February 26 2007
In recent years Algeria has enjoyed rapid economic growth after a long period of stagnation. In order to support this trend the government has introduced a wide-ranging programme to encourage foreign investment by offering benefits and guarantees to potential investors. The terms of the programme are set out in Ordinance 2001/03, which was revised and completed by Ordinance 2006/08, issued on July 15 2006.
The definition of 'investment' in the new ordinance includes:
The National Investment Council determines the conditions which an investor must meet in order to benefit from government incentives. The National Development Investment Agency is in charge of granting or rejecting applications from investors. Therefore, all investments must be declared to the agency, which will consider the object of the investment; it has 72 hours to make a decision on the implementation phase and 10 days to rule on matters relating to the operation of the project or enterprise.
The agency's decision lists the benefits for and obligations of the investor. If the investor is not satisfied with the decision, it will have recourse to a commission whose composition, organization and powers will be set out in a future regulation. The commission will be required to deliver its verdict within one month of the registration date of the request. If the agency fails to issue a decision in the time allowed, the investor may appeal. If an investor fails to observe the terms of the ordinance, the agency may cancel or withdraw benefits.
The benefits available under the ordinance are divided into two categories: the general regime and the additional benefits regime.
This regime sets out tax and customs incentives relating to the implementation and operation of a project or enterprise. Its benefits are:
Additional benefits regime
The additional benefits system (régime dérogatoire) offers additional advantages in respect of investment in sectors which qualify for special state aid or are of national economic interest. Investments will qualify for additional aid if the relevant projects involve:
The agency will determine which investments and sectors qualify for aid.
Investments in sectors eligible for special state aid will qualify for benefits in the implementation and operation phases. The benefits available in the implementation phase are:
The ordinance does not refer to benefits in respect of services.
The benefits offered in the operation phase are (i) reductions in taxes on profits and professional activity for the first 10 years, and (ii) exemption from real estate taxes for the same period.
Investments of national economic interest will qualify (wholly or partially) for certain tax benefits for the first five years, namely:
Such investments will also be eligible for reduced taxes on profits and professional activity for 10 years.
Foreign individuals and legal entities have the same rights and duties as their Algerian counterparts. However, foreign investors are granted certain additional guarantees to protect the security of their investments. The ordinance provides that:
In addition to the advantages and guarantees detailed in the present ordinance and set out in the government's investment strategy, the agency has the power to adopt further measures in response to future needs.
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