Algeria’s judicial system is constructed under a pyramidal structure, consisting of tribunals, courts and higher courts. The Algerian judiciary system is divided into civil and administrative courts. It also has a conflict tribunal, which was created to settle conflicts of competence between the jurisdictions of the judicial courts and the administrative courts. Algeria also offers foreigners the possibility to assert alternative modes of dispute resolution, such as mediation, conciliation and arbitration.

The Algerian Constitution provides for an independent judicial system where judges are accountable to a High Council of the Judiciary.

Civil Courts

The judicial branch contains tribunals, courts of appeal and a Supreme Court.

Tribunals are ordinary courts. They consist of divisions before which cases are registered according to the nature of the dispute; they have exclusive jurisdiction over civil, commercial and social disputes. Algerian jurisdictions give Algerian citizens the privilege to summon foreigners with whom they are in conflict before the court.

Courts of appeal are those before which judgments rendered by tribunals are appealed. Appeals must be filed within one month from the date of notification of the contested decision to the concerned person. Objections, appeals and classification complaints must be made within two months for persons living outside the Algerian territory.

The Supreme Court has the authority to rule on cassation complaints against final decisions and judgments rendered by courts and tribunals.

Administrative Courts

The administrative branch is composed of tribunals and the council of state.

Tribunals and courts of appeal examine, at first instance and appeal, all cases in which one of the parties would be the State, the Wilaya (province), the municipality or a public administrative institution.

The Council is the body regulating the activity of the administrative courts, and ensures compliance with the law and the standardisation of the administrative case law throughout the country. It has complete independence in the performance of its legal powers and has competence to rule on the following at first and last instance:

• appeals for annulment or the interpretation or assessment of legality have been brought against administrative acts stemming from the central administrative authorities of national public institutions and national professional organisations, excluding the decisions of the Competition Council; and
• appeals for interpretation and appeals for the assessment of legality of acts for which the dispute falls under the Council of State (eg, decisions of a minister).

The proceedings are governed by the Civil Procedure Code.

Each of these two branches has a double level of jurisdiction with common courts and courts of appeal. The top of the court system features the Supreme Court for civil and criminal matters and the Council of State for administrative disputes.

The Finance Law for 2023 has introduced the following changes:

• the institution of the Administrative Courts of Appeal, ruling in appeal on orders and judgments given in the first instance by the administrative courts; and
• the determination of the competence of the Council of State as a court of cassation, ruling against the final judgments of the Administrative Courts of Appeal.

Therefore, the Tax Procedures Code has been amended to provide for the following:

• the introduction of Article 89 bis setting out the remedies applicable before the administrative courts of appeal;
• substitution of the expression “the Council of State” provided for in Articles 153 ter and 154 of the Tax Procedures Code with the expression “the Administrative Court of Appeal”;
• making the final judgments of the Administrative Courts of Appeal subject to appeal to the Council of State;
• subjecting final judgments rendered by the Administrative Courts of Appeal to cassation before the Council of State under the conditions and according to the procedures provided for by the Civil Code and Administrative Procedure; and
• the appeal in cassation does not suspend execution.

All foreign investments made in a convertible foreign currency in a sector producing goods or services may benefit from general investment guarantees (including a transfer guarantee) without, in principle, having to require approval. Investments should nonetheless be registered with the Algerian Investment Promotion Agency (AAPI) to properly secure application of investment guarantees (see 2.2 Procedure and Sanctions in the Event of Non-compliance).

Moreover, Executive Decree 22-300 of 8 September 2022 foresees a reorganisation of the minimum threshold to benefit from the transfer guarantee. The threshold has been set at 25% of the amount of the investment, calculated based on the share of foreign financing to be provided by the investors in relation to the total cost of the investment. Failure to meet the minimum threshold does not exclude the benefit of the advantages but it does deprive the investment of the transfer guarantee.

In addition, foreign investments may benefit from incentive regimes subject to the approval of the AAPI. Under Law No 22-18 of 24 July 2022 on investment, foreign investors may benefit from one of three new incentive regimes based on specific sectors (Sector regime), specific geographical zones (Zones regime) and growth potential (Structuring investments regime). During their implementation and exploitation, eligible investments benefit from temporary exemptions from customs duties, VAT, corporate income tax, business activity tax or property tax for a duration of three to five years in the implementation phase and five to ten years during the exploitation phase.

The Complementary Finance Law for 2020 provided that the opening of foreign investment without the obligation of association with a local partner covers all activities of the production of goods and services, excluding activities in strategic sectors and importation for resale activities.

Therefore, the Finance Law for 2021 specified that the exclusion related to the activities of importation for resale concerns only import activities of raw materials, products and goods intended for resale in the same condition. Entities operating in this activity must comply with the local partnership rule (Rule 51/49).

The sectors considered as having a strategic interest were provided by the Complementary Finance Law 2020, as follows:

• upstream activities in the energy sector and any other activity provided under the law on hydrocarbons, as well as the operation of the distribution and transmission network of electric energy by cables, and of gaseous or liquid hydrocarbons by overhead or underground pipes;
• activities related to military industries under the responsibility of the Ministry of National Defence;
• railways, ports and airports; and
• pharmaceutical industries, with the exception of investments related to the manufacture of innovative essential products with high added value requiring complex and protected technology, intended for the local market and for export.

