Algeria: New conditions for Companies seeking to benefit from tax incentives

date 2016/10/19 views 364 comments 0

icon-writer By: Samira Belamri /*/ English Version: Med.B.

The Government has approved a newly-devised book of specifications targeting the combined industrial and assembling enterprises wishing to take advantage of the preferential tax system and ensure the proportion of national product integration as a basic reference, according to a specific document culled from the draft finance Act for the coming year.

Starting from next January 2017, the revised tax system will concern those enterprises active in the field of production and assembling in the mechanical, electronic and electrical industrial fields while safeguarding the profitability ratios of investment as well as the provision of new jobs and the respect for the proportion of the final product integration, and this tax percentage will be pinpointed later on through a joint resolution combining the two ministers in charge of industry and finance.

In this line, the modalities of application of exemption from taxes and the bonus bank interest rates, granted to industrial sectors, have been established by an executive decree published in the Official Gazette No. 22.

This text is applicable to activities in the industrial sectors under Article 75 of the Finance Act, which cites the steel and metal industries, bonding agents, electrical and household appliances, industrial chemistry, mechanical and automotive, pharmaceutical, aerospace, shipbuilding and repair, advanced technology, food processing, textiles and clothing, leather and wood derivatives and products and furniture industry.

The list of activities under the relevant industrial sectors, defined by the National Investment Council, is set up by a joint order of the Ministers of Industry and Finance.

Thus, under this new Executive Order, investments in activities falling within these industrial sectors benefit from a temporary exemption for a period of five (5) years of tax on corporate profits ( lBS) or tax on the total income (IRG) and the tax on professional activity (TAP).

They also receive a bonus of 3% of the interest rates applicable to bank loans.

The Government’s set of measures is mainly aimed at drastically curtailing imports in this vital sector of activity and shoring up local production at all levels.

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