Algeria

Scope of VAT

Territoriality of VAT

VAT applies only to transactions deemed to be made in Algeria (art. 7 of the Algerian Turnover Tax).

Definition of a business deemed to be made in Algeria:

• Sale: when it is carried out under the conditions of delivery of the goods in Algeria

• Other operations: when the service rendered, the right transferred, the object leased or the studies carried out are used or exploited in Algeria.

Taxable transactions

Taxable transactions by nature (art. 1 The Turnover Tax Code ‘CTCA’)

VAT applies on:

• operations of sale, real estate works and provision of services other than those subject to special taxes of an industrial, commercial or artisanal nature and carried out in Algeria on a regular or occasional basis. This tax applies regardless of the legal status of the persons who intervene for their realisation or their situation with regard to other taxes, the form and nature of their intervention

• import operations.

Transactions taxable by specific provision of the law (Art. 2 CTCA)

VAT applies on:

• real estate works

• self-supplies by taxable persons

• rental operations, provision of services, studies and research work, as well as all operations other than sales and real estate work

• operations carried out by banks and insurance companies

• sales of real estate or goodwill by persons who habitually or occasionally purchase such property on their own behalf with a view to reselling it

• shows, games and entertainment of any kind organised by any person, even if acting under the cover of associations governed by the legislation in force

•  Transactions involving the exercise of self-employment professions irrespective of their nature

• telephone and telex services provided by postal and telecommunications services

• sales transactions carried out by supermarkets, multiple trading activities and retail trade, excluding transactions carried out by taxpayers subject to the flat-rate system.

Taxable transactions by option (Art. 3 CTCA)

Natural or legal persons carrying on business outside the scope of VAT may opt to be subject to this tax, to the extent that they supply:

• for export

• to oil companies

• to companies benefiting from the free VAT purchase mechanism.

This option is valid for a period expiring on December 31 of the third year following the year in which it took place and renewable by tacit agreement unless expressly waived.

VAT rates

VAT rates in Algeria are as follows:

• Reduced rate: 9% for goods and services of particular economic, social or cultural interest. Exhaustive list of goods and services subject to the reduced rate is provided by article 23 of the turnover tax code. 
  The reduced rate applies also until 31.12.2024 to services related to tourist activities, hotel and thermal activities, travel, listed restaurants activities, and rental of touristic transport vehicles 

• Standard rate: 19% for transactions, goods and services not specifically subject to the reduced rate.

VAT registration

VAT registration in general

No VAT registration is required in Algeria. Companies must register with relevant tax authorities, where a tax identification number will be assigned.

VAT related to all kinds of operations is declared and paid through monthly declarations called Gn°50.

Non-residents

Non-resident suppliers with no legal presence in Algeria must appoint a representative domiciled in Algeria in order to comply with local regulation and fulfil their VAT obligations, as provided for by Article 63 of the CTCA. Appointing a VAT representative in Algeria is not required in transactions subject to the reverse charge mechanism.

Failing this, the tax and, where appropriate, the related penalties shall be paid by the client on behalf of the person not having an establishment in Algeria.

Input VAT deduction

Right of deduction

Basic principles:

• The VAT charged on the cost price components of a taxable transaction is deductible from the VAT applicable to that transaction.

• The deduction is valid if, after or without processing, the materials, products, objects or services are used in a transaction which is effectively subject to VAT.

• The deduction is to be operated in respect of the month or quarter in which the VAT was payable. The tax which deduction has been omitted may be included on subsequent returns up to 31 December of the year following the year of the omission.

• If the VAT due for a month or a quarter is less than the deductible VAT, the remainder is carried forward to the following months or quarters.

Scope of application

Right to deduct:

• The right to deduct VAT is intended for taxable persons carrying out taxable supply transactions.

• It is also intended for (Article 32 of the CTCA):

  • export transactions

  • transactions for the supply of goods and services to an exempt sector or benefiting from the tax-free purchase regime

  • transactions of sales of exempt products and services whose prices or margins are regulated.

