Algeria

Country Name: People’s Democratic Republic of Algeria
Currency: Algerian Dinar (DZD)
Primary Tax Authority: General Directorate of Taxes (Direction Générale des Impôts, DGI), Ministry of Finance
Key Legislation:

General Tax Code (Code Général des Impôts)
Investment Law (Ordinance No. 01-03 on Investment Development)
Value Added Tax (VAT) Law
Customs Code

Fiscal Authority Allocation

Centralized Fiscal System:
Algeria operates a centralized tax system, with the General Directorate of Taxes (DGI) responsible for administering and collecting taxes, including corporate income tax (CIT), personal income tax (PIT), value-added tax (VAT), and other indirect taxes. Local taxes are also imposed at the municipal level.

Corporate Income Tax (CIT)

Standard Rate: Varies based on sector
Algeria applies sector-specific CIT rates:

15%: For companies in the tourism and construction sectors.
19%: For manufacturing industries.
26%: For companies in other sectors, including services, telecommunications, and trade.

Corporate Forms and Taxation:

Resident Companies: Taxed on worldwide income.
Non-Resident Companies: Taxed only on Algeria-sourced income.

Exemptions and Incentives:

Investment Incentives: Under the Investment Law, Algeria offers tax exemptions, CIT reductions, and customs duty exemptions for up to 10 years to companies investing in priority sectors such as energy, manufacturing, and agriculture.
Free Zones: Businesses operating in certain free zones benefit from CIT exemptions for up to five years and exemptions from customs duties and VAT on imported goods.

Goods and Services Tax (GST) / Value-Added Tax (VAT)

Standard Rate: 19%
Algeria imposes VAT at a standard rate of 19% on most goods and services. VAT is levied on domestic production and imports.

Reduced Rate: 9%
A reduced VAT rate of 9% applies to certain essential goods and services, including agricultural products and public utility services.

Exemptions:
Certain essential goods and services, such as basic foodstuffs, medical products, and education services, are VAT-exempt. Exports are zero-rated, allowing businesses to reclaim VAT on inputs used in producing export goods.

Personal Income Tax (PIT)

Progressive Rates:
Algeria applies a progressive personal income tax system to residents’ worldwide income and non-residents’ Algeria-sourced income.

Resident Tax Rates for 2023 (Annual Income):

Up to DZD 240,000: 0%
DZD 240,001 to DZD 480,000: 20%
DZD 480,001 to DZD 960,000: 30%
Above DZD 960,000: 35%

Non-Resident Tax Rate:
Non-residents are taxed at a flat rate of 20% on Algeria-sourced income.

Deductions and Allowances:
Deductions are available for personal expenses, including social security contributions, healthcare costs, and certain educational expenses.

Additional Mandatory Contributions

Social Security Contributions:
Employers and employees must contribute to Algeria’s social security system, which provides pensions, healthcare, and unemployment benefits.

Employer Contribution: 26% of gross salary.
Employee Contribution: 9% of gross salary.

Withholding Taxes

Dividends: 15%
Interest: 10%
Royalties: 24%
Algeria imposes withholding taxes on payments to non-residents, including dividends, interest, and royalties. Withholding tax rates may be reduced under Algeria’s double taxation agreements (DTAs).

Transfer Pricing Rules

Algeria follows the arm’s-length principle for related-party transactions. Companies engaged in cross-border transactions with related entities must apply market-based pricing. Transfer pricing documentation is required for transactions between related parties.

Special Tax Regimes

Free Zones: Companies operating in designated free zones benefit from tax holidays, VAT exemptions, and customs duty relief on imports of raw materials and equipment. Free zones are designed to encourage foreign investment and export-oriented industries.
Investment Incentives: Algeria provides tax holidays of up to 10 years for companies investing in strategic sectors such as renewable energy, oil and gas, agriculture, and infrastructure. The Investment Law also offers reduced CIT rates and customs duty exemptions.

Other Taxes

Customs Duties: Algeria imposes customs duties on imports, with rates ranging from 5% to 30%. Some essential goods, such as raw materials for industrial use, may benefit from reduced rates or exemptions.
Excise Taxes: Excise taxes are levied on specific goods such as alcohol, tobacco, fuel, and luxury products. Rates vary depending on the product.
Property Tax: A 3% tax is imposed on the rental value of commercial and industrial properties.

Double Taxation Agreements (DTAs)

Algeria has signed several double taxation agreements (DTAs) with countries including France, Germany, and Spain. These agreements help reduce withholding taxes on cross-border income and prevent double taxation of income earned in Algeria and other jurisdictions.

Local Taxes

Local governments in Algeria may impose municipal taxes, including property taxes and business license fees. However, most major taxes, such as CIT, PIT, and VAT, are centrally administered by the General Directorate of Taxes (DGI).

Compliance and Reporting

Annual Filing:
Corporate tax returns must be filed by April 30th of the following year. Personal income tax returns are generally due by April 30th. VAT returns are filed quarterly, and businesses must remit VAT collected to the DGI.

Penalties for Late Filing:
Penalties for non-compliance or late filing include fines and interest on unpaid taxes. The standard penalty is 10% of the unpaid tax, with additional fines for underreporting income.

Recent Developments

Renewable Energy Investment:
Algeria is focusing on expanding its renewable energy sector, offering tax incentives for companies investing in solar, wind, and hydropower projects. These incentives include CIT exemptions, VAT deferrals, and customs duty reductions on imported equipment for green energy projects.

Oil and Gas Sector Reforms:
Given Algeria’s significant natural resources, particularly in oil and gas, the government has implemented tax reforms aimed at attracting foreign direct investment (FDI) in this sector. Companies in the oil and gas industry benefit from reduced withholding tax rates and customs duty exemptions on equipment imports.

Efforts to Modernize Tax Administration:
The Algerian government has been working to modernize its tax administration, including digitalizing tax filing and payment systems to improve compliance and reduce tax evasion. These reforms are part of a broader strategy to enhance transparency and increase government revenue.

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