Algeria: Business Environment
The acquisition of products, goods and services already benefiting from a VAT exemption or VAT franchise regime is zero-rated.
Tobacco products are subject to excise tax set at the rate of 5% starting from 2022. Article 72 of FL2024 increases the rate on tobacco products from DZD 37 to DZD 50, a 35% rise in the ATTP per pack or box. To encourage domestic sourcing by tobacco manufacturers, Article 86 raises the solidarity contribution from 2% to 5% on raw materials and inputs used in tobacco production. Article 10 amends Article 150 bis of the DTC, adjusting the Complementary Tax on tobacco manufacturers' profits: 16% if the integration rate is 40% or higher, and 20% if it is below 40%. New tobacco manufacturers are subject to a 16% tax rate for three years from the start of their business, regardless of their integration rate.
An annual property tax is levied on real estate, with rates varying according to the location of the property.
Various stamp duties apply.
The depreciation rates usually follow this scheme: office items depreciation rate is 10% or 20%; industrial buildings 5%; cars 20% or 25% (limited to DZD 3 million).
Starting from 2022, the deductibility threshold of low-value expenses is raised from DZD 30,000 to DZD 60,000.
Start-up expenses are deductible when paid and cannot be capitalised and depreciated. Bad debts are deductible if legal action has been taken to recover the debt or when evidence is provided that the receivable has become irrecoverable. Charitable contributions are deductible (capped at DZD 4 million). Advertising gifts are deductible up to DZD 1,000/unit (capped at DZD 500,000).
Companies with the "start-up" or "incubator" label can deduct 30% of their taxable profit for expenses related to research and development, as well as expenses incurred in "open innovation programs." The maximum deduction is capped at DZD 200 million.
Taxes are generally deductible (except the IBS itself, the tax on apprenticeship and training and that on passenger cars).
Losses can be carried forward until the fourth fiscal year after the year in which the loss occurred. Carryback of losses is not allowed.
Incentives are further available for qualifying investments that are declared to the National Agency for Investment Development (AAPI), such as investments to acquire assets included in the creation of new activities, to participate in the share capital of an Algerian company and to take over privatisation activity. Exemptions could apply to VAT, IBS or the Tax on Professional Activity (TAP). Specific rates depend on whether the investment qualifies in the general regime or the derogatory regime (which requires contribution from the Algerian state). A temporary exemption from IBS is granted to investing companies creating at least 500 jobs.
Resident companies are eligible for various rebates: 25% on revenue from building, public works, and hydraulic engineering; 30% on wholesale transactions and retail sales with over 50% indirect duty; 50% on wholesale transactions and retail sales of medicinal products classified as strategic goods with a sales margin of 10-30%; and 75% on retail sales of certain fuels and turnover from installing LPG/C kits.
Other significant taxes include a Local Solidarity Tax (LST) levied on the monthly turnover, excluding VAT, of economic operators in specific activities (3% for pipeline transport of hydrocarbons and 1.5% for mining activities subject to PIT or CIT), Apprenticeship Tax of 1% of payroll, and Training Tax of 1% of payroll (should be declared and paid on an annual basis).
Social contributions paid by the employer amount to 26% of the gross salary.
A Transfer Tax applies to land, buildings, and ongoing business at a rate of 5% for registration fees, plus 1% for publication formalities for the transfer of ownership of land and buildings.
A 4% tax applies on the import of services (Bank Domiciliation Tax, reduced to 0.5% for the importation of goods or merchandise with a minimum amount of DZD 20,000). A pollution tax is levied on assets that may be harmful to the environment.
Various stamp duties apply.
Algeria | Middle East & North Africa | United States | Germany | |
Number of Payments of Taxes per Year | 27.0 | 20.8 | 10.6 | 9.0 |
Time Taken For Administrative Formalities (Hours) | 265.0 | 204.0 | 175.0 | 218.0 |
Total Share of Taxes (% of Profit) | 66.1 | 32.1 | 36.6 | 48.8 |
Source: Doing Business, Latest available data.
Global income tax (IRG) | Progressive rate up to 35% |
Up to DZD 240,000 | 0% |
From DZD 240,001 to 480,000 | 23% |
From DZD 480,001 to 960,000 | 27% |
From DZD 960,001 to 1,920,000 | 30% |
From DZD 1,920,001 to 3,840,000 | 33% |
Over DZD 3,840,000 | 35% |
Starting from 1st January 2023, the new tax regime applies to rental gross income. If the rental gross income is equal to or less than DZD 1,800,000, a discharging withholding tax (WHT) rate will apply |
If the annual rental gross income exceeds the DZD 1,800,000 threshold, a provisional tax rate of 7% will apply, regardless of the property's nature. |
Interest: 10%, unless the rate is reduced under a tax treaty.
Royalties: 30% for both residents and non-residents. (unless specified otherwise by a treaty).
Branch remittance tax (applied to remittances by a permanent establishment to its foreign head office): 15% (unless specified otherwise by a treaty).
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Latest Update: November 2024