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IMF Urges Algeria To Increase Non-Hydrocarbon Revenues

by Lorys Charalambous, Tax-News.com, Cyprus

15 December 2014


The International Monetary Fund (IMF) has suggested a range of fiscal measures to help Algeria reach its tax collection potential.

The Fund said in its Article IV consultation report for Algeria that the country's tax potential in 2013 was 3.3 percentage points of non-hydrocarbon gross domestic product (GDP) higher than actual collected tax revenues. Closing this gap will require broadening the tax base and strengthening tax administration, it said.

Tax exemptions should be eliminated or reduced, the distortive turnover tax should be replaced with well-targeted excise taxes, and the property tax should be overhauled, the report said.

The IMF welcomed an increase in the ceiling for the corporate flat rate tax, which was announced in the 2015 budget law. It should lead to higher returns and free resources within the General Tax Directorate for expanding the tax base, it said.

The report noted that while the Algerian authorities broadly agreed that non-hydrocarbon revenues need to increase, they saw merit in continuing to grant tax exemptions, notably to promote investment, and were cautious about introducing new taxes before first developing a broader domestic consensus, including with local governments, around a revenue strategy.

TAGS: tax | investment | property tax | tax incentives | law | gross domestic product (GDP) | budget | International Monetary Fund (IMF) | Algeria | oil and gas | tax breaks | Tax

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