Algeria Personal Income Tax

Individuals who are tax resident in Algeria are sub­ject to income tax on their worldwide income. Individuals who are not tax resident in Algeria are subject to tax on their income from Algerian sources.

The following individuals are considered to be tax resident in Algeria:

  • Individuals who are owners or beneficial owners of a home in Algeria
  • Individuals who are tenants in Algeria with a rental term of a continuous period of at least one year, whether by single or by successive agreements
  • Individuals who have their place of principal residence or the center of their main interests in Algeria
  • Individuals working in Algeria, regardless of whether they are paid
  • Agents of the Algerian government who serve at a mission in a foreign country and who are not subject in the foreign country to a personal tax on all of their income

Income subject to tax

Employment income. Employment income is included in annual taxable income. It includes salaries, wages, pensions, life annui­ties and benefits in kind, except for certain items, such as food, housing, heating and lighting.

Self-employment and business income. Income derived by self-employed individuals is divided into the following two categories:

  • Business profits, which are profits derived by individuals from commercial, industrial, artisanal or mining activities
  • Non-market benefits, which are profits derived by individuals from artistic and scientific occupations

The tax base for self-employed individuals engaged in activities in the above two categories is computed in the same manner as the tax base for corporations. Taxable income equals the differ­ence between gross income and expenses incurred for the perfor­mance of the activity during the calendar year.

Income below DZD30 million is subject to the Single Flat Rate Tax (Impôt Forfaitaire Unique, or IFU) at the tax rates set forth in Rates. IFU is a single tax that includes personal income tax (impôt sur le revenu global, or IRG), value-added tax, corporate tax and the tax on business activity. If net income is DZD30 mil­lion or more, it is taxed under the “real regime” at the same rates applicable to employment income (see Rates).

Income derived by taxpayers under the category of non-market business is subject to IRG at a rate of 20%. This tax is levied at source.

Amounts paid as fees or copyright artist fees to artists who have their tax residence outside Algeria are subject to IRG through a final 15% withholding tax. However, these fees are not subject to IRG if they are earned by the artists in the context of cultural agreement exchanges, national holidays, festivals, and cultural and artistic events organized by the Ministry of Culture.

Investment income. Dividend distributions are subject to a final withholding tax at a rate of 10% for residents and 15% for non­residents.

Revenues from loans and deposits are subject to an advance pay­ment corresponding to a 10% withholding tax. However, for interest earned on monies deposited in savings accounts of indi­viduals, the following are the withholding tax rates:

  • 1% for the portion of interest payments not exceeding DZD50,000 (final withholding tax)
  • 10% for the portion of the interest payments exceeding DZD50,000

Directors’ fees. Directors’ fees are fees paid to directors of com­panies as compensation for the performance of their functions. Directors’ fees are considered distributions of income. Consequently, they are subject to a final withholding tax at a rate of 10% for residents and 15% for nonresidents.

Taxation of employer-provided stock options. The Algerian Direct Tax Code does not contain any specific measures relating to the taxation of stock options granted to employees.

Capital gains. Capital gains derived from the transfer of tangible property during the course of a nonbusiness activity are not tax­able.

The taxation of gains derived from the transfer of capital assets depends on whether the assets are short-term or long-term assets. Capital assets are considered long-term assets if they have been held more than three years. Thirty-five percent of gains on long­term assets are included in taxable income. Capital assets that are not long-term assets are considered short-term assets. Seventy percent of gains on short-term assets are included in taxable income is transferred to the notary. The rate is 20% for nonresidents, after one-fifth of the capital gain is transferred to the notary.

Capital gains on share transfers for residents are exempt from tax if the amount is reinvested (company contribution or purchase of shares of another company).

Capital gains are exempt from IRG if they are derived from the sale of bonds, securities and Treasury bonds that are listed in the stock exchange or traded on a regulated market and that have a minimum term of five years and are issued during the five-year period beginning on 1 January 2014.

Deductions

Personal deductions and allowances. Taxpayers may deduct cer­tain expenses from employment income including social insur­ance contribution, support payments and insurance premiums paid as an owner or lessee.

