- Benefits granted to the investments
- Indications on the different taxes
Benefits granted to the investments
The general focus of the Algerian investment system is summarized in the following formula: The more the investment is of interest to the national economy, the more significant the benefits granted to it will be.
These benefits vary according to the location and type of investment. They are organized into three major schemes:
- the general scheme concerns current investment projects located outside the areas to be developed;
- the scheme for areas to be developed (or exceptional) concerns current investment projects located within the areas to be developed; and
- the investment agreement scheme concerns the investment projects which pose a particular interest for the national economy.
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1. Benefits granted for the general scheme:
Project setup phase
- VAT (TVA) exemption on non-excluded goods and services;
- Exemption of customs duties on non-excluded imported equipment ;
- Exemption of the transfer duty on real estate acquisitions.
Execution phase
- 3-year exemption from the Tax on Company Profit (TCP) (TAP);
- 3-year exemption from the Professional Activity Tax (PAT)(TAP).
2. Benefit granted for the the scheme for areas to be developed
Project setup phase
- VAT (TVA) exemption on non-excluded goods and services;
- Exemption of customs rights on imported equipment;
- Exemption of the transfer duty on real estate acquisitions;
- Registration right at a reduced rate (0/00) for constituent acts and capital increases;
- The possibility for total or partial assumption by the State of expenses related to the infrastructural work necessary to carry out the investment.
Execution phase
- Ten-year exemption from the Tax on Company Profit (TCP)(IBS);
- Ten-year exemption from the Professional Activity Tax (PAT)(TF);
- Ten-year exemption from the Land Tax (LT)(TF);
- Possibility of granting other benefits (deficits report and redemption periods).
3. Benefits granted for the agreement scheme.
The investments arising from this scheme may enjoy all or part of the following benefits:
Project setup phase (for a maximum of five years):
- Exemption from duties, taxes, levies and other fiscal deductions on all imported goods and services or those purchased locally,
- Exemption from the transfer duty on real estate acquisitions and legal advertising;
- Exemption from registration duties, (LT)(TF);
- Exemption from the Land Tax (LT)(TF)
Execution phase (for a maximum of ten years):
- Exemption from the Tax on Company Profit (TCP) (TAP) ;
- Exemption from the Professional Activity Tax (PAT) (TAP).
Apart from these benefits, the CNI can grant other additional benefits or facilities to investments made within sectors posing a particular interest for the national economy.
Indications on the different taxes :
Tax on company profit - TCP (IBS) :
All capital companies are subjected to this tax. The tax rate for profits gained in Algeria is 25% and is reduced to 12.5% if the profits are reinvested. This rate is one of the lowest in the Maghreb.
Professional activity tax - PAT (TAP) :
This tax, paid annually, affects the sales turnover achieved, excluding VAT. Its total is calculated taking into account rebates of 30-50% established by law. The tax is 2% deductible on the taxable profit.
Value added tax - VAT (TVA):
The sales made by the companies are subjected to payment of the VAT included in the sales price of the products. This tax is deductible; however the deduction principle is controlled in substance, form and time as specified by law. There are currently two VAT rates - a normal rate of 17% and a reduced rate of 7%. The taxation is done on the actual one and the withholding cannot form the object of a reimbursement, even if this is partial.
Land tax - LT (TF):
The taxable base of this tax comprises the rental fiscal value of the taxable property. The rate for the land tax on the built property is 3%, while for inbuilt properties located in a non-urbanized area, it is 5%. In urbanized areas, it varies between 5 and 10% according to the surface area. There is an allowance of 2% per annum.
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