guide to investing in algeria

316 Pages·2011·4.06 MB·English

KPMG ALGERIE
GUIDE TO
INVESTING

IN ALGERIA

2011 EDITION

GUIDE TO INVESTING
IN ALGERIA -2011
(Updated in March 2011)
Dépôt légal : 4271-2011
ISBN : 978-9947-807-17-0

SOMMAIRE
Chapter1
GENERAL INTRODUCTION TO ALGERIA ..........................................................................................13
1.1 History and Geography ..........................................................................................................................................................13
1.2 Population Demographics ....................................................................................................................................................14
1.3 Main cities - Languages – Religions ...................................................................................................................................14
1.4 Territorial and administrative organization - Political institutions .........................................................................15
1.5 Political parties Associations ................................................................................................................................................17
1.6 Judicial system ..........................................................................................................................................................................17
1.7 Staying in Algeria: conditions – procedures – work permit ......................................................................................18
1.8 Practical information ..............................................................................................................................................................18
1.9 Economy: key figures .............................................................................................................................................................19
1.10 Economic policy: development and trend .....................................................................................................................29
1.11 Economic development outlook 2010–2014 ................................................................................................................44
1.12 The legal environment for business ..................................................................................................................................45
Chapter 2
FOREIGN INVESTMENT IN ALGERIA .......................................................................................................47
2.1 Legal framework .......................................................................................................................................................................47
2.1.1 General definition of investment .......................................................................................................................................47
2.1.2 Freedom to invest and Algerian partnerships ...............................................................................................................47
2.1.2.1 Freedom to invest ....................................................................................................................................................................47
2.1.2.2 Partnership .................................................................................................................................................................................48
2.1.2.3 State first refusal right ............................................................................................................................................................49
2.1.3 Guarantees - Protections - Agreements concluded by Algeria ...............................................................................51
2.1.4 Capital transfers in Algeria ....................................................................................................................................................53
2.1.4.1 The principle ..............................................................................................................................................................................53
2.1.4.2 Transfer procedures ................................................................................................................................................................54
2.1.4.3 Investment financing ..............................................................................................................................................................55
2.1.5 Tax incentives likely to be granted to investors ............................................................................................................55
2.1.5.1 General scheme tax incentives ...........................................................................................................................................56
2.1.5.2 Dispensatory scheme tax incentives ................................................................................................................................58
2.1.5.3 Procedures to obtain incentives .........................................................................................................................................59
2.2 Implementation of incentives .............................................................................................................................................60
2.2.1 Incentives at the implementation phase ........................................................................................................................60
2.2.2 Incentives at the operating phase .....................................................................................................................................61
2.2.3 Obligation to reinvest profits ...............................................................................................................................................62
2.3 Institutions governing investment promotion ............................................................................................................63
2.3.1 The National Investment Council (CNI) ............................................................................................................................63
2.3.2 The National Investment Development Agency (ANDI) ............................................................................................63
2.3.3 One-stop service ......................................................................................................................................................................64
Chapter 3
LEGAL FORMS OF INCORPORATION IN ALGERIA .............................................................66
3.1 Commercial companies .........................................................................................................................................................66
3.1.1 Common elements for all commercial companies ......................................................................................................66
3.1.2 The features of each commercial company-type .........................................................................................................69
3.1.2.1 The joint stock company (JSC) ............................................................................................................................................69
3.1.2.2 The limited liability company (LLC) ...................................................................................................................................77
3.1.2.3 The sole proprietorship limited liability company (SPLLC) .......................................................................................81
3.1.2.4 Limited partnership (LP) ........................................................................................................................................................82
3.1.2.5 Limited partnership with shares (LPS) .............................................................................................................................82
3.1.2.6 Undeclared partnership ........................................................................................................................................................83
3.2 The Group/Joint Venture [index 49] ..................................................................................................................................84
3.2.1 The goal of the group/JV .......................................................................................................................................................84
3.2.2 Transparency of the group’s activities ..............................................................................................................................84
3.2.3 Legal status of the group/JV ...............................................................................................................................................84
3.2.4 Contractual freedom ..............................................................................................................................................................85
3.2.5 Liability ........................................................................................................................................................................................85
3.2.6 Practical use of groupings and temporary JV ................................................................................................................ 85
3.3 Other types of establishments in Algeria ........................................................................................................................86
3.3.1 The liaison office........................................................................................................................................................................86
3.3.1.1 The principle ..............................................................................................................................................................................86
3.3.1.2 The accreditation of the liaison office ..............................................................................................................................86