Furthermore, investments in certain sectors are subject to specific conditions. Pursuant to the Finance Law 2020, Executive Decree 21-145 has been published, setting out the following activities as being “strategic” and therefore subject to a resident national participation of 51%:

• activities in the military industries initiated by or in relation to public establishments of an industrial and commercial nature under the economic sector of the Ministry of National Defence;
• activities related to the pharmaceutical industry sector (eight activity codes);
• activities related to the energy and mining sector (17 activity codes); and
• activities related to the transport sector (19 activity codes).

The Finance Law for 2022 removed the exploitation of the national mining domain from the above list, as well as the exploitation of any underground or surface resources arising from an extractive activity (excluding quarries of non-mineral products). These activities, however, remain subject to the local partnership rule, as do the maritime transportation sector, some regulated activities and the automobile sector.

To simplify procedures, Law 22-18 has reintroduced the principle of the “single window” relating to the development of investment, which existed under Ordinance 01-03 of 20 August 2001 but was then abrogated.

On the one hand, Law 22-18 distinguishes the “single window” with national competence at the level of the AAPI, which is dedicated to large investments and foreign direct investments; on the other hand, it sets out the “decentralised single window” of investment, covering all the necessary steps in the implementation of investment projects. The single window aims to facilitate the administrative procedures for foreign investors.

Failure to register the investment will have different consequences depending on the applicable regime, as follows:

• investments eligible for tax incentives will not be granted the expected benefits;
• the investment registration certificate will be cancelled by the Agency; and
• cancellation of the registration certificate is evidenced by a decision to withdraw the benefits issued to the investor.

There are several formal and substantive conditions, but the most important is to invest in convertible foreign currency in a sector producing goods or services.

If a foreign investor has benefited from an incentive regime, failure to comply with certain obligations (eg, the submission of a progress report on the project to the AAPI) will result in the withdrawal of the benefits granted.

Law No 22-18 of 24 July 2022 on investment created a national commission for investment appeals (Haute commission nationale des recours liés à l’investissement – the “Commission”), which introduced changes and clarifications concerning the guarantee of the right to appeal.

Investors are able to lodge an administrative appeal before the Commission set up under the supervision of the Presidency of the Republic.

In accordance with Article 6 of Presidential Decree No 22-296 of 4 September 2022 establishing the structure and functions of the High National Commission for Investor-Related Appeals, an investor shall refer any investment-related dispute to the Commission, including disputes relating to:

• the withdrawal or refusal to grant benefits; and
• the refusal to issue decisions, documents and authorisations by the administrations and organisations concerned.

In compliance with the principle of equity, this appeal is also open to foreign investors.

In parallel to this administrative appeal, in the event of a dispute between the foreign investor and the Algerian State, Law No 22-18 reaffirms the possibility for investors to lodge an appeal with the competent courts, unless otherwise provided for in bilateral or multilateral agreements ratified by the Algerian State and the investor's country.

Algerian law recognises limited liability companies, in which the shareholders’ liability is limited to their contribution, and both general and limited partnerships. Other forms can also be incorporated in Algeria, such as representative offices, commercial branches and permanent establishments.

The main forms of capital companies present in the Algerian market for foreign investment are joint stock companies and limited liability companies. For the two types, the capital is divided into shares and the contributions can be in cash or in kind.

Limited Liability Companies (LLCs)

An LLC (Société à responsabilité limitée) may be established by two or more people (but not exceeding 50), whose liability is limited to the value of their respective contributions to the company's capital (in cash or in kind). Once the number of partners exceeds 50, it is mandatory for the LLC to be transformed into a joint-stock company (JSC) (Société par actions).

The share capital of an LLC is set freely by the partners since its amount is not legally determined, and is divided into equal shares. The share capital must be stipulated in the articles of association of the company. In practice, the incorporation process of an LLC requires the opening of a bank account with a capital of DZD100,000 (approximately USD760) and with a minimal nominal value of DZD1,000 (approximately USD7.60) per quota.

The shares must be distributed among the partners in the articles of association of the company and must be subscribed in full by the partners. They must be fully paid up when they represent contributions in kind.

An LLC is also required to appoint one or more qualified auditors to verify the accuracy of the company’s financial statements and books of account, as well as the information provided to partners regarding the company’s financial status.

The LLC may increase or reduce its share capital in accordance with and under the conditions set out in its articles. However, a reduction in capital requires an authorisation of the extraordinary meeting of the company, and may not affect the equality in standing of its partners, nor may it be motivated by losses sustained by the company.

The LLC may exist indefinitely and is unaffected by the demise of any of its partners. However, it may be dissolved in accordance with the terms of its articles (eg, in the case of the expiry of the 99-year term fixed for its operations) or as decided by its partners. Alternatively, it may be dissolved through the intervention of the courts in cases prescribed by law, such as when its share capital falls below the prescribed minimum.

