Depreciation and amortisation
The depreciation rates are determined according to common usage and the accounting rules, for example:
- The depreciation rate for office items is 10% or 20%.
- The depreciation rate for industrial buildings is 5%.
- The depreciation rate for cars is 20% or 25%. The depreciation base for cars is limited to DZD 3 million.
According to the new provisions of FL 2023, it it expected that fixed asset depreciation periods and rates will be determined by an order from the Ministry of Finance.
Low-value fixed assets
Starting from 2022, low-value fixed assets are deductible up to DZD 60,000.
Under the SCF, goodwill is registered in the local books as a non-current/intangible asset of the balance sheet and can be amortised over a period of 20 years. Therefore, the depreciation of goodwill recorded according to the Algerian accounting standards is deductible from the corporate income tax base with no limitation.
Start-up expenses are deductible when paid and cannot be capitalised and depreciated.
Interest expenses are deductible when paid.
A bad debt provision becomes deductible when legal action has been taken to recover the debt or when evidence is provided that the receivable has become irrecoverable.
Charitable contributions and subsidies
Granted subsidies and contributions for charitable organisations are deductible for CIT calculation purposes up to DZD 4 million/fiscal year.
Advertising gifts are deductible up to DZD 1,000 /unit, up to the limit of DZD 500,000.
Pension expenses are deductible when paid.
Payments to directors
Payments to directors are deductible.
Research and development (R&D) expenses
Expenses incurred within the framework of research and development, as well as those incurred within the framework of "open innovation programs", that are carried out by companies with the "start-up" or "incubator" label, the rate of deductibility is set at 30% of the taxable profit capped at DZD 200 million.
Bribes, kickbacks, and illegal payments
Bribes, kickbacks, and illegal payments are non-deductible from the CIT basis.
Legal fines and penalties
Legal fines and penalties are non-deductible from the CIT basis.
Penalties paid as part of contractual provisions are deductible for CIT calculation purposes, provided that the beneficiary of penalties is a taxable entity in Algeria.
Taxes duly paid are deductible, except for the CIT itself, which is not deductible. Also non-deductible for CIT purposes are the tax on apprenticeship and training and tax on passenger cars.
Net operating losses
Carryforward losses are permitted until the fourth fiscal year following the year of loss. Carryback losses are not permitted.
Payments to foreign affiliates
Payments to foreign affiliates are deductible when effectively paid.