Tax News Update    Email this document    Print this document  

September 26, 2022
2022-1443

Algeria issues governing decrees related to new Investment Law

  • The Algerian Government has published eight decrees related the implementation of the new Investment Law published in July 2022.
  • The Alert outlines the key provisions of the decrees related to institutional framework, incentive regimes, conditions of eligibility for benefits and guarantees granted to investors.

Following the publication of the Investment Law n 22-18 (the Law) on 24 July 2022, the Algerian Government published on 18 September 2022, eight decrees related to implementation of the Law.

The new Law introduces changes to the institutional framework, incentive regimes, conditions of eligibility for benefits and guarantees granted to investors.

Institutional framework

The new Investment Law specifies that the bodies in charge of investment in Algeria are:

  • The National Investment Council (NIC)
  • The Algerian Investment Promotion Agency (which replaces ANDI)

Chapter 3 of the Law and Executive Decree No. 22-297 refocus the role of the NIC solely on providing strategic advice on investment, ensuring its overall coherence and evaluating its implementation.

The aforementioned chapter, through its Article 19, provides for a one-stop shop dedicated to large investment projects and foreign investments. Executive Decree No. 22-299 defines major projects as projects with an investment amount equal to or greater than DZD2 billion. This same decree defines foreign investments as any investment including a capital holding by foreign persons, benefiting from a transfer guarantee.1

Investments other than those mentioned above are handled by decentralized single desks.

Incentive regimes and eligibility conditions for benefits

The Investment Act provides for the following incentive regimes:

Sector regime

Investments in the following areas of activity are eligible for this regime:

  • Mines and quarries
  • Agriculture, aquaculture and fishing
  • Industry, food industry
  • Pharmaceutical and petrochemical industry
  • Services and tourism
  • New and renewable energy
  • Knowledge economy and information and communication technologies

Area regime

Investments implemented in the following areas are eligible for this regime:

  • Highlands, South and Deep South locations
  • Localities in development needs special support from the state
  • Localities with natural resource potential to be developed

The localities are listed in Annex 1 of Executive Decree No. 22-301.

Structuring projects regime

According to Executive Decree No. 22-302, structuring investments are defined as investments with a high potential for creating wealth and jobs likely to increase the attractiveness of the territory and to create a knock-on effect on economic activity for sustainable economic, social, and territorial development, with the following objectives:

  • Import substitution
  • Export diversification
  • Integration into global and regional value chains
  • The acquisition of technology and expertise

According to the same Decree, investments that meet the following criteria are eligible as structuring projects:

  • The establishment of 500 direct jobs
  • An investment amount equal to or greater than DZD10 billion

Benefits provided by law No. 22-182

 

Implementation stage

Operational stage

Exemption from customs duties for goods imported and used directly in the realization of the investment

Benefits applicable to all incentive regimes

 

VAT exemption for goods and services imported or acquired locally entering in the investment

Exemption from transfer duties and land registration tax for real estate acquisitions made in the context of the investment

Exemption from registration duties for company constitutions and capital increases

Exemption from registration duties, land registration tax and state remuneration on concessions of built and unbuilt real estate intended for the implementation of investments projects

Exemption from property tax on investment properties for a period of 10 years from the date of acquisition

Exemption from corporate income tax (CIT)

 
  • 3 to 5 years for the sector regime
  • 5 to 10 years for the two other regimes

Guaranties granted to foreign investors

Article 8 of the Investment Law provides for a guarantee of transfer of invested capital and the income derived from it. The same article specifies that the reinvestment in capital of profits and dividends declared transferable is admitted as an external contribution. In order to benefit from these guarantees, the foreign investor must bear at least 25% of the overall cost of the investment, as specified in Executive Decree No. 22-300.

Article 13 of the Law ensures stability of the legal framework for investments registered under this Law by providing that any future changes to this Law will not apply to that investment, unless expressly requested by the investor.

Executive Decree No. 22-296 provides the investor with the possibility to submit an appeal with the High National Commission for Investment-related Appeals, attached to the Presidency of the Republic.

Disposal and transfer of benefits

Article 14 of the Investment Law provides for the possibility of transferring or disposing of goods or services that have benefited from the benefits, with the approval of the Algerian Investment Promotion Agency "AAPI" (which replaces the ANDI in the new Law).

Executive Decree No. 22-299 provides for a repayment of the benefits granted in the event of the transfer of the goods or services that benefited from these benefits. The repayment of benefits is calculated in proportion to the remaining depreciation period. The above-mentioned decree provides for the same treatment for the transfer of benefits, except in the case of a prior agreement by the AAPI.

Penalties applicable in the event of non-compliance with the obligations undertaken

Under the terms of Executive Decree No 22-303, the investor must provide the Agency with a progress report on the project within 30 days of the date of signature by the tax authorities.

Failure to justify the lack of submission of the latter within the stipulated timeframe will result in a decision by the Agency to withdraw the benefits and the refund the used operating benefits.

_________________________________________

CONTACTS

For additional information with respect to this Alert, please contact the following:

Ernst & Young Algérie, Algeria Tax, Legal and Transaction Practices Leader, Alger

EY Société d'Avocats, Africa Tax Desk Leader

Ernst & Young Algérie, Business Tax Advisory, Alger

_________________________________________

ENDNOTES

  1. See Section below on guaranties granted to foreign investors.

  2. A list of activities, goods and services excluded from these benefits is provided for in the appendices to Executive Decree No. 22-300.

 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 1996 – 2024, Ernst & Young LLP

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

EY US Tax News Update Master Agreement | EY Privacy Statement