A sole proprietorship limited liability company (SPLLC) (enterprise unipersonnelle à responsabilité limitée) applies the same rules as the LLC, except that it is owned by a single individual, who cannot be the sole partner for another LLC; such individual can also be the manager of the company and has the powers of the general assembly, approving the financial statement within six months following the closing of the financial year.

Joint Stock Company

The JSC (société par actions) is a company with at least seven shareholders, whose liability is limited to the amount of their capital contributions. A JSC is required to maintain a minimum share capital of DZD1 million; this is increased to DZD5 million if it invites contributions from the general public.

The JSC is required to appoint an auditor from a list of experts for a period of three years, who will verify the accuracy of the company’s accounting records and report back to the shareholders at each annual general assembly.

Other Forms of Companies Under Algerian Law

The Algerian commercial code also regulates the following types of companies, although they are not commonly used in practice.

Representative office

Representative offices are only entitled to undertake promotional activities and may not engage in profit-market activities nor have a local income, which make them an appealing form of establishment in Algeria for doing business.

In order to have a representative office in Algeria, an approval from the Minister of Commerce is required, which is usually granted for a period of two years and is renewable. In addition, registration duties are required, along with a CEDAC (Compte Etranger en Dinars Algériens Convertible) account.

Commercial branch

The Algerian commercial code provides the possibility for a foreign company to have a branch undertaking commercial activities. However, such an option is technically impossible due to the 49/51 rule imposed on foreign investment.

Permanent establishment

Foreign companies can undertake commercial activities in Algeria through a permanent establishment, which acts as a branch of a foreign company. Such permanent establishments do not have a legal personality but are recognised fiscally and can hire personnel and transfer hard currency offshore.

Regardless of the sector in which it will operate, every new incorporated company is required to be registered in the trade register within two months of its incorporation. This registration requires the submission of the following documents to the territorially competent National Centre of the Trade Register (CNRC):

• a signed application, in the form provided by the CNRC;
• proof of premises suitable for commercial activity issued on behalf of the company – this can be done by presenting either a property deed, a lease agreement, a deed of concession or any act or decision of affectation issued by a public body;
• a copy of the articles of association of the company, which must be drawn up by a public notary;
• a copy of the passport and/or identity card of the manager – if the manager is a foreigner, their passport must be certified and legalised by the Algerian Consulate of their country of origin;
• a copy of the publication of the company's articles of association in the Official Gazette of Legal Announcements (BOAL);
• a receipt evidencing the payment of the stamp duty (DZD4,000);
• a receipt of payment of the registration fees in the trade register (the amount is determined according to the amount of the company's share capital);
• a copy of the authorisation or the temporary approval delivered by the competent administrations for the exercise of the regulated activities or professions;
• the certificate of the company's denomination; and
• a bank certificate relating to the receipt of funds forming the company's share capital.

If one of the shareholders is a legal entity, the following documents shall also be submitted:

• extracts of the Trade Register of the legal entity;
• the articles of association of the legal entity; and
• a decision of the authorised body of the legal entity for the creation of the new company.

All documents must be provided in Arabic or French; if they were prepared in a different language, certified translations in either Arabic or French must be provided.

In addition, registration of the company with the trade registry is mandatory and confers legal status upon the company. After incorporation, the company is required to make several additional registrations, including with different social security and tax departments.

Private companies must report the following in relation to corporate or financial matters:

• book-keeping as per the -Algerian accounting standards (Système comptable et financier);
• the publication of annual accounts;
• any modification of the share capital;
• any modification of the headquarters or of the management of the company;
• mandatory reporting when the net equity of the company falls under one quarter of the share capital;
• the payroll book;
• the vacation pay register;
• the personnel register;
• the register of foreign workers;
• the register of technical inspections of industrial plant and equipment;
• the health and safety and occupational medicine register; and
• the register of workplace accidents.

Société par Actions (SPA) (JSC)

The JSC is managed by a board of directors consisting of at least three and at most 12 board members, each of whom is appointed (or dismissed) at the ordinary general assembly of the company. The board of directors can act on behalf of the company in all circumstances, subject to the powers expressly granted to it by the shareholders and within the limits of the company’s purposes.

Each director may serve as such for not more than six years, and together they must own at least 20% of the share capital of the company. The board is headed by a president (chair of the board), who assumes responsibility for the company’s general management and represents the company in its dealings with other parties. The president must be elected by the other board members, and dismissed according to the same procedure.

Alternatively, the JSC may be managed by a directory with a monitoring council (conseil de surveillance). The directory consists of three to five members, one of whom acts as the president of the company. All members are appointed by the monitoring council, which has permanent control over the company. Unlike the board of directors, only individuals may serve as members of the directory. The members of the directory usually serve for four years, unless the by-laws of the company provide otherwise. The permanent council must have between seven and 12 members, none of whom may also serve as a member of the directory. Membership of the council is gained through election at the company’s general assembly, and such members must together hold at least 20% of the company’s share capital.