3.3.1.3 Operations and obligations of the liaison office ..........................................................................................................87
3.3.1.4 Advisability of resorting to a liaison office ......................................................................................................................87
3.3.2 The branch registered with the trade registry ..............................................................................................................87
3.3.3 The permanent establishment ............................................................................................................................................88
Chapter 4
EXERCISING COMMERCIAL ACTIVITIES ..........................................................................................89
4.1 The Trade Register ...................................................................................................................................................................89
4.2 Regulated activities .................................................................................................................................................................90
4.3 The status of foreign traders ................................................................................................................................................91
4.3.1 The professional card .............................................................................................................................................................92
4.3.1.1 Conditions for obtaining the professional card ............................................................................................................92
4.3.1.2 Establishing/Renewal of the professional card .............................................................................................................93
4.3.1.3 Period of validity of the professional card ......................................................................................................................93
4.3.2 The foreign resident card ......................................................................................................................................................93
Chapter 5
FOREIGN TRADE ......................................................................................................................................................................94
5.1 Legal Framework concerning Imports and Exports ....................................................................................................94
5.1.1 Freedom of Imports and Exports .......................................................................................................................................94
5.1.2 Protective Trade Measures ....................................................................................................................................................94
5.1.2.1 Safeguards ..................................................................................................................................................................................94
5.1.2.2 Countervailing Measures .......................................................................................................................................................95
5.1.2.3 Anti-Dumping Measures .......................................................................................................................................................95
5.2 Obligations of Commercial Companies ...........................................................................................................................96
5.3 Customs Procedures ...............................................................................................................................................................96
5.3.1 Customs Regulations ..............................................................................................................................................................96
5.3.2 The customs agent .................................................................................................................................................................97
5.3.3 The accompanying supporting documents ..................................................................................................................98
5.3.4 Bonded Warehouses Regimes .............................................................................................................................................99
5.3.5 The temporary admission regime ......................................................................................................................................99
5.3.6 Customs value ........................................................................................................................................................................100
5.3.7 Measures to protect intellectual property rights ......................................................................................................100
5.3.8 The Euro-Mediterranean agreement establishing an association
between the European Union and Algeria ..................................................................................................................101
Chapter 6
FOREIGN EXCHANGE REGULATIONS .................................................................................................103
6.1 Contextual elements ...........................................................................................................................................................103
6.2 The new role of commercial banks ................................................................................................................................104
6.3 The principle of the free movement of capital ..........................................................................................................104
6.4 Foreign currency accounts ................................................................................................................................................105
6.5 The imports system ..............................................................................................................................................................106
6.5.1 Domiciliation ..........................................................................................................................................................................107
6.5.2 Elements or information contained in the commercial contract ........................................................................107
6.5.3 Payment of imports ..............................................................................................................................................................108
6.6 The exports system ..............................................................................................................................................................109
Chapter 7
CONTRACT LAW ....................................................................................................................................................................110
7.1 General principles .................................................................................................................................................................110
7.2 The effects of the contract .................................................................................................................................................110
7.3 Contractual liability and breach of contract ...............................................................................................................111
Chapter 8
COMPETITION LAW ..........................................................................................................................................................113
8.1 Definition and scope of application ...............................................................................................................................113
8.2 Pricing freedom .....................................................................................................................................................................113
8.3 Unfair contract terms ...........................................................................................................................................................114
8.3.1 The essential components of commercial contracts ...............................................................................................114
8.3.2 Contract terms deemed unfair .........................................................................................................................................114
8.3.3 The establishment of a controlling institution ...........................................................................................................115
8.4 Prohibited restrictive practices ........................................................................................................................................115
8.5 Regulation of economic concentrations ......................................................................................................................116
8.6 Rules applicable to commercial practices ....................................................................................................................117
8.7 The Competitive Council ....................................................................................................................................................119
Chapter 9
THE FINANCIAL AND BANKING SYSTEM ......................................................................................120
9.1 The legal framework of banking activities ...................................................................................................................120
9.1.1 The provisions of the Ordinance on money and credit ..........................................................................................121
9.1.1.1 Monitoring payment systems ..........................................................................................................................................121
