Algeria Includes Gold On 'Negative' Tax List

by Ulrika Lomas, Tax-News.com, Brussels

03 October 2013

Algeria has drawn up a new "negative list" of products that are to be excluded from the customs tax exemption benefiting most products under the terms of the Greater Arab Free Trade Area agreement (GAFTA), which is to include gold.

Under the GAFTA accord, treaty member states have up to four years in which to protect any vulnerable production sectors from the impact of the free trade zone. Algeria has opted to protect its "at risk" sectors via the unilateral application of a negative list for goods imported.

The revised negative list includes 953 products, compared to 1,260 currently. In contrast, Algeria's "positive list" provides exemption from customs duties to 4,784 products. The Government decided to update its negative list to take into account the fact certain products, that have up to now been excluded from customs tax exemption, have never actually been imported from Arab countries. The revision also forms part of efforts to clamp down on fraud and abuse of the tax perk.

Despite the undoubted benefits of the free trade zone, the customs tax exemption has been open to abuse. Fraudsters have taken advantage of the tax break to significantly inflate their import prices. Previously, when a normal tariff system has applied, prices have been kept low to avoid payment of additional customs charges.

Last year, the Algerian Finance Ministry discovered that this type of fraud also involves gold. Consequently, it decided to include gold ores and concentrates on its negative list in order to address the problem.

Algeria's updated negative list will apply from October 1.

TAGS: Finance | tax | Algeria | excise duty | tax breaks | trade | free trade zone