Business deductions. Business deductions include depreciation and general expenses incurred for business purposes. Depreciation of business assets is deductible if it is recorded annually in the accounts and relates to assets shown in the balance sheet. The depreciation rates vary according the nature of the activity in which the assets are used.

Other deductions. After the net income for each category of income is aggregated, the following expenses are deductible:

  • Interest paid on loans obtained by a taxpayer for a business purpose or the acquisition or construction of a principal home
  • Contributions paid by a taxpayer for a retirement pension or social insurance
  • Maintenance allowance
  • Insurance policy concluded by a landlord

Rates. The following are the progressive personal income tax rates in Algeria, which apply to employment income and to self-employment and business income of DZD30 million or more.

Taxable income

Exceeding DZD Not Exceeding DZD Rate %
0 120,000 0
120,000 360,000 20
360,000 1,440,000 30
1,440,000  – 35

All bonuses paid by the employer on a non-monthly basis are subject to a reduced rate of 10%. For this purpose, non-monthly bonuses include amounts paid to employees in addition to the amounts paid to them for their principal activities.

Self-employment and business income below DZD30 million is subject to IFU at the following rates:

  • Income from production activities and sales of goods: 5%
  • Income from other activities: 12%

Relief for losses. In general, losses incurred in business and agri­cultural activities may be carried forward for four years to offset profits from the same category. Losses attributable to the depre­ciation of assets may be carried forward indefinitely.

Nonresidents. Individuals who are not tax resident in Algeria are subject to tax on their Algerian-source income. The types of income considered to be Algerian-source income include the following:

  • Income from Algerian real estate and related rights
  • Income from Algerian securities and capital assets
  • Income from business carried out in Algeria
  • Income from professional activities (including self-employment) carried out in Algeria
  • Profits derived from Algerian real estate operations

The following types of income are also considered Algerian-source income if the payer of the income is resident for tax pur­poses or established in Algeria:

  • Pensions and annuities
  • Amounts paid as compensation for services provided or used in Algeria
  • Income received by inventors, income from copyrights, and income from intellectual or commercial property and related rights

Other taxes

Tax on donations. Donations are taxable on the basis of the value of donated property. The tax rate is 3% for donations between parents, children and spouses. The same rate applies to the fixed assets of a company that heirs agree to continue operating. This tax does not apply to donations to non-family members.

Wealth tax or net worth tax. Individuals who are tax resident in Algeria are subject to wealth tax on their property located in Algeria and abroad. Individuals who are not tax resident in Algeria are subject to wealth tax on their property located in Algeria. The tax is assessed on 1 January of each year.

The following are the rates of the wealth tax.

Taxable net value

Exceeding DZD Not Exceeding DZD Rate %
0 100,000,000 0
100,000,000 150,000,000 0.5
150,000,000 250,000,000 0.75
250,000,000 350,000,000 1
350,000,000 450,000,000 1.25
450,000,000 1.75

Property tax

Developed properties. The property tax is payable annually on buildings located in Algeria, except those that are specifically exempt. Facilities also subject to this tax include, but are not limited to, the following:

  • Facilities to house people and goods, or to store products
  • Commercial facilities within the perimeters of airports, port terminals and railway and bus stations

The tax base is the tax rental value of the property, which is based on the cadastral value determined by the Algerian administration. An allowance rate of 2% is applied each year to reflect obsolescence. However, in general, this deduction cannot exceed a maximum of 25%.

The tax rate for buildings is 3%. However, a 10% rate applies to buildings for residential use that are not employed in a personal or family capacity as a rental in areas to be determined by regulation.

The following are the tax rates for land considered dependency property (land attached to the building property):

  • 5% if the size is less than or equal to 500 square meters
  • 7% if the size is greater than 500 square meters and not more than 1,000 square meters
  • 10% if the size is greater than 1,000 square meters

Undeveloped properties. Property tax is imposed annually on all undeveloped properties, except those that are specifically exempt.