9.1.1.2 Adapting to international accounting standards ......................................................................................................121
9.1.1.3 Strengthening banking supervision ..............................................................................................................................121
9.1.1.4 Minimum capital requirements .......................................................................................................................................121
9.1.1.5 The status of financial institutions ..................................................................................................................................122
9.1.1.6 The equity investment system .........................................................................................................................................122
9.1.1.7 Organizations outside the banking legislation ..........................................................................................................122
9.1.1.8 Group treasury operations ................................................................................................................................................122
9.1.1.9 Regulated agreements and normal transactions ......................................................................................................123
9.1.1.10 Withdrawal of the Public Treasury from the deposit insurance fund ................................................................123
9.1.1.11 The right to a bank account ..............................................................................................................................................123
9.1.1.12 Strengthening of cooperation with foreign monetary authorities ....................................................................123
9.1.2 Principles of the Algerian banking system laid down by Ordinance
NO. 03-11 pertaining to Money and Credit .................................................................................................................123
9.1.2.1 Privileges granted to banks and financial institutions ............................................................................................124
9.1.2.2 Broad delegation of power to monetary authorities ...............................................................................................124
9.1.2.3 Separation between the regulatory and supervisory authorities .......................................................................124
9.2 The characteristics of the Algerian banking sector .................................................................................................125
9.2.1 Diversification of the banking system ...........................................................................................................................127
9.2.2 Modernization of the Algerian banking system ........................................................................................................127
9.3 Requirements for the formation and establishment of banks and financial institutions ...........................128
9.4 The financial market ............................................................................................................................................................130
9.5 The fight against money laundering .............................................................................................................................131
9.6 Prudential regulations .........................................................................................................................................................131
9.7 Banking services ....................................................................................................................................................................132
9.7.1 Banking approach ................................................................................................................................................................132
9.7.2 Banking products and services ........................................................................................................................................133
Chapter 10
THE ALGERIAN ACCOUNTING SYSTEM ............................................................................................135
10.1 General background on the Algerian Accounting System ....................................................................................135
10.1.1 The existing accounting plan ...........................................................................................................................................135
10.1.2 Revaluations ...........................................................................................................................................................................136
10.1.3 The new financial and accounting system (FAS) .......................................................................................................136
10.2 The financial and accounting system ............................................................................................................................137
10.2.1 Required financial statements .........................................................................................................................................137
10.2.2 Balance sheet format ...........................................................................................................................................................138
10.2.3 Format of the balance sheet .............................................................................................................................................139
10.2.4 Detailed accounting plan and nomenclature of the FAS project ........................................................................142
10.2.5 The main accounting concepts and innovations
introduced by the proposed FAS compared to NAP 75 ..........................................................................................144
10.2.5.1 General principles .................................................................................................................................................................144
10.2.5.2 Main innovations ..................................................................................................................................................................144
10.2.5.3 IFRS influence in definitions and recognition criteria ..............................................................................................145
10.2.5.4 Contradictions with previous legislations ...................................................................................................................146
10.2.6 Organizational rules of the FAS ........................................................................................................................................146
10.2.7 Analysis of the main accounting rules or standards ................................................................................................147
10.2.7.1 Property, plant and equipment ........................................................................................................................................149
10.2.7.2 Non-current financial assets .............................................................................................................................................150
10.2.7.3 Inventory .....................................................................................................................................................................................51
10.2.7.4 Trade accounts receivables ...............................................................................................................................................151
10.2.7.5 Subsidies .....................................................................................................................................................................................51
10.2.7.6 Provisions for liabilities and charges ..............................................................................................................................151
10.2.7.7 Loans and financial liabilities ............................................................................................................................................152
10.2.7.8 Long-term contracts ............................................................................................................................................................153
10.2.7.9 Leasing contracts and deferred taxes ............................................................................................................................153
10.2.7.10 Method and valuation changes .......................................................................................................................................154
10.2.7.11 Rules of consolidation, goodwill and concessions ....................................................................................................154
10.2.8 Conclusion regarding the FAS proposal under review ............................................................................................ 155
10.3 Latest elements concerning FAS .....................................................................................................................................155
10.3.1 Transition-related problems .............................................................................................................................................155
10.3.1.1 Contents of these instructions .........................................................................................................................................156
10.3.1.2 Examination of general provisions .................................................................................................................................156
10.3.1.3 Procedures that have to be implemented ...................................................................................................................157
10.3.1.4 Accounting provisions related to the transition ........................................................................................................158
10.3.1.5 Contents of the methodological notes .........................................................................................................................158
