The Investment Law:

The general framework of investments is governed by Law No. 16-09 which defines investment by:

(1) acquisitions of assets in the context of the creation of new activities, the extension of production capacity and/or rehabilitation;

(2) participations in the capital of a company.

The investments covered by the provisions of this Law shall be made in compliance with the laws and regulations in force, in particular those relating to environmental protection, regulated activities and professions and, in general, the exercise of economic activities.

The Act focuses on investor benefits (Chapter 2), procedures (Chapter 3), investment guarantees (Chapter 4) and governance (Chapter 5 on investment bodies).

In addition, the 2020 finance law eases the 49/51 rule that subjects foreign investors to the constraint of having a majority local partner. This relief will not concern strategic sectors (hydrocarbons, mining, banking and insurance, etc.).

Terms of reference for the other activities are currently being developed. They will replace the requirement to have local partners with conditions for providing funding, knowledge and/or local content rules.

Investment procedures:

The National Investment Agency (ANDI) is responsible for monitoring investments through the facilitation of the completion of administrative formalities relating to the launch of business creation projects through an operational one-stop shop

To do this, ANDI:

• Welcomes, advises and supports investors at the level of its central and regional structures;
• Informs investors through its website, promotional materials and various information points on the occasion of economic events organized in Algeria and abroad;
• Formalizes, on a basis of equity and within a short period of time, the benefits provided by the incentive system;
• Ensures the concerted execution with the various institutions concerned (Customs, taxes, etc.), of investment incentive decisions;
• Contributes to the implementation of development policies and strategies, in synergy with the economic sectors concerned;
• Makes its partnership exchange available to potential investors.

In addition, the Decentralized Single Window is a local division of ANDI. Created at the wilaya level. It brings together, within it, in addition to the executives of the Agency itself, the representatives of the administrations involved at one time or another in the investment process, in particular for the formalities related to:

• the incorporation and registration of companies,
• the authorizations and permits required, in particular the building permit,
• investments related to investments (it should be noted that the granting of benefits to investments amounting to or greater than five billion dinars (5,000,000,000 DA) is subject to the prior approval of the National Investment Council.

As such, it is responsible for the reception of the investor, the reception of his registration file and the issuance of the related certificate, as well as the receipt of files related to the services of the administrations and organizations represented within the various centers, their routing to the services concerned and their proper finalization.

Decentralized Single Windows Centres:

1- Benefits Management Center

2- Formalities Completion Center

3- Business Creation Support Center

4- Territorial Promotion Center

Decentralized one-stop shops: (Read more)

The Finance Act for 2022 governs taxation in Algeria.

Corporate taxes

Resident companies

The standard tax regime is applicable for all tax resident companies, which are taxed in Algeria on their worldwide income. The standard tax regime includes the following taxes:

• Corporate income tax (CIT) is set at the rate of:
  • 19% for manufacturing activities.
  • 23% for building activities, public works, and hydraulics, as well as tourist and thermal activities, excluding travel agencies.
  • 26% for all other activities not mentioned above.

For mixed activities involving the application of several CIT rates, the taxable profits under each rate are determined according to the turnover portion declared or taxed for each activity.

Note that there is a 10% reduced rate for reinvested profits in the frame of manufacturing activities.

Nil corporate annual tax returns include the payment of a minimum CIT amounting to DZD 10,000.

• Tax on professional activity (TPA) is set at the rate of 1.5%. However, this tax is set at the rate of 3% for the turnover generated from hydrocarbon pipeline transport activity. Bear in mind that manufacturing activities are exempt from TPA starting from 2022.

Non-resident companies

In the absence of a double tax treaty (DTT), the basic principle that governs taxation of non-resident entities is that such entities are taxable in Algeria on their Algerian-source income whatever the way and wherever the location the work is carried out, provided only that the same are rendered or used in Algeria.

As a consequence, an entity will be liable for CIT via the WHT regime (see below) in Algeria through the execution of a related contract (services contract) to be performed in Algeria. From an Algerian point of view, such a contract is not an investment and is, by nature, temporary. Note that it is possible to execute several contracts under the same permanent establishment (PE).

In the presence of a DTT, a foreign company will be taxed in Algeria if it has a PE only. In this respect, in case the services would not trigger a PE in Algeria, the services will be subject to VAT under the reverse-charge mechanism, to be paid by the service importer.

Article 34 of FL 2022, amending and supplementing the provisions of Article 137 of the Algerian Tax Code, brings forth the clarification of the territoriality concept of CIT by including in the CIT scope the profits made by foreign companies in Algeria and whose right of taxation is attributed to Algeria under DTTs signed by Algeria. These consist of:

• Profits made through a PE within the meaning of the tax treaty provisions.
• Profits, products, and incomes related to transactions involving property owned by these companies in Algeria, even on an occasional basis.
• Any other profit for which the right to tax is attributed to Algeria under a tax treaty.

(Read more)

Personal Taxation:

(Read more)

Sales Tax:

VAT is applied on the supply of goods or services in Algeria. It includes all economic activities conducted in Algeria. The standard VAT rate is 19%. The reduced rate is 9%, applying to various basic items listed by law.

Monthly VAT returns and payments are due by the 20th day of the following month.

• The duration of working time: 40 hours per week.
• Health insurance and social security: Health insurance benefits are provided by Algeria as it has a public healthcare system that is funded through social security and state contributions. Companies may offer supplementary private healthcare insurance.
• Annual leave: 30 days.
• Maternity Leave: 14 weeks. 3 days for parents.
• Minimum wage: In May 2020, the government increased the basic pay rate to DZD 18,000, almost equal to USD 170. Employees must be allowed a fully paid annual leave of up to 30 days.