Transactions not giving rise to a right of deduction:

• transactions outside the scope of VAT

• retail trade activities

• commissionaires and brokers

• sports meetings of all kinds.

VAT excluded from the right to deduct:

• VAT charged on goods and services used for private use or for a non-taxable activity

• VAT charged on services, spare parts and supplies used for the repair of goods excluded from the right of deduction

• VAT charged on passenger cars and passenger transport vehicles not constituting the main tool of the holding

• VAT on donations and gifts.

Obligations relating to the right to deduct:

• mandatory information on invoices

• the turnover statement must be submitted to the tax collector within 20 days of the calendar month.

This statement must be supported by a report containing, for each supplier, the following information:

• tax identification number (*)

• surname and first name(s) or company name

• address

• trade register entry number (*)

• invoice date and reference

• amount of purchases made or services received

• amount of VAT paid.

(*) The tax identification number and the trade register number must be authenticated according to the procedure in force.

VAT free purchases regime

Overview

This regime enables a taxable person who is unable to charge the VAT paid on his purchases to acquire, free of VAT, goods and services intended either for export or for the production of goods expressly exempted by law.

The transactions benefiting from this regime are expressly listed by law.

This regime needs to obtain an authorisation setting an annual quota of VAT-free purchases from the territorially competent regional tax director (or DGE), under certain conditions and in accordance with a specific procedure.

Existence of VAT free purchase formalities and obligations borne by the beneficiary of the authorisation.

Scope of application

Operations benefiting from VAT free purchases regime:

• goods and services listed in executive decree 14-06 acquired by suppliers of oil companies assigned exclusively to hydrocarbon activities defined by article 2 of the Hydrocarbon Law 19-13, such as:
  • Upstream activities including:
  • The activities of exploration, research, evaluation, development, and exploitation of hydrocarbons. These activities include the separation, the fragmentation, the compression, the collection and supply, the on-site storage and disposal of hydrocarbons. They also include the management activities inherent to these operations as well as abandonment and rehabilitation of sites. In the case of offshore activities, upstream activities also cover floating facilities, including gas storage, shipping and liquefaction.

• Downstream activities including: 
  • The activities of transport by pipeline, refining, processing including the manufacture of lubricants and the regeneration of used oils, storage and distribution.
  • Please note that Upstream activities and Downstream activities mentioned above benefit from the exemption regimes provided for by Article 9-9 of the CTCA referred to in section “Exempt supplies”.

• purchases or imports of goods made by an exporter for export or re-export in the same condition or for incorporation in the manufacture, composition, conditioning or packaging of products for export, as well as services directly linked to the export operation.

• purchases or imports of goods, made by an exporter, intended either for export or re-export in the same state, or for incorporation into the manufacture, composition, packaging or wrapping of products intended for export, as well as services directly linked to the export operation.

• goods and services acquired in the context of a contract concluded between a foreign company not having a permanent professional establishment in Algeria and a contracting party benefiting from this regime.

Quota (contingent):

• The authorisation for VAT-free purchases, which shall be valid for one calendar year, shall be issued for an annual quota, the amount of which may not exceed:

  • either the sales value, excluding tax, of goods normally subject to VAT, delivered by the beneficiary during the previous financial year, or

  • the amount, excluding tax, of purchases of such products during the previous year plus 15%.

• An additional quota may be granted on presentation of supporting documents justifying the need for the requested increase.

• A provisional quota fixed at ¼ of the previous year’s quantum may be granted at the beginning of the calendar year pending the renewal of the annual authorisation.

• When a newly established company applies for the quota approval, a provisional quota with a quarterly deadline is granted. This quota is then revised to set the limit for value added tax-free purchases until the end of the calendar year.

Output VAT

Description

Taxable turnover includes the price of goods, works or services, including all costs, duties and taxes, excluding VAT itself.

The taxable turnover for self-employment activities is constituted by the gross amount of the fees and revenues realised.

The operative event is constituted by:

• the legal or physical delivery of the goods for resale activities

• the total or partial collection for services provision.

