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. An annual property tax is levied on real estates, 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 1 million). The annual deductibility limit for expenses relating to the renting of passenger vehicles is set at DZD200,000 and their maintenance cost's deductibility is limited to DZD20,000 per vehicle.
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).
Some specific provisions apply to R&D expenses: they are fully deductible when paid by the entity bearing the expenses and when justified. Revenues derived from R&D activities are exempted from corporate income tax (capped at 10% of the taxable benefit or DZD 100 million), provided that the exempted amount is reinvested in R&D activities.
Taxes are generally deductible (except the IBS itself, the tax on apprenticeship and training and that on passenger cars).
Incentives are further available for qualifying investments that are declared to the National Agency for Investment Development (ANDI), 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 100 jobs.
Other significant taxes include Tax on Professional Activity (TAP) of 1.5% of turnover (or 3% for companies engaged in the transport of hydrocarbons, with several rebates according to the sector of activity), 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 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% |
A reduction of 40% of the payable tax applies (between DZD 1,000 and 1,500 per month) |
Interest: 10%, unless the rate is reduced under a tax treaty.
Royalties: 0 when paid to residents, 30% when paid to non-residents (unless specified otherwise by a treaty).
Technical service fee (withholding tax applied on service fees paid abroad by a local company to a foreign company): 30% (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: April 2023