to a union representative. Employers owe four months of back pay for March to June. Social security contributions are calculated on salary capped at eight times the minimum, which is MGA 2.4 million at the MGA 300,000 level.

The employer pays 13% to CNaPS, about 5% for health and 1% for the professional training fund, which comes to roughly 19% on top of gross salary. Employees pay 1% to CNaPS and 1% to their health organisation. The employer also withholds salary income tax (IRSA), a progressive tax with a top rate of 20% and a minimum of MGA 3,000 a month, calculated after the employee’s contributions are deducted. A thirteenth-month bonus and health cover for the employee and family are not legally required but are widely offered, and candidates expect them.

Foreign hires need the work authorisation, visa and residence steps described above. The US State Department notes that some regulations favour local hires at senior management level, so be ready to explain why a foreign appointment is needed.

Tips for Recruiting and Retaining Local Talent

  • Play to the French-speaking workforce. It is the core strength for European-facing support and back-office work, but test English separately rather than assuming it.
  • Benchmark above the floor. The minimum applies to the lowest professional category, and one local job site’s indicative bands for degree-level roles run from roughly MGA 400,000 to 2.5 million a month depending on category.
  • Budget for the thirteenth-month bonus and family health cover from the start, since dropping either later damages retention.
  • For senior or scarce profiles, a recruitment agency in Madagascar with local networks can reach candidates who are employed and not applying, and can coordinate the permit steps when the hire is a foreign national.

Financial Management and Reporting

Companies with turnover above MGA 400 million are taxed under the real regime at 20% of profit, with a minimum tax of 1% of turnover plus MGA 500,000 for agricultural, artisan, transport, industrial, hotel or mining activities, or plus MGA 1 million for other activities. Smaller companies fall under a synthetic regime that taxes 5% of 70% of turnover, with a minimum between MGA 16,000 and MGA 150,000. Taxable income under the real regime is based on statements prepared under the national chart of accounts.

VAT is 20%, exports are zero-rated and input VAT is recoverable under conditions. A foreign company with no permanent establishment that provides services to a Malagasy taxpayer is liable to VAT and should appoint a tax representative. Payments to foreign suppliers of management, technical, licence and royalty services carry 10% withholding tax, and dividends paid to foreign shareholders are also subject to 10%. Interest on loans is subject to 20%.

Fiscal filings have their own rhythm. Returns and balances of tax for a 31 December year end are due before 15 May, provisional instalments are paid every two months and companies above MGA 200 million file their financial statements online. Payments between affiliates are tested against the arm’s length principle, so document intragroup charges when they are set rather than at year end.

Common Pitfalls to Avoid

  • Relying on the outdated MGA 2 million SARL minimum, or on guides still citing the 2003 Labour Code
  • Paying the new minimum wage from the decree date rather than from 1 March 2026, leaving four months of back pay unpaid
  • Stopping provisional income tax instalments without allowing for the 80% penalty if the final bill rises
  • Missing the 10% withholding on service fees and royalties charged by a foreign affiliate

Tips for Operating Successfully in Madagascar

Plan for infrastructure. Power and fuel supply have been unreliable, the government declared a 15-day energy emergency in April 2026 and practitioners advise budgeting for backup power and alternative connectivity, especially for anything client-facing such as a support team.

Stage the commitment. With a military-led transition in place, elections scheduled for September 2027 and an IMF programme under review, it makes sense to grow in steps. If you need people working before you are ready to register, an Employer of Record in Madagascar can employ them on your behalf without an entity, and an SARL with sensible but modest capital can be scaled later.

Keep clean paper trails. Since foreign firms report tax and licensing scrutiny, particularly on imports and exports, hold receipts, keep tax registrations current and use a local tax adviser who knows the administration’s current practice.

Common Mistakes to Avoid

  1. Arriving on a short-stay or business visa and expecting to convert it to long stay
  2. Starting registration before a lease is signed
  3. Choosing free zone status without checking the 95% export requirement
  4. Assuming a foreign company can own land, rather than planning around a long lease
  5. Using a branch where the parent needs protection from local liabilities

Why Now is the Right Time to Register a Company in Madagascar

The case for Madagascar today is about planning rather than momentum, and it would be wrong to suggest urgency. The country is governed by a transitional authority, the IMF reached a staff-level agreement in April 2026 on reviews that would release about USD 183 million, subject to Executive Board approval, and it cut its 2025 growth forecast after the political upheaval. Anyone entering should commit in stages.

What has firmed up is the administrative and cost picture. EDBM’s Orinasa, E-WORK and MADAZEF platforms make company registration, work permits and free zone approvals faster than the old paper process, with registration cut to around 48 hours and permits to about ten days. The wage decree of 29 June 2026 settles the minimum wage at MGA 300,000, rising to MGA 315,000 in October, so a payroll budget built now can use known figures. The authorities have also said stabilising the business climate is a priority alongside fighting corruption.

For export-oriented businesses, particularly offshore support and processing work, the free zone regime and a francophone workforce remain distinctive, and the framework for foreign investors is open on paper. A lean entity registered now can hire gradually and build local relationships while the political calendar plays out.

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Frequently Asked Questions

Not necessarily. Companies can obtain free zone company status without being located in a dedicated zone if they export at least 95% of their output. The regime is set by Law 2007-037 and now runs through the MADAZEF approval platform. Tax relief is exemption from corporate income tax for a period that depends on the category, up to five years for industrial processors and shorter for service enterprises, after which a 10% rate applies. The status excludes other investment incentive regimes and allows relaxed overtime rules, so read the conditions carefully before applying.

No. Foreigners and non-resident investors cannot directly own land. They can obtain renewable long-term emphyteutic leases of up to 99 years, and the 2023 Investment Law confirms that Malagasy companies controlled by foreign investors are eligible to lease land on these terms. These leases can in some cases be mortgaged, transferred or inherited. The law also allows dedicated investment zones with their own land regimes.

Madagascar is a member of ICSID, and the Investment Law allows disputes between foreign investors and the administration to be resolved through arbitration. The US State Department's 2025 report says investors can sue the government. Earlier reports also record complaints that courts have dismissed tax appeals on procedural grounds without ruling on the substance, so keep documentation orderly and consider specifying arbitration in any investment agreement.

The digital commercial register allows public searches by company name or by the identification number issued at registration, without needing an account. The register records legal existence and corporate structure, while the tax identification number is a separate check. A compliance guide reported in May 2026 that Madagascar has no publicly searchable beneficial ownership register, so ask counterparties to disclose owners directly.

The law promises freedom to transfer profits, dividends, salaries and savings, and companies may in theory hold foreign currency accounts. In practice the US State Department reports that foreign currency transfers often require government approval, and exchange control regulations remain in force. Build extra time into any plan that depends on moving money out of the country, and confirm the current procedure with your bank before making commitments.