VAT related to each month is declared and/or paid through the monthly declarations G50 to be submitted before the 20th of the following month.

Exempt supplies

The below operations are exempt from VAT:

Business done inside the country

• Operations excluded from the scope of VAT, such as:

  • listed products liable to the sanitary tax on meat

  • gold, silver and platinum articles, subject to the guarantee right, except luxury jewellery

  • transactions carried out between companies of the same group as defined by provisions of the Algerian Tax Code.

• Operations expressly exempt from VAT as provided for by article 9 of the CTCA as amended and completed by Finance Law 2023.

• Raw oil, press cakes generated from in-country trituration and oilseed cakes are exempt from the value added tax, for a five-year period.

Import business

• Products which domestic sale is exempt from VAT are, on importation, exempted under the same conditions.

• Also exempt from VAT on imports:

  • goods placed under one of the customs duty suspensive regimes

  • goods subject to exceptional duty-free admission

  • aircrafts intended for use by air navigation companies

  • articles and products, raw or manufactured, for use in the construction, fitting out, repair or conversion of aircrafts, approved flying schools and training centres

  • the refurbishment, repair and transformation of Algerian ships and aircraft abroad

  • goods imported under barter arrangements in accordance with the conditions provided for by the laws and regulations in force

  • ships intended for shipping companies listed under certain headings of the Customs Tariff.

  • Works of art, paintings, sculptures, works of art in general and any other work of national cultural heritage when imported by national museums as part of the repatriation of national cultural heritage from abroad.

Export business

• sales and processing businesses relating to exported goods, subject to some conditions provided by Article 13 of CTCA

• the business of selling and processing of goods of national origin delivered to legally established bonded warehouses.

International trade

Goods and services

Goods and services imports are subject to VAT at the rate of 19% or 9%, except where a specific exemption applies.

The taxable base is constituted by the customs value including all duties and taxes, excluding VAT itself.

Goods and services intended for export are generally exempt from VAT under some conditions (Article 13 of CTCA).

However, there are some exceptions such as sales of antiques, paintings, watercolours, postcards, drawings, original sculptures, engravings or prints, gemstones, rough or cut, fine pearls, precious metals, etc.

The taxable base for taxable products is the value of the goods at the time of export, including all duties and taxes, excluding VAT itself.

Place, time and value of supply

Operative event and due date

Article 14 of the Algerian Turnover Tax Code (CTCA) specifies the operative event as per the below:

• sales and similar operations: physical or legal delivery of the goods

• real estate works: total or partial collection of the price

• self-deliveries of manufactured movable goods and real estate works: delivery

• provision of services: total or partial collection of the price

• import: introduction of the goods into customs

• export: presentation to customs.

Time of supply

Value of supply

For operations carried out inside the territory: The taxable turnover includes the price of the goods, works or services, all costs, duties and taxes included, excluding VAT itself.

For import operations: The taxable base is constituted by the customs value including all duties and taxes, excluding VAT itself.

For export operations: The taxable base for taxable products is the value of the goods at the time of export, including all duties and taxes, excluding VAT itself.

VAT compliance

Accounting basis and tax period

VAT is accounted for at the time of receipt of the invoice. It is declared to the tax authorities under a statement (series G n°50) indicating the turnover realised with the payment of all mandatory taxes.

VAT related to each month is declared and paid through the monthly declarations G50 to be submitted before the 20th of the following month.

Interest and penalties

Any late payment of the VAT will give rise to a penalty, calculated on the amount to be paid, by a percentage which differs according to the period of delay:

• Between the 21st of month N+1 and the last day of month N+1, the penalty is 10%.

• Beyond month N+1, a penalty of 3% will be added every month to the initial rate until it reaches 25%.

Withholding VAT obligation

In Algeria, VAT is not declared by a withholding system. Each taxpayer will have to pay the VAT for the transactions carried out.

Non-resident suppliers with no legal presence in Algeria have to appoint a representative domiciled in Algeria in order to comply with local regulation and fulfil their VAT obligations, as provided for by Article 63 of the CTCA.