Société à Responsabilité Limitée (SARL) (LLC)

An LLC is managed by one or more individuals (managing director(s)/Gérant(s), who may or may not be members specified in the company’s articles or appointed as managers by the partners at their annual general meeting. The manager is usually vested with all the powers necessary for the effective performance of their duties and may generally bind the company in its dealings with third parties, unless such parties were aware of the manager’s lack of authority to act in such manner. The manager may, however, be personally liable for certain debts incurred by the company in some cases (eg, bankruptcy). A manager’s appointment may be revoked by members representing more than 50% of the share capital, or by the courts at the request of the partners.

Under Algerian law, the directors are liable individually or jointly to the company or to third parties, either for breach of applicable laws or regulations, for breaches of the company’s articles of association, or for faults committed in their management.

In addition, directors may incur criminal sanctions for specific offences (eg, failure to comply with mandatory reporting obligations, misuse of company funds).

The employer/employee relationship in Algeria is regulated through different texts, mainly Law No 90-11, Order No 97-03 of 1997 with regards to working hours and Decree No 94-09 of 1994 on the preservation of employment and protection of employees.

The Labour Law is rather protective of employees and guarantees their right to syndication, strikes, collective bargaining and social insurance.

Algerian employment law is mainly articulated around the following sources:

• Law No 90-11 of 21 April 1990, which is the fundamental law for employment relationships and related matters, as well as other specific texts;
• case law;
• collective bargaining agreements; and
• companies’ internal rules.

An employment contract exists when a person (the employee) undertakes to work, in return for remuneration, for the account and under the orders and control of another person (the employer). The execution of the employment contract entails a certain number of obligations for both the employee and the employer.

An employment contract usually sets out the employee’s job title and status, duties, remuneration, working time, mobility provision and restrictive provisions (eg, non-compete).

Term

The work contract may be entered into for a fixed term or on a permanent basis. In the absence of a written contract, the employment contract is deemed to be permanent. Consequently, fixed-term contracts should always be written.

Fixed-term contracts cannot be used to fill permanent positions and are only allowed under the following specific circumstances:

• the performance of non-renewable services;
• the replacement of employees;
• the performance of intermittent, periodic work; and
• a temporary increase of activity or seasonal work.

Trial Period

Newly hired employees are subject to a trial period, which may last up to six months for low-skilled workers and up to 12 months for higher-skilled jobs. The trial period is usually set by the collective bargaining agreement for each category of employee.        

The Algerian Labour Law sets the legal working hours per week at 40, distributed across a minimum period of five days. The Algerian Labour Law grants the employer the right to require additional working hours from employees only under certain circumstances. In any case, the official working hours cannot exceed 12 hours per day. Every employee has the right to take only two days off, specifically every Friday and Saturday.

This standard working time may be:

• reduced for people working in particularly arduous and dangerous jobs or jobs involving physical or nervous strain; or
• increased for certain jobs involving periods of inactivity.

Overtime hours are allowed only under certain imperative circumstances and may not exceed 20% of the legal workday (within the above-mentioned maximum 12 hours a day). The hourly rate is increased by 50% minimum.

Executive Decree No 90-290 of 29 September 2019 regulating managers’ employment contracts provides that managers benefit from the same rights as employees under applicable law, subject to the specific provisions provided for in their employment contract. As such, managers’ rights and obligations under their employment contract are not subject to collective bargaining and may be individually negotiated.

The Labour Law (Law No 90-11) provides that an employment relationship ceases as a result of:

• nullity or abrogation of the employment contract;
• the expiry of a fixed-term employment contract;
• resignation by the employee;
• dismissal by the employer;
• total incapacity to work, as defined by law;
• redundancy in relation to downsizing;
• the cessation of activities by the employer;
• the retirement of the employee; or
• the death of the employee.

Dismissal

Dismissal by the employer must be carried out in accordance with the law and the company’s internal rules, particularly with regard to notification of the decision to the employee and the requirement to hold a preliminary hearing for the employee.

Only two types of dismissal are allowed under Algerian law:

• dismissal for serious misconduct; and
• dismissal as a result of a reduction of the workforce (redundancy).

Disciplinary dismissals are allowed under the following specific circumstances and result in dismissal without notice or compensation:

• wrongdoings committed in the course of work and punishable under criminal law;
• refusal to follow instructions without justification;
• disclosure of confidential information;
• participation in a concerted collective “work stoppage” in violation of applicable law;
• acts of violence, intentional property damage, or alcohol or drug consumption in the workplace; or
• refusal to perform a notified requisition order in compliance with legal provisions.

Employees who are dismissed on this ground may be eligible for compensation, depending on the circumstances.

Pursuant to Law No 90-11, the employer can proceed to make a reduction in the workforce when economic reasons justify such a measure. The reduction of the workforce results in simultaneous individual redundancies and is only decided after the negotiation of a collective bargaining agreement.

In addition, the employer is required to use all means likely to reduce the number of redundancies by implementing the following specific measures:

• the transfer of employees to other activities or to other companies;
• a reduction of working hours;
• the implementation of part-time work; and
• the retirement of employees.

Employees who are dismissed on this ground may be eligible for compensation, depending on the circumstances and the outcome of the bargaining process.

The right to organise is recognised for both employees and employers, who may form unions to defend their interests.

Employees are represented by the following bodies when more than 20 persons are employed:

• staff delegates at every worksite comprising more than 20 employees; and
• a representative committee made up of elected staff delegates and instituted at the employer’s headquarters.

