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As of early 2026, Madagascar has introduced significant updates to its fiscal and labor landscape. The 2026 Finance Law (PLFI 2026) has modernized the personal income tax structure and signaled a potential 14% salary revaluation across sectors to counter inflationary pressures.
A PEO in Madagascar is the primary mechanism for international companies to navigate these rapid changes. By utilizing a PEO, organizations can hire Malagasy talent without the 6-to-12-month lead time required for local incorporation or the risk of miscalculating the new IRSA tax brackets.
The PEO Advantage in 2026 Madagascar
In the current Malagasy business environment, the PEO acts as the legal employer. While the client organization retains direct management of work output and strategy, the PEO assumes all liability for statutory filings, which are now increasingly digitalized under the Ministry of Economy and Finance.
Key Drivers for PEO Adoption
- Rapid Market Entry: Hire and onboard a team in 48 to 72 hours, bypassing the requirement to deposit share capital or register with the EDBM (Economic Development Board of Madagascar).
- 2026 Tax Compliance: The PEO automatically manages the new 25% top marginal rate for high earners and the mandatory minimum IRSA payments.
- Regulatory Resilience: Managing the strict Labour Code requirements regarding “transformable visas” and the complex approval process with the Ministry of Labour (MFPTLS).
- Cost Efficiency: Avoid the overhead of local directors, physical office requirements, and annual corporate audits.
2026 Labor Landscape and Statutory Compliance
The Malagasy employment environment is defined by its meticulous job classification system (SME – Salaire Minimum d’Embauche) and rigorous social protection mandates.
1. 2026 Minimum Wage and Job Categories
Madagascar utilizes a tiered wage system based on skill level. While a 14% increase was adopted for civil servants in early 2026, the private sector is currently aligning its scales.
|
Category |
Classification |
2026 Monthly Minimum (MGA) |
|---|---|---|
|
M1-1A |
Basic Manual Labor |
262,680 |
|
OS1-2A |
Specialized Worker |
268,700 |
|
OP1A-3B |
Skilled Worker |
277,700 |
|
OP3-5B |
Highly Skilled |
402,100 |
Note: Professional roles for international companies (e.g., Software Engineers) typically command between MGA 2,500,000 and MGA 4,500,000.
2. Personal Income Tax (IRSA) – Effective Jan 1, 2026
The 2026 Finance Law introduced a more progressive scale to capture higher revenues from executive salaries.
|
Monthly Taxable Income (MGA) |
Tax Rate |
|---|---|
|
0 – 350,000 |
0% |
|
350,001 – 400,000 |
5% |
|
400,001 – 500,000 |
10% |
|
500,001 – 600,000 |
15% |
|
600,001 – 4,000,000 |
20% |
|
Above 4,000,000 |
25% |
- Minimum Tax: A flat MGA 3,000 is payable even for those in the 0% bracket (unless they have negative income).
Social Security and Mandatory Contributions
Employers must manage three primary statutory pillars. Combined, these typically add 13% to 18% to the gross salary cost.
Statutory Contribution Rates
- CNAPS (Social Security):
- Employer: 13% of gross salary.
- Employee: 1% of gross salary.
- Ceiling: Calculated up to 8x the SME (approx. MGA 1,910,400).
- Health Insurance (e.g., OSTIE or FUNHECE):
- Employer: 5% of gross salary.
- Employee: 1% of gross salary.
- FMFP (Vocational Training):
- Employer: 1% of gross salary (capped at specific thresholds).
Key Employment Rights and Obligations
- Working Hours: 40 hours per week (non-agricultural). Overtime is paid at 130% for the first 8 hours and 150%
- Annual Leave: Employees earn 5 days per month (30 days per year) after completing 12 months of service.
- Maternity Leave: 14 consecutive weeks, fully paid (usually split 50/50 between the employer and CNAPS).
- Probation Period: Not strictly mandatory by law, but standard practice is 1 to 6 months depending on the role.
Strategic Support for Expatriates
Deploying international talent to Madagascar involves a rigorous “Labor Market Test” to justify the hire.
- Transformable Visa: The employee must enter on a 1-month transformable visa.
- Work Permit: The PEO submits the draft contract to the MFPTLS for approval.
- Residency Card: Once the work permit is granted, a residency card (Carte de Résident) is issued for up to 2 years.
Conclusion
Expanding into Madagascar in 2026 requires an agile approach to the 14% salary revaluation and the new 25% IRSA tax tier. Partnering with PEO Madagascar services provides the compliance assurance and operational stability needed to build a sustainable presence without the friction of local entity management. By centralizing HR, payroll, and the increasingly digital CNAPS reporting, a PEO allows your organization to focus on your core mission while maintaining a perfectly compliant workforce.