Government Role in the Economy
Algeria’s market of 35 million inhabitants, energy
wealth, and growing demands for modern infrastructure have generated
interest from governments and companies around the world. On one hand,
Algeria’s economy is expected to grow at a healthy rate of 3-5% over the
next several years based on higher world prices for oil. As Algeria is a
non-traditional market for many exporters, Algeria can open doors in several
new sectors such as health & nutrition, franchising, and home & housewares.
Algeria is a market that requires patience and
determination, it is advised to demonstrate a long-term commitment to
maximize their chances of success. Algeria remains one of the few countries
not to have joined the WTO. It joined the Arab Free Trade Area at the
beginning of 2010.
The Algerian Government has recently implemented new
controversial measures concerning trade and investment. Below are policies
which have been implemented recently as well as a summary of a
‘Complementary Finance Law’ published in the Official Journal July 26, 2009.
The Law contains nine chapters comprising 30 pages.
Pharmaceuticals ban on 800 drugs (implemented Jan
Refurbished heavy equipment ban (implemented Aug
Freezing of consumer credit (implemented Aug 2009).
It is expected that this policy will seriously hurt export opportunities
in cars and other large household appliances.
Complementary Finance Law:
I - Investments
All foreign investment can only be realized in a
49/51 partnership with Algerian investors. The 51% majority Algerian
share can be represented by several Algerian partners or entities.
All foreign investments must demonstrate a favorable
balance in foreign exchange during the lifetime of the project.
The Government and Algeria and state-owned companies
can reject or accept all transfers of shares of foreign shareholders.
Foreign investments in goods and services must
register a Declaration of Investment with ANDI, the National Agency for
Foreign investment is subjected to prior review by
the National Investment Council, NCI.
Foreign investors must commit to preferential
treatment for Algerian goods and labor in order to obtain Algerian
Government investment incentives. This commitment must be submitted in
writing to the CNI and ANDI.
Foreign investors are exempt from VAT only when
purchasing Algerian products or products that are not produced in
The CNI has the authority to grant, for a limited
period not exceeding 5 years, exemptions or reduction of duties, taxes
or charges, including VAT.
An exemption period of 5 years on Corporate Tax is
granted to companies that create over 100 jobs.
Investors that benefit from Algerian Government tax
exemptions are required to re-invest the equivalent of their tax
exemption inside Algeria within four years of commencing the investment
Corporate taxes are established as follows: 19% for
production, public works and tourism activities; 25% for commercial and
Commercial banks registered under Algerian law are
only allowed to grant loans to individuals as part of real estate
II – Measures affecting imports
Import activities can only be exercised by
individuals or foreign legal entities within the framework of a
partnership whose resident national shareholding is equal to at least
30% of the share capital.
A banking domiciliation fee of 10,000 DZD (approx.
$150) is levied on each import transaction of goods. For import of
services, the fee is 3% of the transaction amount.
Capital goods and raw materials are explicitly
excluded from this requirement, provided the importer commits in writing
that imported goods are not to be re-sold.
Algerian importers must obtain a Tax Identification
Number, NIF, from the Algerian Tax Administration in order to proceed
with import activities.
Imports operation may not be carried out by third
parties. Banking domiciliation procedures relating to the imports
business should be performed by the holder of the trade registration or
the general manager of the importing company. The physical presence of
the holder is required for border control formalities (Border Police and
This measure was amended on August 12 2009 authorizing
the formalities to be made by a third party provided they can show a mandate
as well as an official declaration at the Wilaya (state) where the import
company is headquartered.
An importing company must domicile its operations at
an Algerian bank before beginning business.
A letter of credit in the only way to pay for
imports. LC’s may only be opened with correspondent banks approved by
Importing companies that want to cancel their trade
registration must submit a tax certificate to the National Center of
Trade Registration within the Ministry of Commerce within 48 hours of
applying for cancellation.
The customs administration may engage specialized
companies to check goods and perform inspections before shipments arrive
These measures enter into effect and are enforceable
as of July 27 2009.