Algeria: Endorsement withdrawal to foreign liaison offices “which don’t toe the line”!

The Ministry of trade has decided to bar foreign liaison offices based in Algeria from exercising any activity other than those mentioned in their books of specifications, while sternly warning that it would take stringent sanctions against any offenders by withdrawing their official endorsement in the case of exercise of a commercial activity, in addition to imposing severe financial sanctions as provided for by the relevant laws and regulations.

According to the Ministerial Decree No. 62, published in the Official Gazette, defining the terms and conditions for opening and operating non-commercial liaison offices, these are temporary structures of representation and are responsible for exploring the domestic market, establishing contacts, gathering information, promoting products and fulfilling administrative formalities for the benefit of foreign trade companies but they don’t have a legal status and therefore cannot engage in economic activities.

These liaison offices’ interventions are carried out on behalf of the company they represent and act in that capacity, by delegation of the latter. The opening of these offices is subjected to prior authorization on the part of the Ministry of Trade for a two-year renewable term.

The request for authorization to open a liaison office must be duly conveyed to the Trade Ministry by the authority responsible for the foreign trade company accompanied, among others, by its statutes authenticated by Algerian consular services of the exact location of the company’s headquarters.

If accepted, the application must be completed by a receipt for payment of the registration fee against the value of 1,500,000 Dinars in convertible currency and a statement justifying the provision of a bond of $ 30,000 US dollars, with a primary bank, in addition to a certificate showing a  current foreign bank account in convertible DA (CEDAC) with the same bank with a payment of an amount in hard currency corresponding to a minimum of 5.000 US dollars and above all a commitment by the legal representative of the foreign trading company to respecting the laws and regulations in force in Algeria, in particular not to exercise direct or indirect economic activities on Algerian soil.

As clearly stated in the Official Gazette, the exercise of commercial activities by the Liaison Office in the name and on behalf of the foreign trading companies is strictly prohibited.

The application for renewal of the approval of the liaison  office is formulated within a maximum period of two months before the expiry date of the endorsement, accompanied by a receipt for payment in convertible currencies in addition to a two-year lease contract and  a thorough situation statement vis-à-vis the tax authorities.

These liaison offices are compelled to take in charge all the expenses they make and all other accruing fees and those of their dependents as part of their business in Algeria, supported and paid by the foreign trading company via a foreign bank account in convertible dinars.

In case of a cessation of the activity by a liaison office, the release and, if applicable, the transfer of the bail amount is allowed on presentation of the release of the bond established by the Ministry of Trade.

Furthermore, those who aren’t entitled to open a liaison office in Algeria include individuals, agencies, subsidiaries, business representations, consulting firms, transit customs agents and legal persons engaged in activities not subjected to registration in the national Trade Register.