Algeria flag Algeria: Business Environment

Tax rates in Algeria

Tax Rates

Consumption Taxes

Nature of the Tax
Value added tax (VAT) (Taxe sur la valeur ajoutée - TVA)
Tax Rate
19%
Reduced Tax Rate
A special reduced rate of 9% applies to: sales of electricity and natural gas for consumption under 250 kWh and 2,500 thermal units per quarter; sales of heavy fuel oil, butane, propane, and their mixtures as GPL-C; pawnbroking transactions with households; cinema ticket sales; maritime and air construction site operations; services related to tourism, including hotels, spas, classified catering, travel, and tourist vehicle rentals (until 31 December 2024); recoverable waste and products from the processing of tilapia fish; and sales of recyclable waste such as aluminum, iron, wood, glass, cardboard, plastic, paper, rubber, used tires, engines, gearboxes, lubricating oils, edible oils, fats, and lead batteries.

The acquisition of products, goods and services already benefiting from a VAT exemption or VAT franchise regime is zero-rated.

Other Consumption Taxes
Imports are subject to customs duties with the following rates: duty-free, 5%, 15%, 30%, or 60%.

Tobacco products are subject to excise tax set at the rate of 5% starting from 2022. Article 72 of FL2024 increases the rate on tobacco products from DZD 37 to DZD 50, a 35% rise in the ATTP per pack or box. To encourage domestic sourcing by tobacco manufacturers, Article 86 raises the solidarity contribution from 2% to 5% on raw materials and inputs used in tobacco production. Article 10 amends Article 150 bis of the DTC, adjusting the Complementary Tax on tobacco manufacturers' profits: 16% if the integration rate is 40% or higher, and 20% if it is below 40%. New tobacco manufacturers are subject to a 16% tax rate for three years from the start of their business, regardless of their integration rate.
An annual property tax is levied on real estate, with rates varying according to the location of the property.
Various stamp duties apply.

Return to top

Corporate Taxes

Company Tax
19% (10% reduced rate for reinvested profits in the frame of manufacturing activities)
Tax Rate For Foreign Companies
IBS (Impôt sur le Bénéfice des Sociétés) is levied on all Algerian-sourced profits, including income of representative agents of foreign companies and income of companies that do not have an establishment or representative agent but realize a complete cycle of commercial activities in the country. Non-resident entities are taxable in Algeria on their Algerian-source income whatever the way and wherever the location the work is carried out.
Capital Gains Taxation
Capital gains are generally taxed as ordinary income at the corporate income tax rate (Impôt sur le Bénéfice des Sociétés, or IBS). In some cases, a 30% relief is granted if the assets have been held for up to three years, or 65% if the assets have been held for longer periods.
An exemption can be granted on capital gains deriving from the disposal of assets, provided that the company commits to re-invest them within three years.
Main Allowable Deductions and Tax Credits
In general, expenses are deductible if they are: registered in the accounts and supported by an invoice, not specifically listed as non-deductible items, incurred in the company's interest, and certain, liquid, and due during the financial year.
Expenses are deductible for amortisation, reserves, interest expenses, rents for premises and equipment, wages, pension expenses, etc. Some non-deductible expenses include fines, gifts, subsidies and restaurant, hotel and entertainment expenses not directly linked to the business.

The depreciation rates usually follow this scheme: office items depreciation rate is 10% or 20%; industrial buildings 5%; cars 20% or 25% (limited to DZD 3 million).
Starting from 2022, the deductibility threshold of low-value expenses is raised from DZD 30,000 to DZD 60,000.
Start-up expenses are deductible when paid and cannot be capitalised and depreciated. Bad debts are deductible if legal action has been taken to recover the debt or when evidence is provided that the receivable has become irrecoverable. Charitable contributions are deductible (capped at DZD 4 million). Advertising gifts are deductible up to DZD 1,000/unit (capped at DZD 500,000).
Companies with the "start-up" or "incubator" label can deduct 30% of their taxable profit for expenses related to research and development, as well as expenses incurred in "open innovation programs." The maximum deduction is capped at DZD 200 million.
Taxes are generally deductible (except the IBS itself, the tax on apprenticeship and training and that on passenger cars).
Losses can be carried forward until the fourth fiscal year after the year in which the loss occurred. Carryback of losses is not allowed.

