Executive summary

The Finance Law for 2025 (FL 2025) introduces a set of measures aimed at modernizing the Algerian tax system and simplifying tax procedures while promoting digitization for greater transparency. Descriptions of key measures applicable to companies follow.

Corporate taxation

Tax measures in the new law that affect corporations include those relating to the capital gains declaration, the deduction of research and development (R&D) expenses and the Corporate Profit Tax Rate for the tobacco sector.

Capital gains provisions (Articles 5, 6, and 8 of the FL 2025, amending Articles 80, 80 ter and 80 quarter of the Direct Tax Code)

Under the new law, a reduced rate of 5% will apply to capital gains reinvested in shares or equity interests, as long as the taxpayer makes a commitment to reinvest before 31 December of the year following the deed signature date. A 25% penalty will apply if the taxpayer fails to comply with its reinvestment commitment. Further, the taxpayer must make a mandatory capital gain declaration within 30 days, even if no capital gain is realized on the transaction.

The taxpayer must pay any capital gains tax due within 30 days at the tax office of the company's registered headquarters.

Deduction for R&D expenses and open innovation (Article 10 of the FL 2025, amending Article 147 of the Direct Tax Code)

Expenses incurred in internal R&D or open innovation programs, or both, carried out with companies holding the "start-up" or "incubator" label qualify for a deduction in determining taxable income. The deduction is limited to 30% of accounting profit, with a ceiling of 200 million Algerian Dinar (DA200m).

Increase in additional Corporate Profit Tax Rate (ICBS) for tobacco activities (Article 13 of the FL 2025, amending Article 150 bis of the Direct Tax Code)

The ICBS has been increased as follows:

• 20% for manufacturers of chewing or snuff tobacco
• 31% for manufacturers of smoking tobacco, including e-cigarettes and hookahs

Personal taxation

Change in deadline for filing annual personal income declarations (Article 7 of the FL 2025, amending Article 99 of the Direct Tax Code)

The deadline for personal income tax declarations (Series G No. 01) is extended to 30 June (instead of 30 April).

Extension of deadline for Wealth Tax declaration (Article 21 of the FL 2025, amending Article 281 of the Direct Tax Code)

The deadline for filing the Wealth Tax declaration for 2025 is extended to 30 June 2025.

Value-Added Tax (VAT)

VAT reimbursement(Article 66 of the FL 2025, amending Article 50 quinquies of the Turnover Code)

The new law adds an obligation to simultaneously file VAT credit reimbursement requests and cessation balance sheets in case of business cessation.

Competent authorities must provide and communicate well-founded (justified) decisions to taxpayers.

Taxpayers may contest decisions regarding reimbursement requests. The contestation period ends on the last day of the fourth month following the decision's notification.

Tax procedures

Strengthening legal guarantees for audited taxpayers(Article 90 of the FL 2025, amending Article 20 of the Tax Procedures Code)

Taxpayers can now submit multiple responses to a tax reassessment notification, provided deadlines are respected.

Sanctions for refusing communication rights (Article 98 of the FL 2025, amending Articles 62 and 63 of the Tax Procedures Code)

A DA2m fine may be imposed for refusing to communicate, prematurely destroying documents, or providing false information.

A DA50k penalty may be imposed per day of delay or late responses, capped at DA2m.

A DA50k fine may be imposed for incomplete or insufficient document submissions, capped at DA2m.

Double penalties may be imposed for repeat offenses, with a cap of DA4m.

Retention periods for documents subject to communication rights (Article 99 of the FL 2025, amending Article 64 of the Tax Procedures Code)

A 10-year retention period is imposed for documents covered by tax, commercial and anti-money laundering legislation. And a six-year retention period is imposed for other documents subject to control, communication and investigation rights.

Other tax measures

Promotion of electronic payment methods (Article 47 of the FL 2025, creating Articles 258 quinquies of the Stamp Code)

A reduction in the taxable base for Corporate Income Tax (CIT) has been granted to commercial banks and Algérie Poste for 2025, equivalent to commissions on electronic transactions.

An exemption from stamp duty will now apply for payments made via electronic means. Also, VAT and customs duties are waived on kits for assembling electronic payment terminals from 1 January 2025 to 31 December 2027.

Bank domiciliation tax (TDB) on royalties contracts (Article 123 of the FL 2025, amending Article 2 of the 2005 Complementary FL)

Royalty contracts are subject to a TDB of 5%, except for software usage rights.

Advertising tax rate (Article 117 of the FL amending Article 63 of 2010 supplementary FL)

The applicable advertising tax rate has increased from 1% to 2%.

Extension of the tax deduction granted to activities in the Great South (Article 124 of the FL 2025, amending Article 6 of FL 2020)

The 50% tax deduction on Personal Income Tax (PIT) or CIT for individuals or companies permanently domiciled and established in the Great South will be extended for five years.

Implications

Relevant to multinational corporations, the new finance law clarifies a process for tax litigation at the appellate level that allows the payment of the tax debt to be deferred via guarantees and not only via the payment of 20% of the amount under litigation.

In addition, the local structures of multination corporations will need to become familiar with the new communication rights and obligations under FL 2025.