10.3.1.6 Details that are not contained in the instructions ....................................................................................................161
10.3.2 Position of the tax authorities ..........................................................................................................................................161
10.3.2.1 Provisions of the Supplementary Finance for 2009 relating to FAS ....................................................................161
10.3.2.1.1 Monitoring long-term contracts .....................................................................................................................................162
10.3.2.1.2 Provisions .................................................................................................................................................................................162
10.3.2.1.3 Preliminary expenses ...........................................................................................................................................................162
10.3.2.1.4 Asset revaluation ...................................................................................................................................................................163
10.3.2.1.5 General framework ...............................................................................................................................................................163
10.3.2.1.6 Conclusion ...............................................................................................................................................................................163
10.3.2.2 Provisions relating to the 2010 Finance Law ...............................................................................................................164
10.3.2.2.1 Treatment of Leasing ...........................................................................................................................................................164
10.3.2.2.2 Operating depreciation ......................................................................................................................................................164
10.3.2.2.3 Reversal of preliminary expenses ...................................................................................................................................164
10.3.2.2.4 Treatment of grants ..............................................................................................................................................................164
10.3.2.3 Provisions of the supplementary Finance Law for 2010 affecting the FAS ......................................................165
10.3.3 Conclusion ...............................................................................................................................................................................165
Chapter 11
THE TAX SYSTEM IN ALGERIA .......................................................................................................................166
11.1 Taxation of individuals ........................................................................................................................................................166
11.1.1 Tax liable individuals ............................................................................................................................................................166
11.1.2 Residents and non-resident Algerians ..........................................................................................................................166
11.1.2.1 Domestic rules .......................................................................................................................................................................166
11.1.2.2 Treaty rules .............................................................................................................................................................................167
11.1.3 Definition of Global income tax (Impôt sur le revenu global, IRG) ......................................................................167
11.1.4 Tax regime ...............................................................................................................................................................................167
11.1.4.1 Taxation of salaries ...............................................................................................................................................................167
11.1.4.1.1 Determination of taxable income ...................................................................................................................................167
11.1.4.1.2 Tax system for Algerian salaried workers .....................................................................................................................168
11.1.4.1.3 Tax system for expatriate salaried workers ..................................................................................................................168
11.1.4.2 Taxation of income from movable capital ...................................................................................................................169
11.1.4.2.1 Revenues from dividends and membership shares .................................................................................................169
11.1.4.2.2 Revenues from debt securities, deposits and guarantee bonds ..........................................................................169
11.1.4.3 Taxation of capital gains .....................................................................................................................................................170
11.1.4.3.1 Capital gains on property conveyances .......................................................................................................................170
11.1.4.3.2 Capital gains from the transfer of capital assets ........................................................................................................170
11.1.4.4 Other revenue categories ..................................................................................................................................................171
11.1.4.4.1 Industrial and commercial profits (ICP) .........................................................................................................................171
11.1.4.4.2 Non-commercial earnings .................................................................................................................................................171
11.1.4.4.3 Property revenues ................................................................................................................................................................172
11.2 Main taxes paid by legal entities .....................................................................................................................................172
11.2.1 Resident legal entities .........................................................................................................................................................172
11.2.1.1 Direct taxes ..............................................................................................................................................................................172
11.2.1.1.1 Corporate income tax (IBS) ................................................................................................................................................ 172
11.2.1.1.2 Tax on professional activities (TAP) ................................................................................................................................177
11.2.1.1.3 Dividends .................................................................................................................................................................................179
11.2.1.2 Value Added Tax (VAT) ........................................................................................................................................................180
11.2.1.2.1 Territoriality of the VAT ........................................................................................................................................................180
11.2.1.2.2 Taxable operations ...............................................................................................................................................................180
11.2.1.2.3 Calculation of the tax ...........................................................................................................................................................181
11.2.1.2.4 Assessment and payment of taxes .................................................................................................................................182
11.2.1.2.5 Specific regimes ....................................................................................................................................................................183
11.2.1.3 Registration fees applicable to legal entities ..............................................................................................................184
11.2.1.3.1 Registration fees on transfers ...........................................................................................................................................184
11.2.1.3.2 Registration fees for articles of incorporation ............................................................................................................185
11.2.1.3.3 Registration fees on the transfer of corporate shares and bonds for consideration ....................................188
11.2.1.4 Tax advantages ......................................................................................................................................................................188
11.2.2 Non-resident legal entities ................................................................................................................................................189
11.2.2.1 The regime of service providers ......................................................................................................................................190
