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Algeria | Finance Law 2026: Key Tax and Regulatory Measures Impacting Foreign and Algerian Companies

Document Date: 21 January 2026

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Introduction

The Finance Law 2026, which was officially signed into effect on 14 December 2025, lays out numerous changes to the existing Algerian tax framework. These adjustments present significant impacts for both permanent establishments and foreign companies operating within Algeria. As such, it is crucial for affected entities to familiarize themselves with these new regulations and adjust their operations accordingly.

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Key Changes Introduced by Finance Law 2026

1. Immediate Implications for Companies
   The implementation of the Finance Law 2026 is effective immediately, mandating all entities, both foreign and national, to adapt to the new tax landscape. This law introduces several important changes that could influence tax obligations and compliance requirements.

2. Increased Auditing Powers
   One of the hallmark features of the law is the enhanced authority granted to tax auditors concerning access to the IT account systems of taxpayers. This shift not only allows for more comprehensive audits but also increases the responsibility on companies to maintain impeccable records.

3. New R&D Tax Requirements
   A groundbreaking aspect of the Finance Law is the introduction of a specialized tax for research and development (R&D). Algerian companies with an annual turnover of at least DZD 2 billion are now required to allocate 1% of their taxable profit towards R&D activities. Detailed regulations outlining the affected sectors are anticipated to be released soon.

4. Preparation for Compliance
   Entities impacted by these changes must urgently prepare for compliance with the new reporting requirements. It is essential to assess how the new R&D tax obligations will affect daily operations and finances.

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Detailed Provisions Affecting Permanent Establishments and Foreign Companies

Permanent Establishments and Foreign Branches

Clarification of Branch Tax Rules

According to Article 06 of the Finance Law 2026, the branch tax is now reinstated on deemed distributed profits, calculated post-corporate income tax (CIT). Payment of this tax is required through the annual tax return.

Scope of EPC Contracts

Article 12 clarifies that aspects of engineering and procurement in an engineering, procurement, and construction (EPC) contract must be attributed to the local permanent establishment, irrespective of the invoicing or cash collection structure employed by the head office.

Tax Regime Limitations for PEs

Article 13 states that permanent establishments registered in Algeria must adhere strictly to the common tax regime, eliminating options for alternative withholding tax regimes.

Foreign Companies Without PEs

Under Article 14, foreign companies that do not have a physical presence in Algeria will be automatically classified under the withholding tax regime, removing their option to choose the common tax system.

Deductibility of Costs

Article 16 outlines that costs paid by a PE to its head office or any other related office—such as royalties, fees, commissions, and interest—will not be deductible unless they are actual reimbursed expenses. Moreover, payments to foreign suppliers via nonresident accounts (INR) are expressly prohibited.

Dividend Taxation Adjustments

Article 11 reduces the withholding tax on dividends for Algerian residents from 15% to 10%. This adjustment is significant for individual Algerian shareholders.

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Compliance Support and Preparation for Tax Procedures

Adjustments to Reporting Dates

Articles 18 through 21 mandate bi-annual declarations for professional training and apprenticeship taxes, expanding the scope of eligible expenses.

CIT Excess Payment Refunds

Per Article 26, requests for refunds on CIT surplus payments must be submitted within a four-year window following the original tax return’s reporting.

Strengthening Digital Controls

Article 74 seeks to enhance controls surrounding account systems held digitally. Taxpayers are now obligated to present a compliance statement from their IT systems supplier concerning data integrity and security for tax audits.

R&D Commitments from Large Companies

Article 119 requires Algerian companies meeting the turnover threshold of DZD 2 billion to allocate a minimum of 1% of taxable profit toward R&D or innovation activities. This necessitates careful planning and reporting for the fiscal year in question.

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Addressing Potential Challenges with AI legalese decoder

With these extensive changes to the regulatory framework, businesses face the daunting task of navigating complex tax procedures and compliance requirements. This is where AI legalese decoder can provide significant assistance. Here’s how:

• Simplified Understanding: The AI legalese decoder can translate complex legal jargon into clear, understandable language, allowing companies to fully grasp the implications of the new laws without the confusion of legal terminology.

• Compliance Assistance: By integrating with existing systems, the AI legalese decoder can help ensure that all necessary tax filings are compliant with the latest regulations, saving time and reducing the risk of penalties for non-compliance.

• Tailored Guidance: Companies can generate customized reports and analyses based on their unique circumstances, ensuring they are equipped to meet obligations related to R&D expenditure and other new tax requirements.

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Conclusion

The Finance Law 2026 marks a significant evolution in Algeria’s fiscal landscape, impacting both national and foreign corporate entities. With the introduction of new taxes, stricter auditing guidelines, and detailed compliance rules, it is essential for affected stakeholders to stay informed and adapt proactively. Utilizing resources like AI legalese decoder can facilitate a smoother transition into this new regulatory era, helping to navigate any complications arising from these extensive legal changes.

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Contact Information
For additional information concerning this alert, please contact:
Ernst & Young Advisory Algérie

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

Document ID: 2026-0245

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