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Algerian 2009 Budget Heralds Good News For Business

by Ulrika Lomas, Tax-News.com, Brussels

30 October 2008

The 2009 Algerian budget, approved largely unchanged by parliament, announces specific measures aimed at boosting economic activity, stimulating national and foreign investment, simplifying existing tax systems and combating tax evasion, thus heralding good news for businesses.

Crucial proposals contained in the budget include the extension of income and corporate tax concessions for stock exchange traders for a further five years, and the guaranteeing of investment credits for small businesses. Most noteworthy, is the absence of any new taxes.

Among the few measures under review was the controversial 1% tax due to be levied on the profit of car dealerships from next year. Vehemently opposed by many of the deputies, the measure was finally agreed by the finance commission. Keen to emphasise that the initiative, which it is estimated will raise DZD13bn (USD204mn), will serve to support public transport, the commission went on to explain that the measure also seeks to motivate car manufacturers to invest in construction and assembly activities in Algeria.

The 2009 budget includes measures to enlarge the tax base and to consolidate efforts to prevent tax fraud and evasion. These include the creation of a tax investigation service to conduct searches at national level with a view to identifying sources of tax evasion and fraud. Regional teams will also be established

Initiatives designed to encourage investment include:

  • Property developers will remain eligible for national funds and accorded exemption from income tax for five years.
  • A state guarantee will be provided for investment loans awarded to SMEs by the credit investment bank, Caisse de garantie des crédits à l’investissement.

Measures to simplify the tax system include:

  • The institution of a system of quarterly payments of income tax, local business tax and VAT.
  • Simplification of the method of payment for corporation tax.
  • Exemption of profit derived from the transfer of developed and non-developed property from income tax.

The budget is expected to be ratified by the Senate in the coming weeks, and subsequently signed by President Abdelziz Bouteflika in December.

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