11.2.2.1.1 The withholding tax regime ..............................................................................................................................................190
11.2.2.1.2 The real income regime option .......................................................................................................................................190
11.2.2.1.3 Sale of equipment ................................................................................................................................................................191
11.2.2.1.4 Delivery of services and tax treaties ...............................................................................................................................191
11.2.2.2 The construction regime ....................................................................................................................................................191
11.2.2.2.1 The real income taxation regime ....................................................................................................................................191
11.2.2.2.2 Tax declaration obligations ................................................................................................................................................192
11.2.2.2.3 EPC contracts and tax treaties ..........................................................................................................................................192
11.2.2.3 Specific circumstances linked to the existence of a grouping .............................................................................192
11.2.2.3.1 Signing a grouping contract .............................................................................................................................................192
11.2.2.3.2 Invoicing and earnings distribution problems ...........................................................................................................193
11.2.2.4 Double taxation treaties .....................................................................................................................................................193
11.2.2.4.1 General presentation ...........................................................................................................................................................193
11.2.2.4.2 List of treaties signed by Algeria .....................................................................................................................................194
11.2.2.4.3 Presentation and analysis of the OECD model convention ...................................................................................196
11.3 Supervision and litigation ..................................................................................................................................................198
11.3.1 Control procedures and the guarantees of taxable persons ................................................................................198
11.3.1.1 Controlling declarations .....................................................................................................................................................198
11.3.1.1.1 Definition .................................................................................................................................................................................198
11.3.1.1.2 Control procedures ..............................................................................................................................................................199
11.3.1.1.3 Correction of the declarations .........................................................................................................................................199
11.3.1.2 Accounting audits ...................................................................................................................................................................99
11.3.1.2.1 Audit notification dispatch ................................................................................................................................................199
11.3.1.2.2 Prior preparation period .....................................................................................................................................................200
11.3.1.2.3 Assistance of counsel ..........................................................................................................................................................200
11.3.1.2.4 Place of audit ..........................................................................................................................................................................200
11.3.1.2.5 Time limit of accounting audits .......................................................................................................................................200
11.3.1.2.6 Provision prohibiting the renewal of accounting audits ........................................................................................200
11.3.1.2.7 Notification of adjustments ..............................................................................................................................................201
11.3.2 Litigation ..................................................................................................................................................................................201
11.3.2.1 The prior administrative appeal ......................................................................................................................................202
11.3.2.1.1 Jurisdiction of the director of the DGE ..........................................................................................................................202
11.3.2.1.2 Investigation of the claim ..................................................................................................................................................202
11.3.2.1.3 Choosing a residence in Algeria ......................................................................................................................................203
11.3.2.1.4 Statutory payment deferment .........................................................................................................................................203
11.3.2.1.5 Jurisdiction of the central tax authorities ....................................................................................................................204
11.3.2.2 Appealing before the Central Commission .................................................................................................................204
11.3.2.2.1 Deadline for petitioning ..................................................................................................................................................... 205
11.3.2.2.2 Effect of the Central Commission’s opinion ................................................................................................................205
11.3.2.3 Judicial proceedings ............................................................................................................................................................205
11.3.2.3.1 Proceedings before the administrative court ..............................................................................................................205
11.3.2.3.2 Proceedings before the State Council ...........................................................................................................................206
11.4 Taxation of corporate groups ...........................................................................................................................................206
11.4.1 Definition of corporate groups ........................................................................................................................................206
11.4.1.1 Legal definition of corporate group ...............................................................................................................................206
11.4.1.2 Definition of a corporate group from a tax standpoint ..........................................................................................207
11.4.2 The regime applicable to corporate groups ...............................................................................................................208
11.4.2.1 The legal regime ....................................................................................................................................................................208
11.4.2.2 The tax regime .......................................................................................................................................................................209
11.4.2.2.1 Applicable tax rate .................................................................................................................................................................209
11.4.2.2.2 Consolidation of earnings ..................................................................................................................................................210
11.4.2.2.3 Granted tax advantages .....................................................................................................................................................210
11.4.2.2.4 Declaration obligations of corporate groups .............................................................................................................211
11.4.3 Financial flexibility granted to corporate groups ......................................................................................................211
11.5 Other financial provisions ..................................................................................................................................................212
Chapter 12
SOCIAL SYSTEMS .................................................................................................................................................................213
12.1 The main characteristics of labor law ............................................................................................................................213
12.1.1 Law No. 90-11 of 21 April, 1990 concerning employment relationships ..........................................................213