ANNOUNCED AS TEMPORARYNo
FDI: Treatment and operations, nes
The Supplementary Budget Act of 2008 and the Finance Act of 2009 contain provisions that are detrimental to the interests of foreign investors. According to KPMG:
"The supplementary budget law for 2008 includes an obligation to reinvest tax exemptedprofits (that benefit from investment support, such as those granted by ANDI). Companies that receive suchbenefits must reinvest profits, within four years. Tax administration has specified that the reinvested funds must match the sum of the exempted taxes and not the sum of profits subject to exemption. Thus, if a company providing services makes a profit of 100 that is tax-exempt, it must reinvest 25, i.e. the amount of unpaid tax, not 100. The 2009 Finance Act includes several measures that affect foreign investors or foreign companies that are executing contracts in Algeria.
New sanctions were imposed by the 2009 Finance Act for companies that receive tax benefits, including ANDI benefits. Unpaid taxes, duties and excises become immediately payable (plus a 25% penalty) if investments subject to benefits were not achieved or have not complied with required conditions. Sanctions and penalties will also apply to taxpayers found guilty of fraud, after benefits were granted by court decision with force of res judicata (art. 194 bis of the Direct Taxation Law, hereafter CID). These coercive measures are intended to ensure that recipients of ANDI benefits meet their obligations and extend the scope of sanctions to all duties and taxes covered by the exemption decision. The ordinance on Investment (art.194 bis CID) contributes to the harmonization of tax legislation."
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