Since 2008 the government has introduced various restrictions on foreign investment in Algeria. Companies cannot engage in foreign trade activities unless 30% or more of their capital is held by resident Algerian nationals, while certain foreign investment is subject to a 51% shareholding requirement.
The Complementary Finance Act 2009 covers a range of fiscal measures, including amendments that reflect the government's new policies on the reduction of advantages for direct investment and on limitations on, and increased control over, transfers of funds. The changes particularly affect beneficiaries of tax privileges and parties involved in importing goods and services.
The Complementary Finance Act 2009 has significant implications for Algerian and foreign companies. Among other things, this new legislation affects the regime for building and civil engineering contractors, amends the tax consolidation regime, introduces an enhanced tax credit for research and development expenses and allows for revaluations resulting from the adoption of new accounting standards.
The 2009 Finance Act introduced several amendments that affect foreign entities, typically by either creating a heavier tax burden on foreign investment or introducing new procedural requirements. For example, profits transferred to a non-resident foreign company by its branch established in Algeria or an Algerian permanent establishment are considered distributed profits and are subject to a 15% withholding tax.
Recent regulatory reforms include a sweeping prohibition of exclusive agreements and the attachment of the Competition Council to the Trade Ministry. It is unclear whether the council will manage to balance effective enforcement and independence, but the moves indicate that undertakings keen to break into the Algerian market or extend their market share can no longer afford to ignore the regulator or the law.
Including: Forms of Insurance; Insurance Activity; Risks.
Many multinational companies are seeking to increase their presence in Algeria, keeping watch for a target that will allow them to make their entrance effectively. Whether an acquirer chooses a state-owned target or a privately held company, one question is bound to arise: whether the acquirer should buy assets or shares.
Algeria has made increasing efforts to impose strict IP controls on merchandise entering the domestic market. As brands have assumed ever-greater significance nationally and globally, a trademark registration regime has been developed for the benefit of rights owners and consumers alike.
Public companies are often the main employer in their area; a reduction in workforce can have a significant social effect. Specific ordinances - as well as general legislation which is very protective of employees - govern the dismissal of workers in the context of a privatization and can pose problems for new employers.
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. Additional benefits are available in respect of investments in sectors which qualify for special state aid or are of national economic interest.