Algeria: Start Of Dismantling Of Used Car Markets

National Taxation Managing Director at the Ministry of Finance, Abderrahmane Raouia, has officially informed accredited vehicle dealerships, of the start in the marketing of used vehicles to customers as well as new cars, stressing that the latter will benefit as a result from fiscal cuts, with a 19% VAT deduction.

He explained that the authorities’ decision on the matter came within the framework of the reorganization of the used car market, to enable the acquisition by the customers’ vehicles at a lower price than those set for the brand-new ones.

Public procurement begun before 2017 and will continue to benefit from the old VAT rates (7% for the reduced rate and 17% for the standard rate) instead of the rates of the 2017 budget law until their completion, Mr Abderrahmane Raouia further noted.

“Public contracts which have started to run until 31 December 2016 will continue to be subjected to the old VAT rate until the end of the works,” Mr Raouia said on Thursday in Algiers, during a seminar on tax measures introduced in the 2017 Finance Act ( FL2017).

As a reminder, the FL 2017 raised the VAT rate by two percentage points to the normal rate, which rose from 17% to 19% and the reduced rate increased from 7% to 9% for a certain list of products.

“It was the Prime Minister (Abdelmalek Sellal) himself who took charge of this issue to avoid the inconvenience caused by the readjustment of VAT (from 1 January 2017),” he said.

In response to a question from a participant in the meeting as to whether the holdback, paid by the operators as a guarantee of performance of the public contract, was affected by this derogation, Mr Raouia explained that this guarantee was, de facto, submitted to the same VAT rate to which the public contract itself is subjected.