Algeria Implements Sweeping Tax Reforms in 2026 Finance Law

Algeria's tax landscape underwent significant changes with the implementation of the 2026 Finance Law, signed by President Abdelmadjid Tebboune on December 14, 2025. The law aims to foster investment, boost economic activity, simplify tax procedures, and support exports. The Directorate General of Taxes (DGI) is tasked with ensuring the strict application of these measures across its regional and state-level services.

The 2026 Finance Law introduces several key measures impacting both resident and non-resident companies. A notable change is the elimination of the optional real profit regime for non-resident companies without a permanent establishment, meaning they will now be taxed exclusively via withholding tax. The law also reduces the withholding tax rate on dividends and similar income received by Algerian-resident individuals from 15% to 10%. Furthermore, the law establishes an exceptional voluntary tax regularization system, allowing taxpayers to regularize their tax situation by December 31, 2026, through a one-time 8% tax without penalties. The law also extends until December 31, 2026, tax exemptions and customs duties on essential consumer products such as crude soybean oil, coffee, pulses, and white and red meat.

The Finance Law includes specific measures for permanent establishments (PEs) and foreign companies. Article 16 specifies that amounts a PE pays to its head office or other offices of the same company (royalties, fees, commissions, interest) are not deductible if they do not correspond to reimbursement of actual expenses. Articles 13 and 15 explicitly state that PEs are subject to the same tax obligations as Algerian legal entities eligible for the real profit regime. Articles 6 and 28 specify the determination of taxable income deemed distributed to non-resident foreign parent companies, as well as the liquidation and payment of the related tax. The net profits realized in Algeria by a branch or other permanent establishment are deemed distributed to the non-resident parent and taxed accordingly.

Several measures target specific sectors and activities. The law introduces a new tax dedicated to research and development (R&D) and innovation, requiring Algerian companies with an annual turnover of at least DZD 2 billion (~$14.8 million) to allocate 1% of taxable profit to R&D activities. The law extends the tax exemption period for start-ups from one year to two years upon label renewal and renews the tax benefits for business incubators with each label renewal. To ensure the availability and affordability of meat for the Eid al-Adha holiday, the government has approved tax and customs exemptions on the import of livestock, including the elimination of five types of taxes and duties on imported livestock. This includes the import of one million sheep. The law also extends until December 31, 2026, the application of the reduced rate of 5% customs duty on imports of live cattle and sheep intended for slaughter, as well as vacuum-packed fresh and chilled beef and sheep meat.

Looking ahead, businesses should monitor the forthcoming regulations detailing the specific sectors affected by the R&D tax. Companies should also ensure compliance with new reporting requirements and assess the implications of the R&D tax obligations on their operations. Taxpayers engaged in micro-importation activities are subject to a 0.5% tax per import transaction, calculated on the customs value, augmented by customs duties and a fixed margin of 30%. The deadline for purchase applications for occupants of public rental (social) housing who wish to purchase their homes has been extended to December 31, 2026. The Treasury is authorized to cover interest during the deferral period and to subsidize 100% of the interest rate on loans granted by public banks for the construction of 300,000 homes under the lease-to-own program (AADL) in 2026.