Select a location

This selection will switch the site from presenting information primarily about Algeria to information primarily about . If you would like to switch back, you may use location selection options at the top of the page.


2020 Complementary Finance Act Bill

Legal Alert

Below is a chart summarizing the main features of the forthcoming 2020 Complementary Finance Act. You will find the PDF version at the bottom of the page.

The 2020 Complementary Finance Act will enter into force only after its approval by the parliament, as it is or after its amendment thereby.


Legal provisions

Expected implementing regulation



Main tax provisions1


Art.6: Suppression of the taxation of the portion of the profits not capitalized during three years.



Suppression of counterproductive measure inserted by the 2020 Finance Act. It was rather an incentive to distribute dividends to the shareholders.



 Art.7: Suppression of the 15% withholding tax applicable to the dividends payable by an Algerian company to its Algerian parent company.


Suppression of this double taxation inserted by the 2020 Finance Act.


Art.10: Taxation of the remuneration of the services provided by a foreign company in Algeria and the revenues of a permanent establishment in Algeria at 30% (instead of 24%).


Extension for the permanent establishments of the term to opt for the regular taxation scheme (IBS, TAP and TVA) from 15 to 30 days.


The rationale of the change is to encourage the foreign companies to opt for the regular taxation scheme.




51/49 rule


Art.50:  51/49 applicable to resale without transformation and strategic activities



The inclusion of the resale without transformation in the scope of the 51/49 is new compared to the provisions of 2020 Finance Act.

The reason of such inclusion is not linked to the repatriation of dividends as all dividends attributable to resale without transformation are not repatriable (art. 6 of CBA’s instruction No. 01-09 of 15 February 2009).

The probable reason is to fight against over invoicing. In the government’s view, a company owned by foreigners would be more keen to over pay goods sold by its parent company located abroad.

Re: existing companies majority owned by foreigners, there is no explicit obligation to comply with the 51/49 rule in case of change of their registration status, and all previous exceptions to such obligation have been suppressed. It will have to be clarified in notes addressed to the National Center of Registry of Commerce to ensure legal certainty.

One critical issue is not addressed: what happens if an existing company majority owned by foreigners, and not operating in a strategic sector, carries out production of goods and services as well as resale without transformation? Would the 51/49 rule be applicable? On what criteria? The fact that the law does not address this issue will probably be the source of uncertainty, overall considering that no forthcoming regulation is expected to clarify this legal provision.


Art.51: List of strategic activities (to which the 51/49 rule applies):

- The exploitation of the national mineral domain, as well as any underground or surface resource resulting from surface or underground extractive activity, excluding quarries of non-mineral products;

- Upstream of the energy sector and any other activity governed by the law on hydrocarbons, as well as the operation of the distribution and transport network of electrical energy by cables and of gaseous or liquid hydrocarbons by overhead or underground pipelines;


- Industries initiated by or related to the military industries under the Ministry of National Defense;


- Railways, ports and airports;




- Pharmaceutical industries, with the exception of investments linked to the manufacture of essential innovative products with high added value, requiring complex and protected technology, intended for the local market and for export.




Yes (if needs be - sic)




Is the activity of cement and aggregate production subject to the 51/49 rule?





What is the purpose of addressing an issue that is already governed by the hydrocarbons law (which already provides for a 51/49 scheme)? Any modification of the hydrocarbons legal scheme would be more complex. Two laws would have to be modified instead of one.





It is a very broad language. It could have been limited to activities that are heavily sensitive in terms of IP.


Does it concern the infrastructures or the operation? If it includes the operation, what happens to the current operation agreements with foreign companies? It will have to be clarified.

Does the language “pharmaceutical industries” include the production of services? If yes, there will be an issue for the ownership of the marketing authorizations (MA) (AMM in French) which international companies are not keen to share with local partners (the Health Act No. 18-11 creates an obligation for drugs imported or manufactured locally to have the MA owned by a local company).

Who decides whether it is “essential innovative products with high added value, requiring complex and protected technology”? The Ministry of Health (the Delegated Ministry for the pharmaceutical industry) or the Ministry of Commerce (through Algerian companies’ house that is the National Center of Registry of Commerce)?