If there is only one single worksite, the elected staff delegate enjoys the privileges granted to the representative committee.

Employee representatives are calculated according to the number of employees, as follows:

• from 20 to 50: 1;
• 51 to 150: 2;
• 151 to 400: 4;
• 401 to 1,000: 6; and
• above 1,000: one additional delegate per 500 employees.

Personal Income Tax (PIT) – Progressive Scale

This category of income includes wages, salaries, emoluments, pensions, life annuities and other similar income. The following are also regarded as falling within this category:

• payments to minority partners in LLCs;
• remuneration of domestic workers;
• payments to company directors, including reimbursement of costs;
• all regular bonuses paid by employers;
• amounts paid to persons engaged in teaching, research, supervisory or other intellectual activities in addition to their main employment activities; and
• remuneration paid to managers of LLCs and partners in partnerships is treated as employment income for individual income tax purposes.

Wages, salaries, emoluments, tips, pensions and life annuities derived by taxpayers from foreign sources are also included in this category.

All earned income is taxable on the basis of a final withholding at source, withheld by the employer in accordance with a monthly adjusted progressive tax on global income at rates up to 35%. The final amount of tax is only determined after the application of specific abatements and additional reductions.

The following rates apply with effect from 1 January 2022:

• annual taxable income up to DZD240,000: 0%;
• annual taxable income of DZD240,001 to DZD480,000: 23%;
• annual taxable income of DZD480,001 to DZD960,000: 27%;
• annual taxable income of DZD960,001 to DZD1,920,000: 30%;
• annual taxable income of DZD1,920,001 to DZD3,840,000: 33%; and
• annual taxable income of more than DZD3,840,000: 35%.

PIT at 10%

Remuneration, benefits, non-monthly bonuses and gratuities are taxed under a 10% withholding tax.

Social Security Contributions

Affiliation to a social security fund is mandatory in Algeria. Employers have to declare themselves and all employees to the social security agency of the “wilaya” with territorial jurisdiction, regardless of the nationality of the employee (in the absence of provisions to the contrary in the treaty signed between the country of origin and Algeria).

The employer contribution amounts to 26% of the employee's gross salary, while the employee contribution amounts to 9%. This rate covers contributions for old age benefits, early retirement, injury at work and sickness, unemployment insurance, the social activities fund and the employees’ social housing fund.

Legal entities present in Algeria are subject to different taxes according to whether they are residents or not.

Resident Legal Entities

Corporate income tax (CIT)

Corporate profits earned by resident companies are subject to an annual tax. Taxable profits cover all operations of any kind carried out by the company, including the sale of assets.

CIT rates are set per business segment, as follows:

• 19% for the production of goods;
• 23% for building activities, public works and hydraulics, as well as tourist and thermal activities (excluding travel agencies); and
• 26% for other activities.

Any company conducting various activities that are subject to different tax rates must provide separate accounting records in order to determine the taxable base for each activity. If this requirement is not fulfilled, the 26% tax rate is applicable to the total taxable profits.

A reduced rate of 10% applies to:

• profit reinvested by manufacturing companies through the acquisition of production equipment related to the activity carried out; and
• reinvested profit resulting in the acquisition of equity shares and stocks or similar securities of at least 90% in the share capital of another manufacturing, construction or service company, subject to paying up the total amount of the share acquisition.

Special lump-sum tax regime

A special lump-sum tax regime (impôt forfaitaire unique – IFU) applies to industrial, commercial or co-operative activities whose annual net profits do not exceed DZD8 million, pursuant to Article 282 ter of the Indirect Tax Code (ITC).

For businesses engaged in trading activities relating to large-scale consumption goods and for which the price or margin are regulated by the Algerian government, the tax is applied to the margin realised (Article 282 quater of the ITC).

The lump-sum tax rate is set as follows:

• 5% for the activities of production and sale of goods; and
• 12% for other industrial, commercial or agricultural activities.

However, Article 16 of the Finance Law for 2023 introduces a new specific regime for taxpayers eligible for the status of self-entrepreneurs with an annual turnover not exceeding DZD5 million, subjecting them to the 5% rate.

Value-added tax (VAT)

VAT applies only to transactions carried out in Algeria. A sale is regarded as having been made in Algeria if it meets the conditions for the sale of goods in force in Algeria. Other types of transactions are regarded as having been carried out in Algeria if, for example, the supply made, the service rendered, the right granted or the object hired is used in Algeria. VAT must be charged on the following transactions (Article 2 of the Algerian Turnover Tax Code – CTCA):

• sales and supplies by producers;
• building works;
• sales and supplies on a wholesale basis of imported taxable, finished goods by commercial importers;
• sales by wholesalers;
• self-deliveries for the private or business use of the taxpayer concerned;
• rental operations, the provision of services, studies and research, as well as all operations and research work, and all operations other than sales and real estate work, including:
1. sales of buildings or business assets by persons who usually or occasionally purchase such property in their own name with a view to resale;
2. transactions by intermediaries for the purchase or sale of the goods referred to above; and
3. subdivision and sale operations carried out by the owners of land under the conditions;
• trade in second-hand goods other than equipment made wholly or partly of platinum, gold or precious stones;
• non-commercial business transactions;
• entertainment and sports events of any kind organised by persons acting under associations governed by the law;
• telephone and telex services supplied by the post office;
• sales by hypermarkets and other retailers, with the exception of sales carried out by taxpayers subject to the special lump-sum tax;
• transactions carried out by banks and insurance companies; and
• sales transactions carried out electronically.

