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ALGERIA |
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How to invest in Algeria? |
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The opening of the Algerian economy has increased significantly in recent years to a market-oriented economy. Seeking to diversify and modernise the economy, the Algerian government has embarked on an aggressive liberalisation programme to attract foreign direct investment. The investment code was revised by Ordinance n°01-03 of 20 August 2001 on investment promotion. It governs domestic and foreign investment in the economy to produce goods and services and provides a framework for concessions and licensing regulations. |
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Algeria |
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How to invest in Algeria ? |
The opening of the Algerian economy has increased significantly in recent years to a market-oriented economy. Seeking to diversify and modernise the economy, the Algerian government has embarked on an aggressive liberalisation programme to attract foreign direct investment.
The investment code was revised by Ordinance n°01-03 of 20 August 2001 on investment promotion. It governs domestic and foreign investment in the economy to produce goods and services and provides a framework for concessions and licensing regulations.
The Ordinance recognises the principle of freedom to invest in any and all activities, including those covered by specific regulations (hydrocarbons, financial institutions or insurance companies) and there are no restrictions on the percentage of capital that can be held by a foreign investor (except in hydrocarbons, where foreign companies can own no more than 71 percent of capital).
In addition, all State-owned companies are now open to privatisation. Legislation provides an appropriate legislative framework that harmonises rules and reaffirms requirements for transparency and regularity in privatisation transactions under the supervision of the Council of State Holdings (CPE).
It also provides incentives for investors and introduces new measures to promote investment, such as creation of the National Investment Council (CNI) chaired by the Head of State, created to strengthen the legal and regulatory framework for investment. The CNI is in charge of defining investment strategy and priorities, approving special investment incentives by sector, and giving final authorisation for special investment schemes.
Any initial founding, extension, rehabilitation or reorganisation carried out by a legally constituted economic entity engaged in the production of goods and services other than trade is eligible for the incentives available under the Investment Code whether it is a resident or non-resident company.
A comprehensive tariff reform has been in effect since 2001, reducing the average tariff rate from 26 percent to 19 percent. 2001–05 temporary additional duty on certain imports is being phased out as planned. Important steps have also been taken to liberalise the hydrocarbons and telecommunications sectors. |
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Free trade zones |
There are five free trade zones in Algeria where investments are exempt from all customs, taxes and other fees.
Investors wishing to enter the Algerian market can either open a branch office or set up a company by creating a legal entity under Algerian trade law, a joint venture with an Algerian resident (private individual or corporate entity) by creating a mixed investment Company (SEM), or securing shares in the capital of an already existing company. A recent law (passed in 2005) requires that all companies working in foreign trade increase capital stock equity to a minimum of DZ20 million (about US$ 275,000) by 26 December 2005.
Possible legal forms for a new company are: joint stock company (SPA), limited liability company (SARL), individual limited company (EURL), joint venture (SNC), sleeping partnership (SCS), holding company (SP), partnership limited by shares (SCA).
Customs tariff dismantling came into effect on 1 January 2002, based on eight-digit international HS nomenclature and comprising four customs duty rates: 0 percent, 5 percent, 15 percent and 30 percent, according to the degree of transformation of imported materials. The 5 percent rate is applied on raw materials and capital goods, the average rate of 15 percent to semi-finished and intermediate products and the highest rate of 30 percent to consumer products. Tax exemptions are also available in some sectors and for the equipment needed for new investments. Customs fees have been removed, but provisional additional duty (DAP) of 12 percent is applied to protect goods produced locally, to be abolished by January1, 2006. |
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