What happens if one and same manufacturer produces “old” and “innovative” products?

What happens if an “innovative” product is no longer an “innovative” product because a biosimilar arrives on the market?

Finally, as a general comment, in the explanation made by the government of the relaxation of the 51/49 rule, there is an explicit critic of the concept of “sleeping partner” to whom foreign investors were resorting in order to control the “51% stake” held by such sleeping partner. This may imply that the government will specify in the forthcoming regulation that the Algerian shareholder(s) owning the 51% will have to evidence an experience in the sector in which the joint-venture wishes to operate.

It will have to be clarified.


Art. 53: Within the framework of the strategic activities, any disposal of shares between foreigners is subject to a prior authorization.



This is supposed to be the replacement of the governmental preemption rights, only applicable within the framework of the so-called strategic activities.

Which administration grants the authorization?

What happens in the event of refusal? Can’t the selling party exit?

It will have to be clarified.


Governmental preemption rights


Art.53bis: Suppression of direct and indirect governmental preemption rights which are set forth in Articles 30 and 31 of Law No. 16-09, respectively.



According to press releases not reflected in this bill of 2020 Complementary Finance Act, the government contemplates to condition any foreign investment in Algeria to an authorization to be granted by the Prime Minister on the basis of an experts’ commission.

If that information proves to be true, it would be a bad signal to foreign investors, as it would most likely be more dissuasive than the governmental preemption rights.


Foreign financing


Art.54: Foreign investors are no longer obliged to finance their investment on the local market.



The foreign investors are encouraged to bring their financing from abroad.

The technicalities are unclear and raise questions.

Will Algerian companies majority owned by foreigners still be allowed to contract facilities with local banks?

How loans contracted with foreign banks compatible with the banking monopoly set forth in the Algerian banking law (Ordinance No. 03-11)?

Will the rules governing shareholders’ loans granted by foreign parent companies be relaxed (currently such loans are only authorized to finance capital expenditures, excluding working capital pursuant to Executive Decree No. 13-320)?

It will have to be clarified.


Incentives for industrial activity


Art.55: Exemption for 2 years (renewable) of customs duties and VAT for the components and raw materials imported or acquired locally by the sub-contractors in the mechanical, electronics and electric sectors, as well as for companies operating in the equipment maintenance and the production of spare parts in all sectors.


Technicalities of renewal to be fixed.

In the previous scheme (art.110 of 2017 Finance Act), the duration was 5 years applicable only to sub-contractors approved by the manufacturers.



Art. 57: Authorization of importation for consumption of refurbished production chains, except the transportation vehicles for persons and goods.



In the previous scheme (art.123 of 1994 Finance Act, as complemented and modified), the importation of refurbished production chains was subject to prior authorization by Ministry of Industry.

A forthcoming regulation is expected to list the sectors for which the importation of refurbished equipment is possible, the nature of such equipment and the funding’s structuration.



Art.59: Suppression of the obligation for the vehicles’ distributors to initiate an industrial or semi-industrial project.



Art. 24 of Executive Decree No. 15-58, which contained the same obligation, must also be deemed as abrogated.

Same goes with Art.9 of Arrêté interministériel of 23 April 2015.

As a result, the license of vehicles’ distributors is no longer conditioned by an industrial or semi-industrial project.




Art.60: Exemption of customs duties and VAT for the raw materials imported or acquired locally, as well as components acquired from local sub-contractors, entering into the process of manufacturing in the mechanical, electronics and electric sectors, subject to approval by the Ministry of Industry.

Second scheme with customs duties of 5% and VAT of 19% for importation or acquisition of KD kits by manufacturers having reached the integration rate set forth in the specifications issued by the Ministry of Industry.

The two schemes are cumulative.


Replacement of the previous SKD/CKD scheme by these new schemes.

The specifications to be issued in a forthcoming regulation will be key for the implementation of these schemes.


1We focused on the prominent changes for companies. 2020 Complementary Finance Act contains other important changes with respect to personal income tax.