Algeria: Update on tax rate changes, penalties and incentives

Update on tax rate changes, penalties and incentives

KPMG in Algeria summarizes recent developments of note to domestic and foreign investors in Algeria. These developments include tax rate changes, increased penalties, duties and sanctions, and new exemptions, reductions and advantages.

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Tax rate changes

Corporate profits tax (IBS)

Current IBS rates for specific industries are as follows:

  • 19 percent for manufacturing activities (unchanged)
  • 23 percent for building activities, public works, hydraulics and tourism and thermal baths activities excluding travel agencies (previously 19 percent)
  • 26 percent for other activities (previously 25 percent).

Turnover tax (TAP)

The TAP rate is changed to:

  • 1 percent (from 2 percent), with no reduction for manufacturing activities
  • 2 percent (from 2 percent), with a 25 percent reduction for building activities, public works and hydraulics.

Domiciliation tax on imported goods and merchandise

The existing tariff rate of 10,000 Algerian dinar (DZD) is replaced with a 0.3 percent tax rate on imported goods and merchandise, provided the tax value is DZD 20,000 or more.

Increased duties, penalties and sanctions

The Algerian 2015 Financial Law increased duties, tax penalties and sanctions as follows.

Opening or renewing a liaison office – The Minister of Commerce has modified the terms and conditions for the opening and functioning of liaison offices. The Ministry also communicated that the duty applicable on the opening of a liaison office is now DZD 1.5 million, up from DZD 100,000. The duty is also paid on renewing the authorization.

Work permits – The fee for issuing work permits for foreign workers rose to DZD 10,000 (up from DZD 5,000 DA), and to DZD 1,000 (from DZD 500) for foreign spouses of Algerian citizens. These amounts are increased by 50 percent where the documents are being renewed, duplicated, or reissued because the original permit was stolen or destroyed.

Foreign employees – Penalties for infringements related to foreign employees are increased as follows:

  • The penalty for employers who illegally employ foreign workers who are required to have a work permit or temporary work authorization rose to DZD 20,000 (from DZD 10,000).
  • The penalty for employers who do not notify the Direction de l'emploi of a foreign employee’s termination rose to DZD 10,000 (from DZD 5,000).

Other breaches of employment rules – For non-compliance with the legal age of employment and for payment of remuneration lower than the guaranteed minimum wage, fines have been multiplied by 10. Current fines are range from:

  • DZD 10,000 to 20,000 DA for employing underage workers
  • DZD 10,000 to 20,000 DA for paying workers less than the guaranteed minimum wage.
  • For repeat offenders, the penalty is increased to DZD 50,000 (from DZD 20 000) for each worker concerned.

Failing to register workers for social security – Such failure now attracts penalties ranging from DZD 100,000 to 200 000 and 2 – 6 months’ imprisonment. For repeat offenders, the penalty ranges from DZD 200,000 to 500,000 and 2 – 24 months’ imprisonment.

Exemptions, reductions and advantages

Newly introduced tax incentives include:

  • exemption from customs duties for inputs used in the manufacture of steel products 
  • exemption from customs duties for certain inputs used in the manufacture of motor vehicles
  • tax advantages for imports intended for assembly industries (i.e., completely knocked down (CKD) production activities) 
  • reduction of additional registration fees to 30 percent (from 50 percent) of capital gains from revaluation on transfers of assets that have benefited from regulatory revaluations.

MENASA Tax Update - November 2015

The latest news in tax from the Middle East, North Africa and South Asia (MENASA) region.

 
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