Algeria – Highlights of the 2015 Financial Law

Algeria – highlights of the 2015 Financial Law

KPMG in Algeria summarizes new rules introduced in the Algerian government’s Financial Law 2015, including exemptions and other measures to encourage foreign investment and various modifications to the country’s personal and corporate income tax, value-added tax and customs regimes.

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Amendments to investment rules

Measures included in Financial Law 2015 related to Algeria’s investment rules include:

  • Reintroducing the exemption from registration fees, fees for land registration (publicité foncière) and reintroducing the previously abolished exemption from public registration fees during the implementation phase for the national compensation during the implementation phase as this measure was abolished by last year Granting temporary exemptions for 5 years for corporate income tax and tax on business activity (TAP) for investments in the following industrial sectors and activities:
    • steelmaking and metallurgy
    • hydraulic binders
    • electrical and electrical household
    • industrial chemistry
    • mechanical and automotive,
    • pharmaceutical
    • aerospace
    • shipbuilding and repair
    • advanced technologies
    • food industry
    • textiles and clothing, leather and related products
    • wood and furniture industry
  • Introducing a bonus of 3 percent on the interest rate for bank loans.
  • Encouraging investment in the industrial sector in research and development (R&D) through a new exemption from customs duty (or charges having equivalent effect) and other charges and an exemption from VAT for R&D-related equipment acquired in the local market or imported in the course of creating of an R&D department.
  • Providing Treasury support for bank interest relating to the investments made by the industrial sector for acquiring and mastering technology in order to strengthen the rate of industrial integration of their products and competitiveness.
  • Raising the threshold of investment subject to pre-approval of the National Investment Council (CNI) in order to benefit from tax advantages under the general regime to 2 billion Algerian dinars (DZD) (from DZD 1.5 billion).

Taxation regime changes

Algeria’s taxation regime is modified by Financial Law 2015 as follows:

  • Profits from artisan activities and non-commercial professions are merged with those from industry and trade.
  • For purposes of the Tax Single Lump (Impot Forfaitaire Unique; IFU), eligibility is introduced for submission to the IFU scheme for individuals or legal entities with annual turnover of less than DZD30 million.
  • The rate under the IFU regime is fixed at:
    • 5 percent for the production and sale of goods
    • 12 percent for other activities.
  • The possibility to proceed with tax payments annually during the month of September tax payment is introduced, starting from 1 September to 30 of the same month, without notice from the tax administration.
  • The amount of the minimum tax for taxpayers under the IFU regime is increased to DZD10,000.

Corporate income tax

Changes to Algeria’s corporate income taxation regime include:

  • Setting the corporate income tax rate at 23 percent for all sectors.
  • Increasing the amount of the minimum tax to DZD10,000.
  • Extending the tax reduction of 50% of income earned in certain areas of the south of Algeria until 31 December 31 2020. 

VAT changes

Financial Law 2015 amends Algeria’s value-added tax (VAT) regime as follows:

  • The VAT refund cap is eliminated and the right to receive refunds is extended to to operations that are expressly VAT-exempt.
  • The quarterly requirement for claiming VAT refunds is eliminated and the period for submitting VAT refund applications is revised:
    • Claims must be submitted within a period of twelve (12) months from the last day of the quarter in which the VAT credit was generated.
    • Requests made after the deadline will be permanently inadmissible under the right to reimbursement, but the credit in question may be carried forward for deduction in subsequent operations.
    • Where the credit amount is equal to or greater than 5 percent of the turnover realized for the calendar month, the claim can be submitted within 20 days of the month following the month in which the credit was generated.
  • The benefit of 50 percent advance payment on VAT refunds is extended to taxpayers subject to the Wilaya Directorates Taxes and Tax Centers.

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