Incentives are further available for qualifying investments that are declared to the National Agency for Investment Development (AAPI), such as investments to acquire assets included in the creation of new activities, to participate in the share capital of an Algerian company and to take over privatisation activity. Exemptions could apply to VAT, IBS or the Tax on Professional Activity (TAP). Specific rates depend on whether the investment qualifies in the general regime or the derogatory regime (which requires contribution from the Algerian state). A temporary exemption from IBS is granted to investing companies creating at least 500 jobs.
Resident companies are eligible for various rebates: 25% on revenue from building, public works, and hydraulic engineering; 30% on wholesale transactions and retail sales with over 50% indirect duty; 50% on wholesale transactions and retail sales of medicinal products classified as strategic goods with a sales margin of 10-30%; and 75% on retail sales of certain fuels and turnover from installing LPG/C kits.

Other Corporate Taxes
An annual property tax is levied on real estate, with rates varying according to the location. A wealth tax applies with rates varying from 0% (up to DZD 100 million) to 1% (for a value of holdings above DZD 450 million).

Other significant taxes include a Local Solidarity Tax (LST) levied on the monthly turnover, excluding VAT, of economic operators in specific activities (3% for pipeline transport of hydrocarbons and 1.5% for mining activities subject to PIT or CIT), Apprenticeship Tax of 1% of payroll, and Training Tax of 1% of payroll (should be declared and paid on an annual basis).
Social contributions paid by the employer amount to 26% of the gross salary.
A Transfer Tax applies to land, buildings, and ongoing business at a rate of 5% for registration fees, plus 1% for publication formalities for the transfer of ownership of land and buildings.

A 4% tax applies on the import of services (Bank Domiciliation Tax, reduced to 0.5% for the importation of goods or merchandise with a minimum amount of DZD 20,000). A pollution tax is levied on assets that may be harmful to the environment.
Various stamp duties apply.

Other Domestic Resources
Directorate-General of Taxes

Country Comparison For Corporate Taxation

  Algeria Middle East & North Africa United States Germany
Number of Payments of Taxes per Year 27.0 20.8 10.6 9.0
Time Taken For Administrative Formalities (Hours) 265.0 204.0 175.0 218.0
Total Share of Taxes (% of Profit) 66.1 32.1 36.6 48.8

Source: Doing Business, Latest available data.

Return to top

Individual Taxes

Tax Rate

Global income tax (IRG) Progressive rate up to 35%
Up to DZD 240,000 0%
From DZD 240,001 to 480,000 23%
From DZD 480,001 to 960,000 27%
From DZD 960,001 to 1,920,000 30%
From DZD 1,920,001 to 3,840,000 33%
Over DZD 3,840,000 35%

Starting from 1st January 2023, the new tax regime applies to rental gross income. If the rental gross income is equal to or less than DZD 1,800,000, a discharging withholding tax (WHT) rate will apply

  • 7% for income from renting residential properties
  • 15% for income from renting unfurnished commercial or professional properties, including contracts with companies
  • 15% for income from renting bare lands, which reduces to 10% for agricultural lands.

If the annual rental gross income exceeds the DZD 1,800,000 threshold, a provisional tax rate of 7% will apply, regardless of the property's nature.

Allowable Deductions and Tax Credits
Deductions include personal allowances (such as social insurance contribution, mortgage interest expenses, alimony and qualifying insurance premiums), business expenses and other expenses such as maintenance allowance and interest paid on loans for a business purpose (the same rules for business deductions are applicable for individuals as for corporations). Certain income from rented properties is exempted from taxes (for instance, rental for students). Paid taxes are also deductible, as well as mortgage expenses.
The following expenses are not deductible: charitable contributions, education expenses, childcare expenses, life insurance and healthcare expenses.
The same rules for business deductions are applicable to individuals as to corporations.
Special Expatriate Tax Regime
There is no special expatriate tax regime in Algeria.

Return to top

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
Directorate-General of Taxes
Withholding Taxes
Dividends: 15% for both residents and non-residents.

Interest: 10%, unless the rate is reduced under a tax treaty.

Royalties: 30% for both residents and non-residents. (unless specified otherwise by a treaty).

Branch remittance tax (applied to remittances by a permanent establishment to its foreign head office): 15% (unless specified otherwise by a treaty).

Bilateral Agreement
The United Kingdom and Algeria signed a double taxation treaty, which enters into effect on 1 January 2017 for withholding tax purposes.
The rates are 5/15% on dividends, 7% on interest and 10% on royalties.

Return to top

Sources of Fiscal Information

Tax Authorities
Directorate-General of Taxes
Other Domestic Resources
Directorate-General of Taxes - Fiscal guides (in French)

Return to top

Any Comment About This Content? Report It to Us.

 

© eexpand, All Rights Reserved.
Latest Update: June 2024

Return to top