Tax provisions of the Supplementary Algerian Financial Law 2008

 

In Algerian tax law, the financial laws are traditionally an important instrument for the reform of the taxation of Algerian enterprises.

This text summarizes the major tax law changes contained in the Supplementary Algerian Finance Law (LFC) for the year 2008 (Ordinnance No. 08-02 of 24 July 2008, JORA, No. 42). .

1) Reduction of the tax on profits  

Article 5 of the Supplementary Algerian Finance Law for the year 2008 and Article 150 of the Algerian Code of Direct Taxes (CDI).

Until the entry into force of LFC the rate of corporation tax was 25%.

The Supplementary Algerian Finance Law for 2008 has changed the rate in force as follows: 

• 19% for the production of goods, construction and public works, and tourism activities;
  
  
  
• 25% for trade activities and services;

• 25% for joint activities when the turnover in trade and services is more than 50% of total turnover excluding taxes.

• It is also précised, that notwithstanding Article 4 of the Algerian Code of Taxes on Turnover, "production of goods" means: extracting, manufacturing, treatment or processing of products to the exclusion of packaging or marketing presentation for resale; and that the term "production activity" used in Article 4 of the LFC does not include the mining and hydrocarbons.

 2) Requirement for companies enjoying exemptions or reductions of tax on corporate profits in the context of the legislations supporting investments (including ANDI) to reinvest the profits related to these exemptions or reductions 

Article 4 of the Supplementary Algerian Finance Law for the year 2008 and Article 150 of the Algerian Code of Direct Taxes.

Under this provision of the LFC taxpayers who receive exemptions or reductions of tax on corporate profits in connection with legislations supporting investment are required to reinvest the profits subject to these exemptions or reductions within four years from the closing date of the accounting period whose results were submitted to preferential treatment.

Companies benefiting from the tax advantages granted by the National Agency for the Support of Investment (ANDI) may therefore not distribute the profits pertaining to these exemptions or reductions as long as they receive tax benefits under the ANDI regime.

Notwithstanding any other provisions, the provisions of Article 4 of the LFC apply to the results released for the year 2008, as well as to results whose assignment is pending to the date of promulgation of the LFC.

Failure to observe the provisions of Article 4 of the LFC leads to the repayment of the tax advantages and to a penalty tax of 30%.

3)  Removal of the reduced rate of tax on corporate profits in case reinvestment of profits.  

Article 5 of the Supplementary Algerian Finance Law for the year 2008 and Article 150 of the Algerian Code of Direct Taxes (CDI).

The provisions of Article 5 of LFC result in the cancellation of the taxation of profits reinvested at the advantageous rate of 12.5%.

4) Changing the date of filing annual tax statements

Article 5 of the Supplementary Algerian Finance Law for the year 2008 (LFC) and Article 151-1 of the Algerian Code of Direct Taxes (CDI). The deadline for filing the annual statement and balance sheet tax was extended for one month. It is now expire on April 30 of the year following the accounting period.

5) Establishment of a new tax control procedure

Article 22 of the Supplementary Algerian Finance Law and 20 bis of Algerian Tax Procedures Code. 
 
A new control procedure was established by the LFC in order to strengthen the effectiveness of tax audits. Now the Algerian tax administration may carry out spot check of the accounts of one or more taxes and over a period of less than one tax year.