Algeria

Corporate entities are taxed on activities performed in Algeria via the following two regimes:

Standard tax regime

Resident companies

The standard tax regime is applicable for all tax resident companies, which are taxed in Algeria on their worldwide income. The standard tax regime includes the following taxes:

• Corporate income tax (CIT) is set at the rate of:
  • 19% for manufacturing activities.
  • 23% for building activities, public works, and hydraulics, as well as tourist and thermal activities, excluding travel agencies.
  • 26% for all other activities not mentioned above.
  For mixed activities involving the application of several CIT rates, the taxable profits under each rate are determined according to the turnover portion declared or taxed for each activity.
  
  Note that there is a 10% reduced rate for reinvested profits in the frame of manufacturing activities.
  
  Nil corporate annual tax returns include the payment of a minimum CIT amounting to DZD 10,000.
• Tax on professional activity (TPA) has been definitively removed from the Algerian tax regime. A new Local Solidarity Tax (LST) has been introduced levied on certain activities in order to offset the reduction in tax revenues collected by local authorities issuing from the suppression of TPA.
• LST is deemed on the monthly turnover, excluding VAT, realised by economic operators carrying out one of the following activities: pipeline transport of hydrocarbons (set at the rate of 3%) and mining activities whose profits are subject to PIT or CIT (set at the rate of 1.5%).

See the Tax credits and incentives section for a description of rebates granted for certain activities.

Non-resident companies

In the absence of a double tax treaty (DTT), the basic principle that governs taxation of non-resident entities is that such entities are taxable in Algeria on their Algerian-source income whatever the way and wherever the location the work is carried out, provided only that the same are rendered or used in Algeria.

As a consequence, an entity will be liable for CIT via the WHT regime (see below) in Algeria through the execution of a related contract (services contract) to be performed in Algeria. From an Algerian point of view, such a contract is not an investment and is, by nature, temporary. Note that it is possible to execute several contracts under the same permanent establishment (PE).

In the presence of a DTT, a foreign company will be taxed in Algeria if it has a PE only. In this respect, in case the services would not trigger a PE in Algeria, the services will be subject to VAT under the reverse-charge mechanism, to be paid by the service importer.

Article 34 of FL 2022, amending and supplementing the provisions of Article 137 of the Algerian Tax Code, brings forth the clarification of the territoriality concept of CIT by including in the CIT scope the profits made by foreign companies in Algeria and whose right of taxation is attributed to Algeria under DTTs signed by Algeria. These consist of:

• Profits made through a PE within the meaning of the tax treaty provisions.
• Profits, products, and incomes related to transactions involving property owned by these companies in Algeria, even on an occasional basis.
• Any other profit for which the right to tax is attributed to Algeria under a tax treaty.

Withholding tax (WHT) regime

Non-resident entities performing service contracts in Algeria are subject to the WHT regime. The 30% WHT, which encompasses the CIT, the TAP, and the VAT, is required to be levied on services only. The calculation base is the gross amount of the services invoiced.

Please note that, since 2017, contracts that had been taxed under the WHT are also subject to the Algerian VAT when its basis of calculation benefited from a reduction in the rate or rebates as provided for by the local tax legislation or the DTTs (i.e. software licence contracts, international lease agreements, etc.).

Local income taxes

There are no local or provincial taxes on income in Algeria. LST is being distributed for each district/location where there is a principal or secondary establishment.