When an Algerian company holds 90% or more of the shares of one or more Algerian companies, the group may choose to be taxed as a single entity. Hence, IBS is payable only by the parent company. Under this system, the profits and losses of all controlled subsidiaries in Algeria are consolidated. The consolidated group may also benefit from other tax advantages, such as exemption from VAT and TAP on the inter-group transactions.
An arm’s-length approach to transfer pricing applies. All entities registered with the tax department responsible for large-sized companies (Direction des Grandes Enterprises), in addition to the other foreign companies established in Algeria, must submit their transfer pricing documentation along with their annual tax returns (before 30 April of each year). Failing this, and should the documentation to support one’s transfer pricing practices not be provided within 30 days after a first request is made by the Algerian tax administration, a fine of 25% of the deemed transferred benefits on top of the late payment penalties of 25% are applicable.
Please note that, since 2017, related companies should keep management accounts in order to justify their transfer pricing policies, which should be provided upon tax administration request. Moreover, since 2018, related companies are required to present the consolidated accounts, upon request of the tax administration, if these entities keep consolidated accounts.
There are no thin capitalisation provisions in Algeria.
Controlled foreign companies (CFCs)
There are no CFC rules in Algeria.