EMPOWERING BUSINESS: DISCOVERING
GROWTH AVENUES IN ALGERIA'S 2024 FINANCE LANDSCAPE
The 2024 Finance Law is poised to drive significant economic growth and provide promising investment opportunities for multinational companies in Algeria according to experts. With a projected economic growth of 4.2%, the law prioritizes spending on social and public infrastructure, as well as fiscal measures aimed at boosting investment across various sectors. Notably, industrial growth is expected to reach 7.2%, further solidifying Algeria's position as an attractive investment destination.1
Looking ahead, the economic growth is forecasted to continue its upward trajectory, with projections of +3.9% in 2025 and +4% in 2026. The fiscal reference price for a barrel of crude oil is set at $60 (USD) from 2024 to 2026, aligning with the market price of $70 USD over the same period as outlined in the medium-term macroeconomic framework.2
Allocations within the budget prioritize public sector salary increases, social transfers, and public investments, particularly in infrastructure development. This demonstrates the country's commitment to fostering sustainable growth and creating an environment conducive to business expansion and investment.
In terms of trade, the 2024 Algerian budget anticipates an increase in export revenues to $49.8 billion, resulting in a trade surplus of $6.3 billion. Import levels are expected to reach $43.5 billion, with budgetary spending projected to be $15,275.3 billion DA in 2024. These figures indicate a positive outlook for multinational companies considering investment opportunities in Algeria.3
1 Presentation Report on the 2024 Budget Law Project and Perspective for 2025 and 2026 P17.
2 Hanane Legherissi « APN : Adoption du projet de loi de finances 2024 » Journal EL WATAN 5/12/2024 à 19:41.
3 Presentation Report on the 2024 Budget Law Project and Perspective for 2025 and 2026 P20.
I-The main Corporate Tax Measures of the Algerian Finance Law 2024
Corporate taxation is a key factor in influencing investment decisions and economic growth. In recent years, many countries have implemented various tax incentives and exemptions to attract and retain businesses, and Algeria is no exception.
The Algerian government has made several changes to its tax laws to promote investment in the country. One of the significant changes is the removal of the tax on professional activity (TAP) for most activities, with the exception of hydrocarbon transport activities. This move aims to reduce the financial burden on businesses and encourage them to expand and invest in the economy.1
Additionally, tax exemptions on individual income tax (IRG) and corporate income tax (IBS) have been implemented for bank deposits and proceeds from the sale of Treasury bonds listed on the stock exchange. These exemptions provide financial relief to investors and stimulate savings and investment in the financial market.2
Furthermore, the introduction of a new article 183 ter imposes obligations for clients of the State for companies conducting wholesale sales operations. This measure aims to ensure compliance and transparency in business transactions, ultimately fostering a more favorable investment environment.3
1 Art 14 of the 2024 Finance Law.
2 Art 68 of the 2024 Finance Law.
3Art 12 the 2024 Finance Law - 183 ter Code des impôts directs et taxes assimilées (Code of Direct Taxes and Similar Taxes).
Moreover, a temporary exemption from individual income tax (IRG) and corporate income tax has been granted for activities conducted by eligible investment promoters under employment aid schemes. This exemption serves as an incentive for businesses to participate in employment programs and create job opportunities, contributing to overall economic development.1
In addition, there are exemptions from customs duties, value-added tax (VAT), and bank domiciliation tax for various operations. These measures further reduce the cost of doing business and provide a more conducive environment for investment.2
It is important to note that, except for a few niche sectors, no new taxes have been introduced for business operators. This demonstrates the government's commitment to creating a tax-friendly environment to attract and retain investment.
In conclusion, the changes in corporate taxation in Algeria are designed to promote investment and economic growth. The removal of certain taxes, exemptions, and obligations for businesses reflect the government's effort to create a more attractive and competitive investment landscape. These measures, coupled with the absence of new taxes for most business activities, contribute to a favorable environment for investment and economic development.
1Art 5 of the 2024 Finance Law.
2Art 89 of the 2024 Finance Law.
II-The Impact of Algeria's 2024 Finance Law on Key Sectors
The Finance Law for 2024 in Algeria has introduced several key measures and allocations for various sectors in the country. Each sector is set to benefit from specific provisions aimed at boosting growth, addressing challenges, and promoting development.
Construction and Public Works Sector
The Finance Law has allocated a significant budget for infrastructure and in particular 4 billion USD to unlock struggling construction projects, with 51% of new public programs dedicated to construction. This includes the construction of 460,000 social housing units, making housing, public works, water, rail, and desalination the top priorities. Additionally, there is treasury support for interest payments to improve the interest rate for the construction of 50,000 AADL housing units in 2024.1
1Art 98 of the 2024 Finance Law.
Energy and Mining Sector
The hydrocarbon sector is expected to grow by nearly 1% in 2024, primarily driven by the export of natural gas, LNG, and LPG. To support the sector, the Finance Law has introduced the New Local Solidarity Tax applicable to mining activities and the transport of hydrocarbons.1
There is also a focus on the valorization of Algerian mineral resources, expansion of Green Hydrogen production, and a 1000MW solar energy project.2
1Art 15 of the 2024 Finance Law – 231BIS Code des impôts directs et taxes assimilées.
2Presentation Report on the 2024 Budget Law Project and Perspective for 2025 and 2026 P7.
Agro-food Sector
The Law has introduced temporary VAT exemptions for fruits, vegetables, eggs, chicken, turkey, and flour, cereals, semolina, and bread. There is also a 2% solidarity contribution on imported goods consumed in Algeria and an extension of tax advantages for the import of soybean oil until 2025, with the obligation to start the production process locally.1
Temporary exemptions are in place until December 31, 2024, for fruits, vegetables, eggs, broiler chicken, turkey (production and wholesale/retail), as well as products intended for human consumption (dried vegetables and rice).2
1Art 87 of the 2024 Finance Law.
2Art 65 of the 2024 Finance Law.
Banking Sector:
Key measures for the banking sector include the opening of Algerian banks in Europe and Africa and the exclusion of late payment penalties and non-Islamic finance products from the tax base of the corporate income tax for entities compliant with Islamic finance.1
1Art 9 of the 2024 Finance Law - 147 ter du code des impôts directs et taxes assimilées.
ICT Development and Energy Efficiency:
The Law introduces VAT franchise for job-creating investments and extends the VAT exemption for internet services until December 31, 2026. It also provides tax exemptions for locally produced energy-efficient products destined for export, with the aim of encouraging ICT development and promoting energy efficiency in the country.1
1Art 73 of the 2024 Finance Law.
Overall, the 2024 Finance Law presents a compelling case for companies seeking to expand their operations in Algeria. With its ambitious economic targets, fiscal measures to support growth, and favorable trade projections, Algeria is primed to offer lucrative opportunities for large and multinational companies looking to establish or expand their presence in the country.