The taxable amount consists of the price of the goods, services, etc, including all costs, taxes, duties, etc, but excluding the VAT itself. The tax base varies according to the type of transaction involved, as follows:

• sales: the amount of the sale;
• transactions involving the exchange of goods subject to tax: the value of the goods supplied in exchange for those received, plus any balance where appropriate;
• self-deliveries of movable goods: the wholesale price of similar goods or, in the absence thereof, the cost price plus what would constitute a normal profit for the goods in question;
• self-supply of immovable property: the actual cost;
• contracts for construction works with foreign companies: amounts paid in domestic currency or in foreign currency converted into dinars at the exchange rate prevailing on the date of signature of the contract under which these amounts are due; and
• transactions for which the taxable amount is not defined in the CTCA: the gross amount of remuneration or receipts derived from the transactions in question.

Where a person is engaged in transactions that simultaneously fall into several of the above categories, the tax base is determined separately for each transaction according to the rules applicable to each category involved.

The Finance Law for 2009 introduced a provision to deny the right of deduction of input VAT for expenses exceeding DZD100,000 paid in cash. The new Finance Law for 2023 increases this limitation to DZD1 million (Article 30 of the CTCA).

The standard VAT rate is 19%. A reduced rate of 9% applies to various items listed by law. Please note that the law provides for a number of exemptions.

Tax on professional activity (TPA)

The TPA is a tax on professional activities based on overall sales or gross revenues. The TAP is levied at the following rates:

• 1% for manufacturing activities;
• 1.5% for all other activities, including trade and services; and
• 3% for the transport of hydrocarbons by pipelines.

The TPA is paid each month (before the 20th of the following month) on the monthly turnover, computed based on the previous month’s tax liability, to the territorial jurisdiction for direct tax, and may benefit from rebates on specific revenues.

Non-resident Legal Entities

In the absence of applicable tax treaties, non-resident companies are taxed on income from Algerian sources, according to different tax regimes depending on the nature, duration and location of the activity carried out.

Service providers

Unless a tax treaty applies, non-resident companies providing services are subject to a withholding tax of 30%, which covers CIT, TPA and VAT. This tax is calculated based on the gross amount of all services invoiced.

Construction

Non-resident companies performing a construction contract are deemed to have a taxable entity in Algeria and are subject to the common tax regime with some specificities; they are subject to CIT, TPA and VAT on their actual income.

Group companies

Although the investment regulatory framework has evolved, non-resident foreign companies still frequently associate with a local firm to execute a contract, thus complicating the tax treatment of the contract. Under Algerian law, groups are transparent entities for tax purposes. A group cannot generate sales by itself – it is the members of the group that are deemed to be generating the profits and are therefore taxed accordingly.

Algerian law provides for various tax incentives, which can be granted to new investors, subject to the making of a specific request with the AAPI (see 2.1 Approval of Foreign Investments). Other incentives can be granted for start-up businesses under CIT, TPA and VAT to promote entrepreneurship.

Tax consolidation consists of preparing a single balance sheet for all corporations belonging to a group representing the overall activities of the group.

Law 96-31 of December 1996 introduced the concept of “group companies” formed by two or more legally independent joint-stock companies; where the parent company holds at least 90% of the capital of each subsidiary, the group can choose to be taxed as a single entity. Companies operating in the hydrocarbon sector are excluded from this regime.

Consolidated return rules are optional; once elected, the option is binding for four years.

Group companies benefit from special treatment under the following rules:

• intra-group dividend distributions are tax exempt;
• capital assets may be transferred within the group without liability to capital gains tax; and
• reinvested profits are subject to the reduced CIT rate if they have been used to purchase up to the required 90% of shares and similar securities of other companies in the same group.

In the reverse case, each portion of the consolidated profits is subject to the relevant CIT rate.

Profits and losses that arise in the context of the implementation of the grouping contract are attached to the taxable income of each of the member companies in the financial year in which they arise, according to their rights as stipulated in the grouping contract (or, where that does not prove possible, in equal portions to each member).

Non-resident companies are excluded from this regime.

Article 141 of the Direct Tax Code provides for the full deductibility of interest on loans paid to shareholders concerning trading operations. However, the use of this type of financing allows companies to deduct interest on debt that may be artificial, or even to deduct interest instead of capital increases.

Article 2 of the Finance Law for 2019 now provides for the deductibility of these charges to the average effective interest rates communicated by the Bank of Algeria, with a double condition that the capital has to be fully paid up and the sums available to the company should not exceed 50% of the capital.

In Algeria, all transactions carried out with related parties are subject to transfer pricing documentation requirements, including transactions made with companies located in Algeria. In support of their annual declaration, the companies concerned have to produce documentation to justify their transfer pricing policy in the context of these transactions.

