September 26, 2022
Algeria issues governing decrees related to new Investment Law
Following the publication of the Investment Law n°22-18 (the Law) on 24 July 2022, the Algerian Government published on 18 September 2022, eight decrees related to implementation of the Law.
The new Law introduces changes to the institutional framework, incentive regimes, conditions of eligibility for benefits and guarantees granted to investors.
The new Investment Law specifies that the bodies in charge of investment in Algeria are:
Chapter 3 of the Law and Executive Decree No. 22-297 refocus the role of the NIC solely on providing strategic advice on investment, ensuring its overall coherence and evaluating its implementation.
The aforementioned chapter, through its Article 19, provides for a one-stop shop dedicated to large investment projects and foreign investments. Executive Decree No. 22-299 defines major projects as projects with an investment amount equal to or greater than DZD2 billion. This same decree defines foreign investments as any investment including a capital holding by foreign persons, benefiting from a transfer guarantee.1
Investments other than those mentioned above are handled by decentralized single desks.
Incentive regimes and eligibility conditions for benefits
The Investment Act provides for the following incentive regimes:
Investments in the following areas of activity are eligible for this regime:
Investments implemented in the following areas are eligible for this regime:
The localities are listed in Annex 1 of Executive Decree No. 22-301.
Structuring projects regime
According to Executive Decree No. 22-302, structuring investments are defined as investments with a high potential for creating wealth and jobs likely to increase the attractiveness of the territory and to create a knock-on effect on economic activity for sustainable economic, social, and territorial development, with the following objectives:
According to the same Decree, investments that meet the following criteria are eligible as structuring projects:
Benefits provided by law No. 22-181
Guaranties granted to foreign investors
Article 8 of the Investment Law provides for a guarantee of transfer of invested capital and the income derived from it. The same article specifies that the reinvestment in capital of profits and dividends declared transferable is admitted as an external contribution. In order to benefit from these guarantees, the foreign investor must bear at least 25% of the overall cost of the investment, as specified in Executive Decree No. 22-300.
Article 13 of the Law ensures stability of the legal framework for investments registered under this Law by providing that any future changes to this Law will not apply to that investment, unless expressly requested by the investor.
Executive Decree No. 22-296 provides the investor with the possibility to submit an appeal with the High National Commission for Investment-related Appeals, attached to the Presidency of the Republic.
Disposal and transfer of benefits
Article 14 of the Investment Law provides for the possibility of transferring or disposing of goods or services that have benefited from the benefits, with the approval of the Algerian Investment Promotion Agency "AAPI" (which replaces the ANDI in the new Law).
Executive Decree No. 22-299 provides for a repayment of the benefits granted in the event of the transfer of the goods or services that benefited from these benefits. The repayment of benefits is calculated in proportion to the remaining depreciation period. The above-mentioned decree provides for the same treatment for the transfer of benefits, except in the case of a prior agreement by the AAPI.
Penalties applicable in the event of non-compliance with the obligations undertaken
Under the terms of Executive Decree No 22-303, the investor must provide the Agency with a progress report on the project within 30 days of the date of signature by the tax authorities.
Failure to justify the lack of submission of the latter within the stipulated timeframe will result in a decision by the Agency to withdraw the benefits and the refund the used operating benefits.
For additional information with respect to this Alert, please contact the following:
Ernst & Young Algérie, Algeria Tax, Legal and Transaction Practices Leader, Alger
EY Société d’Avocats, Africa Tax Desk Leader
Ernst & Young Algérie, Business Tax Advisory, Alger