Sixty Million Centimes A Year …Tax On Private Companies For Acquisition Of Vehicles

The Government has decided to oblige all private companies and institutions to pay an annual fee of 60 million centimes (DA) for the acquisition and rental of cars and vehicles for the benefit of these enterprises.

The new procedure excludes however those vehicles exclusively meant for sale, leasing or transport service for the large public. 

In the context of expanding the tax base and ensuring greater collection of the regular tax collection outside hydrocarbons, the government approved a revision of the value of the tariff or fee imposed on the cars of private enterprises, which usually result in the acquisition of a reduction of the annual corporate tax, as stipulated by article 60 of the 2018 draft Finance Bill, now being discussed at the National People’s Assembly.

The vehicles concerned by this compulsory tax payment are numbered in the category of private cars “X”, for less than five years and must be mentioned in the budget of companies, whatever the system followed by the private companies established in Algeria for an annual fee ranging between 350 thousand dinars and 600 thousand dinars on an annual basis.

The relevant vehicles are leased by the same companies for a total period equal to or exceeding three months during the fiscal year. 

In this case, the amount of the tax fee is determined according to the vehicle acquisition price. The fee for the cars purchased is estimated at between 30 million and 60 million centimes (DA), for cars purchased for 250 million centimes, while for vehicles’ price exceeding 600 million centimes, the annual tax fee is set at 50 million centimes (DA).

According to the content of the article, this procedure excludes vehicles intended solely for sale, leasing or transport service to the large public, when these operations are consistent with the normal activity of the owner. 

The fee is not deductible in the tax preparation and must be declared at the same time as part of the companies’ annual income or yearly profit statement.

The fee shall be paid according to the legal article in three cases: payment of the balance of the liquidation of the tax on the profits of the companies, payment of the balance of the tax on the gross income, and the non-declaration and non- payment of the required tax fee within 30 days from the date of the warning notice will lead to a fine of a financial amount equal to twice the value of the due fee.

In the justification of the article, the services of the Ministry of Finance indicated that the supplementary law for 2010 created a mandatory obligation on institutions to pay a fee on vehicles acquired or leased for a total period equal to or exceeding 3 months numbered in the private cars category. 

The 2018 draft Finance Bill also noted that the car purchase price premiums guaranteed by the Finance Act of 2010 no longer respond to current economic realities as the car market in Algeria has significantly increased. 

In order to to ensure adherence to the obligation, the relevant draft Finance Bill proposal has included a fine equal to twice the value of the tax fee, to be compulsorily paid within 30 days after the warning duly sent by the tax authorities to the failing company that did not comply with its obligations on the matter.