Algeria Tax & Business Guide - Deloitte

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Basic facts
Population 33.4m Inflation 1.8% (2006)*
Main languages Arabic, Berber dialects, French GDP per head US$3,300*
Currency Algerian dinar (DZD) GDP growth 3.0% (2006)*
GDP sources 9.6% agriculture, 57.5% industry, 32.9% services
*Economist Intelligence Unit estimates.
Political environment

Algeria is a parliamentary democracy. The president, currently Abdelaziz Bouteflikais, is elected by popular vote for a five-year term and holds the executive power. The president appoints the prime minister and the cabinet. The prime minister is the head of the government.

The next legislative election is scheduled for May 17th 2007; a presidential election is due in April 2009.
Foreign trade and investment
Exports US$52.8bn (2006)* Imports US$21.0bn (2006)*
*Economist Intelligence Unit estimates.

Leading export markets: EU, especially Italy, Spain and France, and the US.

Major exports: Crude oil, natural gas, condensate and refined products.

The government actively encourages foreign investment. In 2001, the government reorganised public-sector companies to facilitate investment, and all sectors, including the hydrocarbon sector, were opened to foreign investment.
Business and financing
Business forms Limited company (SA), limited liability company (SARL)

Forms of business organisation include the limited company, limited liability company, joint stock company, partnership, simplified limited company, economic interest group and branch.
Labour environment
Unemployment rate 14.1%* Minimum wage DZD 12,000 (monthly)
*Economist Intelligence Unit estimate.

As from January 1st 2007, the minimum wage is DZD 12,000 per month for a weekly schedule of 40 hours and an hourly rate of DZD 69.36.

About two-thirds of the labour force is unionised. The only labour confederation is the General Union of Algerian Workers.

To become a permanent resident in Algeria (and receive a foreign resident card), a foreign wage earner must first obtain a work permit.
Taxation
Corporate tax
Main rate 25% (since January 1st 2006)

Under the Commercial Code, all capital and assimilated companies are liable to corporate income tax, regardless of the type of activities carried out. The standard rate of corporate income tax is 25%, with a reduced rate of 12.5% applying to net profits that are reinvested and retained in the business for five years or used to acquire a participation of at least 90% of the capital of another company.

A company exercising an industrial, commercial or handicraft activity on a regular basis and that is registered in the National Register of Commerce can be considered as resident. Foreign companies that are involved in a construction or assembly site for more than 93 days can be considered as having a permanent establishment in Algeria, and therefore will be liable to tax on income linked to such activities.

Non-resident companies are subject to withholding tax on Algerian-source income. The withholding tax rates are as follows: a 24% rate applies to income derived by non-resident companies with no permanent establishment in Algeria, income received as part of a service contract and income paid as remuneration for services of any kind provided or used in Algeria. A 20% rate is imposed or received under a management contract. Non-resident companies subject to these withholding taxes are exempt from Algerian corporate income tax, the tax on professional activities and value-added tax (VAT).
Individual tax
Progressive rates to 40%

Individuals resident in Algeria are taxed on their worldwide income; non-residents are taxed only on Algerian-source income. An individual is resident in Algeria if his/her permanent home or centre of economic interests is in Algeria or if he/she resides in Algeria for any period exceeding 183 days within a 365-day period. Local benefits-in-kind such as housing and school fees are considered ordinary income for tax purposes. Tax is imposed at progressive rates ranging from 0% to 40%.

No special regime applies to expatriates in Algeria.
Capital gains
Generally taxed as income

In general, capital gains are taxed in Algeria as ordinary income and are subject to the company or personal income tax. Certain capital gains, however, are exempt from tax or receive special treatment: capital gains realised within a group of companies; gains from the revaluation of fixed assets if they are booked in a special reserve; and capital gains resulting from mergers, divisions or partial transfers of assets between joint stock companies or limited liability companies.

Capital gains derived from the sale of real property will be subject to the personal income tax.
Indirect tax
VAT standard rate 17% Lower rates 7%

The standard value-added tax (VAT) rate of 17% applies to products, merchandise and transactions that are not subject to the reduced rate. The reduced rate of 7% applies to certain basic foodstuffs listed in the law, certain pharmaceutical products, sales of newspapers, periodicals and books, and fuel oil, propane gas and butane gas. A deduction of input VAT is not allowed for certain transactions that are subject to the reduced rate (eg Internet providers, brokers, etc).
Tax administration and compliance
Tax year Corporations: accounting year; Individuals: calendar year

Companies are required to make three advance payments of tax as follows: the first, from February 15th to March 15th; the second, from May 15th to June 15th; and the third, from November 15th to December 15th. However, taxpayers whose tax situation is managed by the Department of Large Enterprises may pay the three instalments no later than, respectively, March 20th, June 20th and November 20th. Final settlement of the tax due should be made, by the latest, by April 1st of the following year.

Individuals are required to file a tax return of total income before April 1st of each year. Payment of tax dues must be made by the first day of the third month following that in which the assessment is issued. In the case of wages, salaries, pensions and life annuities, tax is withheld at source where the employer or person making the payment is domiciled or established in Algeria. Amounts withheld in respect of any particular month must be paid to the tax authorities within the first 20 days of the following month.

Expatriates generally are not required to file an Algerian income tax return as tax is directly withheld on a monthly basis from the salary. In this case, the employer must prepare, at the end of the year, the so-called 301bis. However, if an expatriate working in Algeria has Algerian-source income other than salary income, the employee must file an Algerian tax return.
Additional tax information
Withholding taxes Dividends (15%), Interest (10%) and Royalties (24%) received by non-residents. Rates may be reduced by tax treaty.
Tax treaties Algeria has concluded 16 double tax treaties.
Dividends Dividends received by individuals are not included in the tax base. Dividends received by (resident) companies are excluded from taxable income.
Groups A 15% reduced rate applies to profits used to acquire a 90% participation in the capital of other companies belonging to the same group.
Other taxes Professional activities tax (2%), Property tax (3%), Land tax (5Ò10%), Registration fees (2.5% of corporate assets).