In some cases, and under certain conditions, the VAT can be declared and paid by the Algerian customer through the reverse charge mechanism (case of foreign suppliers who do not have permanent business facilities in Algeria) as provided for by Article 83 of the CTCA.

VAT refunds

Overview

If the deductible VAT cannot be fully offset against the output VAT, the resulting VAT credit can be refunded by the tax authorities, in certain cases restrictively listed by law.

The refund is granted to the taxpayer, under certain conditions expressly provided for in the law.

A refund application file must be submitted by the taxpayer, in accordance with a specific refund procedure provided for by law.

Right of reimbursement

Refunds are provided for where the deductible VAT cannot be fully offset against the VAT due on taxable transactions carried out by a taxable person, in the following cases:

• Exempt transactions:

  • export transactions

  • trade operations of goods, goods and services expressly exempt from VAT

• Transactions involving the supply of goods, works, goods and services to a sector which is exempt or which benefits from the VAT-free purchase authorisation regime.

• The cessation of activity: The refund of the VAT credit is determined after regularisation of the overall situation of the taxpayer, in particular with regard to the repayment of initial deductions and capital gains on business transfers.

• The difference in VAT rates: This can be resulting from the application of the standard rate on the acquisition of materials, goods, depreciable goods and services and the reduced rate on taxable business.

• Transactions carried out by partial payers: refund limited to the deductible VAT fraction, the non-deductible fraction being regarded as a deductible expense for the purpose of determining taxable profit.

Refund condition

• Keeping of accounts in the regular form

• Production of a cleared statement of account or a payment schedule

• Mention of VAT credit tax on the monthly G 50

• Amount of the transaction in respect of which VAT was due must be duly deductible according to articles 29 and 41 of Turnover Tax code.

• Application for refund of the VAT credit must be submitted by the 20th of the month following the quarter in respect of which the refund is requested, at the latest. For partial taxpayers, applications for refunds must be submitted by 30 April of the year following the year in which the credit was established.

• No deferral of the VAT credit for which the refund is requested as soon as the refund application is submitted.

• The refund application must be for an amount equal to or higher than DA1,000,000, otherwise it will be inadmissible. This threshold does not apply to partial taxpayers and taxpayers who have ceased their activity.

VAT record-keeping

Tax invoice

For VAT to be admissible, the invoice must include the following statements:

• name, address and tax identification of the client

• name, address and tax identification of the supplier

• legal form of the economic agent and nature of the activity

• date of transaction

• order number of the invoice

• method of payment and date of payment of the invoice

• amount excluding VAT

• name and quantity of goods or extent of services

• unit price excluding tax of the goods sold and/or services provided

• total price excluding tax of the goods sold and/or services provided

• rate of VAT, and the VAT amount (the VAT is not mentioned if the buyer is exempt from it)

• total payable amount including all taxes expressed in figures and letters.

Record-keeping

Specific VAT rules

Bad debts

Digital economy

Land and buildings

Leasing

Secondhand goods

Tourism industry

Currency conversion

Transfer of business

Warranty repairs

Other indirect taxes

Import duties

Stamp duty

Other indirect taxes

Bank domiciliation tax

The bank domiciliation tax is set at 0.5 % for the importation of goods or merchandise intended for resale in the same state and at 1% for the import operations operated within the framework of CKD/SKD, without the amount of the tax being lower than DA 20,000.

For importation of services the bank domiciliation tax is set at 4%.

The tax on polluting and environmentally hazardous activities

This tax applies to the activities listed in the annexure to Executive Decree No. 09-336 of 20 October 2009, which defined the activities subject to the tax on polluting or environmentally hazardous activities and set the multiplier coefficient.

Energy efficiency tax

The rate of the EE tax, required at customs clearance, varies between 5 and 30% of the ex-works price of the product for locally manufactured products and between 5% and 40% for imported products (by energy class, etc.) according to article 70 of Finance Law 2017.