The tax base is the tax rental value of the property.

The tax rate is 5% for undeveloped properties located in non-urbanized areas.

For urbanized land, the following are the tax rates:

  • 5% if the land size is less than or equal to 500 square meters
  • 7% if the land size is more than 500 square meters and less than or equal to 1,000 square meters
  • 10% if the land size is greater than 1,000 square meters

The rate is 3% for agricultural land.

For properties located in urbanized or urbanizing areas on which construction has not begun in three years, the normal property tax rate is multiplied by four.

Social security

Social security contributions are based on gross compensation paid, including fringe benefits and bonuses. Some benefits paid on an exceptional basis can be exempt from social security con­tributions under certain circumstances.

Contributions. Employer contributions are paid and employee contributions are withheld monthly. The following are the rates of the social security contributions:

  • Employers: 25%
  • Employees: 9%

Employers must make an additional 1% contribution for the funds for social action.

Coverage. All foreign workers from countries with which Algeria has entered into social security agreements who are pursuing an activity in Algeria while maintaining an employment contract with their employers abroad may elect to be subject to the social security system of their home countries and be exempt from social security contributions in Algeria. To implement this elec­tion, the employer must give a copy of a certificate of coverage (certificat de détachement) to the employee, who then submits it to the national social security fund (Caisse Nationale des Assurances Sociales, or CNAS).

Totalization agreements. Algeria has entered into social security agreements with Belgium, France, Romania and Tunisia.

Tax filing and payment procedures

The Algerian tax law provides for monthly, quarterly and annual tax returns.

The monthly tax return (G50) applies only to businesses under the real regime. This tax return must be filed by the 20th day of each month.

The quarterly tax return applies only to businesses under the simplified regime. It must be filed by the 20th day of the month following the end of the quarter.

All businesses must file an annual tax return by 30 April of each year.

Algerian tax residents who derive personal income in addition to their remuneration must file an annual tax return (G1) by 30 April of each year.

Double tax relief and tax treaties

Algeria has entered into double tax treaties with the following jurisdictions.

Austria                            France                        Portugal

Bahrain                            Germany                    Qatar

Belgium                           Indonesia                    Saudi Arabia

Bosnia and                      Iran                             South Africa

Herzegovina                    Italy                            Spain

Bulgaria                           Korea (South)             Switzerland

Canada                            Kuwait                        Turkey

China                               Lebanon                     United Arab

Egypt                               Oman                         Emirates

Entry and tourist visas

Entry visas are required for nationals of the European Union (EU), United States and certain Arabic countries, such as Egypt. Moroccan and Tunisian nationals are not required to have entry visas.

Algerian embassies or consulates can provide information regarding the documents necessary for the obtaining of a tourist visa.

Foreign nationals who wish to enter Algeria for a period not exceeding 15 days can enter with a business visa. This visa allows the holding of meetings (internal or with clients) but not the provision of services.

Foreign nationals who wish to work in Algeria under a contract that has a duration of less than three months must obtain a tem­porary work authorization. It can be renewed once in a year. Under Article 9 of Law No. 81-10, a foreigner who is assigned to Algeria for a duration of less than 15 days does not require a temporary work authorization. However, a temporary work visa is always required. To obtain the visa, a foreign national must justify his or her work in Algeria.

 

After the granting of a temporary work authorization and work visa, a work permit is required. A work permit’s validity may not exceed two years, but it is renewable. French nationals benefit from a special regime. They need to obtain a foreign worker declaration instead of a work permit.

A foreign worker working as a managing director of an Algerian entity is exempt from the work permit requirement but needs a business professional card and, in some circumstances, a resi­dence card as well.

Residence card

Foreigners who are intending to extend their stay in Algeria beyond the duration specified in the visa must request a residence card 15 days before expiration of the visa’s validity. This card is valid for two years. A residence card with a validity of 10 years can be issued after a regular residency of 7 years in Algeria.

The application form for the residence card must be sent to the local police office.

Family and personal considerations

Family members intending to reside with a working expatriate in Algeria can benefit from family reunification.