Algerian government’s conditions for hard currency transfer and national companies’ investment abroad

Algerianpublic and private companies are now allowed to invest abroad. Theregulation of the Bank ofAlgeria defining the criteria and conditions for investingabroad is entered into force, this Thursday, November 13, with its publication in the latest official gazette N° 63.

Investments and real estate:

It is allowed for the “creation of company or branch; equity participation in existing companies in the form of contributions in cash or in kind;opening ofrepresentation office”, says the text of the Bank of Algeria.

“The investment abroad: must be in relation to the activity of the economic operatorof Algerian rights concerned; should aim to consolidate and develop this activity; must not deal with investment operations or on real property other than those corresponding to the needs of forms of the entities created abroad or forming part of their activity”, says article 4 of the regulation.

Tax havens excluded:

Another condition: the Algerian operator must be exporting regularly in keeping with the Algerian law. Theinvestmentmust be achieved in a country “that is transparent regarding the tax system”.This provision should exclude countries such as Luxembourg, Switzerland, Singapore, the United Arab Emirates…

In all cases, the Algerian economicoperators must acquire at least10% of the shares in a foreigncompany. It must have own funds to finance its operation, without recourse to bankcredit in Algeria. Finally, “the revenue generated by theinvestment made abroad mustbe repatriated to Algeria without delay or prevarication”, says the official document drafted by the Bank of Algeria.

Furthermore,  the Central Bank said, transfers of capital in respect of the investments abroad by the economic operators underAlgerian law, regardless of the legal form that itcan take in the hostcountry, are subject tothe prior approval of the Council of money and Credit (CMC).

The Bank ofAlgeria also insists on the fact that any economic operator, benefiting ornot of the national machinery for the promotion of exports, may submit a requestwhich will be considered “with regard to the viability of the balance of payments”.

With regard to the amount of the transfer of capital, it is a function of revenues from exports and the nature of the investment and cannot exceed the average annual revenues of repatriated export within the prescribed time limits, for the last three (3) years preceding the application.