Algeria Eyes Business Tax "Alternative"

by Lorys Charalambous, Tax-News.com, Cyprus

27 November 2013

Algeria's Director General of Taxation Abderrahmane Raouya has revealed that the Government is currently considering the idea of replacing the country's controversial professional business tax (TAP) with a less disputed alternative.

Underlining the fact that the TAP levy is highly unpopular among entrepreneurs in Algeria, Raouya announced that a study will be initiated shortly "to find a solution" to the tax. The Government aims to find an alternative, even if the problem can not be resolved overnight, the Minister emphasized, underscoring that the levy currently generates around DZD300bn (USD3.8bn) for local authorities in Algeria. Raouya explained that the Finance Ministry has already considered ways in which to simplify the tax.

Furthermore, Raouya made clear that efforts to clamp down on tax fraud and tax evasion are to be stepped up, notably by strengthening intervention. The Minister explained that around 220 tax controls were carried out in the first half of 2013, enabling the tax authorities to recover an estimated DZD1.2bn for the state.

Finally, Raouya confirmed that Algeria's unique lump sum taxation (IFU) regime, applied to around 800,000 small taxpayers in Algeria, is designed to "eliminate" the so-called "informal economy," ensuring that all economic actors contribute.

In Algeria, the favorable IFU tax regime benefits individuals primarily active in either the sale of goods and objects or in the provision of services, in cases where annual turnover does not exceed DZD10m. The tax is levied at a rate of 5 percent for the re-sale of goods and objects, and 12 percent for the provision of services.

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