Order of Aouel Rabie Ethani 1442 of 17 November 2020 defines the companies concerned by the initial and additional documentation, justifying the transfer prices applied by related companies.

Failure to produce or the incomplete production of the documentation within the prescribed deadlines leads to:

• a fine of DZD2 million (equivalent to USD20,000); or
• in the case of a transfer pricing reassessment, a 25% fine on the profits deemed indirectly transferred.

Accounting audits or spot checks are conducted in order to verify the authenticity of tax declarations and the reliability and probative value of the accounting entries.

Tax treaties are also an effective means to prevent international tax evasion, in addition to communication between the authorities. In this regard, Algeria has an increasingly developed treaty network.

Under Ordinance No 03-03 of 19 July 2003, there is a market concentration when:

• two or more previously independent undertakings merge;
• one or more natural persons already holding control of at least one undertaking acquire control of the whole or parts of one or more other undertakings, directly or indirectly, whether by acquisition of capital or assets, contract or by any other means; or
• a joint venture operating as an autonomous economic entity on a long-term basis is created.

A merger notification to the Algerian Competition Council is required when a concentration aims to achieve a threshold in excess of 40% of the sales or purchases made on a market.

Algerian competition law does not provide a specific timeline for filing the notification, nor for the Competition Council to rule on the transaction. The law nonetheless provides that the authors of the concentration may not take any measure that would make the concentration irreversible during the period required for the Competition Council to review the notification.

Under Ordinance No 03-03 of 19 July 2003, concerted practices and actions that have the effect of restricting or distorting free competition within a market or a market segment are prohibited, in particular when they:

• restrict market access or the exercise of certain activities;
• limit or control production, opportunities and investments;
• share markets or sources of supply;
• preclude pricing by market forces by artificially favouring price increases or reductions;
• apply unequal conditions to equivalent transactions with regard to business partners, thereby placing them at a competitive disadvantage;
• make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations that have no connection with the subject of such contracts; and
• allow the granting of a contract in favour of the perpetrators of these restrictive practices.

Under Ordinance No 03-03 of 19 July 2003, any abuse of a dominant or monopolistic position in a market or market segment is prohibited when it consists of:

• restricting market access or the exercise of certain activities;
• limiting or controlling production, opportunities and investments;
• sharing markets or sources of supply;
• precluding pricing by market forces by artificially favouring price increases or reductions;
• applying unequal conditions to equivalent transactions, with regard to business partners, thereby placing them at a competitive disadvantage; and
• making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations that have no connection with the subject of such contracts.

Intellectual property is governed by early legal and regulatory texts in Algeria.

Industrial inventions are protected by Ordinance No 03-07 of 19 July 2003 pertaining to patents, and by Decree No 05-275 of 2 August 2005 on the filing and issuance of patents.

Protected inventions falling under the scope of this regulatory framework (ie, new inventions resulting from an invention and likely to be used industrially) are granted a patent, which gives them exclusive rights to prohibit:

• the manufacturing, use and sale of the product; or
• the use, sale and importation of a product obtained with the protected process.

Under Ordinance No 03-07, the following are not considered inventions:

• scientific principles, theories and discoveries, as well as mathematical methods;
• plans, principles or methods for the purpose of performing purely intellectual or playful acts;
• methods and systems of teaching, organisation, administration or management;
• methods of treating the human or animal body by surgery or therapy, as well as methods of diagnosis;
• simple presentations of information;
• computer programs; and
• creations of an exclusively ornamental nature.

Registration

Patents are first filed with the Algerian National Institute of Industrial Property (Institut National Algérien de la Propriété Industrielle – INAPI).

An application for a patent may relate to only one single invention or to a plurality of inventions linked together in such a way that they form a general inventive concept. The application must contain a description of the innovative nature of the invention and a certificate of payment of the fees.

Once the application is filed, it will be examined by the INAPI. If a condition is missing, the applicant is allowed to regularise their application within two months. If the application meets the conditions set out by the regulations, the applicant receives a registration certificate. The patent is granted for a non-renewable period of 20 years from the application filing date.

All patents are published in the Official Bulletin of Patents (Bulletin officiel des brevets).

Trade marks are governed by Ordinance No 03-06 of 19 July 2003 and by Executive Decree No 05-277 of 2 August 2005 setting the terms and conditions for filing and registering trade marks.

Under the regulations, a trade mark is a distinctive sign that aims to distinguish the products or services of a physical or legal entity from those of others. It includes all signs capable of graphic representation, in particular words (including personal names), letters, figures, designs or images, the characteristic shapes of goods or their packaging, and colours (alone or in combination) that are intended and capable of distinguishing the goods or services of a natural or legal person from those of others. There are several categories of trade marks, including:

• product or brand name;
• service mark;
• trade mark;
• collective marks;
• certification marks; and
• well-known trade marks.

