Corporate entities are taxed on activities performed in Algeria via the following two regimes:
Standard tax regime
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.
- 10% reduced rate for reinvested profits in the frame of manufacturing activities (please refer to the CIT section).
Nil corporate annual tax returns include the payment of a minimum corporate tax amounting to 10,000 Algerian dinars (DZD).
- Tax on Professional Activity (TPA) is set at the rate of 1,5 %. However, this tax is set at the ate of 3% for the turnover generated from the hydrocarbon pipeline transport activity.Bearing in mind that manufacturing activities are exempt form TPA starting from 2022.
A 25% rebate is granted:
- The amount of revenue from building, public works and hydraulic engineering activities.
A 30% rebate applies to:
- the amount of wholesale transactions;
- the amount of retail sales transactions involving products whose retail price
- the amount of retail sales of products whose retail price includes more than 50% indirect duty;
The following are eligible for a 50% rebate:
- the amount of wholesale transactions involving products whose retail price includes more than 50% indirect duties
- the amount of retail sales transactions relating to medicinal products on the double condition:
*it is classified as a strategic good in accordance with the legislation and regulations in force;
*and that the retail sales margin is between 10 and 30%.
Benefits from a 75% rebate:
- The amount of retail sales operations of super, normal, unleaded petrol, diesel, LPG/C and CNG.
- The turnover realised for the installation of LPG/C kits.
Value Added Tax
- VAT at the rate of 19% or 9%. See VAT in the Other taxes section for more information.
- Branch tax set at the rate of 15% calculated on net profits after CIT. See the Branch income section for more information.
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.
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. TPA is being distributed for each district/location where there is a principal or secondary establishment.