The following cannot be registered as trade marks:

• signs that do not constitute trade marks within the above-mentioned definition;
• signs belonging to the public domain or devoid of any distinctive character;
• signs consisting of the shape of the goods or their packaging, if such shape is imposed by the very nature or function of the goods or packaging;
• signs that are contrary to public policy or morality;
• signs that reproduce or imitate flags or other emblems, abbreviations or acronyms, or the official sign or hallmark of a state or an intergovernmental organisation, unless authorised by the competent authority of that state or organisation;
• signs likely to mislead the public as to the nature, quality, origin or other characteristics of the goods or services; and
• signs that are identical or confusingly similar to a well-known trade mark or trade name that is well known in Algeria for identical or similar products, or similar to a mark that has already been the subject of an application registration.

Registration

Trade marks are filed with the INAPI. The application contains a reproduction of the trade mark and a description of the goods and services that will be sold.

Registration of a trade mark is mandatory for any product or service offered, sold or put up for sale on the national territory.

If the application meets the conditions set out by the regulations, the applicant receives a registration certificate. The registered trade mark gives its holder a right of ownership over that trade mark, meaning that the trade mark can only be used with the prior authorisation of its owner.

Industrial drawings and models are protected under Ordinance No 66-86 of 28 April 1966 and by Executive Decrees Nos 66-86 and 66-87 of 28 April 1966.

Industrial drawings comprise any composition of lines or colours aimed at giving a special appearance to a product of industry or handicraft. Models refer to any plastic shape associated or not with colours or to any industrial product that can serve as a pattern to manufacture other units and that distinguishes itself from similar models by its configuration. Only original and new drawings and models are protected.

The counterfeiting of a design is punishable by a fine ranging from DZD500 to DZD15,000. In case of recidivism, the author of the counterfeit is punished by imprisonment from one to six months, with the confiscation of the objects that infringe the rights of the holder.

Registration

Industrial drawings or models are filed with the INAPI.

If the application meets the conditions set out by the regulations, the applicant receives a registration certificate. An industrial drawing or model validly filed with the INAPI is protected for a period of ten years from the date of the filing.

Literary and artistic property rights are protected under Ordinance No 03-05 of 19 July 2003 on copyrights and related rights.

Copyrights protect creations in the literary and artistic fields, including:

• written literary works such as literary essays, poems or novels, scientific and technical research, computer programs and orally expressed works such as lectures, speeches and other works of a similar nature;
• all works of theatre and choreography;
• musical works with or without words;
• cinematographic works and other audiovisual works;
• works of visual and applied arts;
• drawings, sketches, plans, models of architectural and technical works;
• graphics, maps and drawings relating to topography, geography or science;
• photographic works and works expressed by a process analogous to photography; and
• clothing, fashion and ornamental creations.

Authors of protected intellectual productions have both moral and economic rights over their work. These rights are permanent, inalienable and transmissible to their heirs.

Registration

The owner of the copyright is presumed, until proof to the contrary, to be the individual or legal entity under whose name the work has been made available to the public or under which the protected works have been declared to the national office of copyright.

Various intellectual property rights are protected under Ordinance No 03-05 of 19 July 2003 on copyrights and related rights.

Software

Software is granted the same protection as other protected literary rights under Ordinance No 03-05 (see 7.4 Copyright).

Databases

Ordinance No 03-05 specifically protects data compilations, whether in machine-readable or other form, which by reason of the selection or arrangement of their contents constitute intellectual creations.

Translations and Arrangements

Ordinance No 03-05 also protects translations, adaptations, musical arrangements, editorial revisions and other original transformations of literary or artistic works.

Data protection is governed by Law No 18-07 of 10 June 2018 on the protection of individuals in the processing of personal data (the “Data Protection Law”).

The Data Protection Law has an extended scope and covers all information, on whatever medium, on an individual directly or indirectly identified or identifiable, in particular by reference to an identification number or to one or more specific elements of their physical, physiological, genetic, biometric, psychological, economic, cultural or social identity.

In addition, it should be noted that the EU General Data Protection Regulation (GDPR) applies to Algerian companies if they process personal data when:

• offering goods or services to individuals who are in the territory of the European Union; or
• monitoring the conduct of such individuals, insofar as such conduct takes place within the European Union.

The Data Protection Law applies to the processing of personal data when:

• carried out by a natural or legal person established in Algeria or in a state with legislation recognised as being equivalent to the Algerian legislation on data protection; or
• the person processing personal data is not established in Algeria but uses, in processing personal data, automated or non-automated means located in Algeria.

The Data Protection Law created an independent administrative authority for the protection of personal data, whose members have recently been appointed by Presidential Decree No 22-187 of 18 May 2022.

The authority is responsible for ensuring that the processing of personal data is carried out in accordance with the provisions of the Data Protection Law. In particular, the authority is responsible, inter alia, for the following:

• issuing authorisations and receiving declarations relating to the processing of personal data;
• receiving claims and appeals relating to the implementation of the processing of personal data authorising cross-border transfers of personal data;
• ordering actions necessary for the protection of processed personal data;
• ordering the removal or destruction of personal data;
• pronouncing administrative sanctions in accordance with the Data Protection Law; and
• establishing rules of good conduct in the processing of personal data.

Companies that fall under the provisions of the Data Protection Law are expected to comply by 30 August 2023.

The Algerian government has announced a fundamental reform on the decriminalisation of management acts for both private and public companies.