The 2009 Supplemental Finance Law reflects the Algerian Government’s desire to reestablish a balance in international flows by stimulating an expansion of national production and by limiting systematic recourse to importations. The main chapters of the new law (including taxation, current and investment expenditures, and others), which was voted according to the provisions of Ordinance 09-01 of July 22, 2009, translate the Government’s rational and rigorous approach in the face of the negative impacts of the global economic crisis.

Indeed, the crisis’ incidence led the Algerian Government to take a second look at a number of economic indicators around which the initial Finance Law had been designed, while leaving others untouched. For instance, the Algerian currency’s rate of exchange has changed: From an initial 65 Algerian Dinars (AD) per US Dollar, the rate shifted to 73 AD for one US Dollar. On the other hand, in the category of indicators that have remained unchanged, the oil barrel reference price is still maintained at $37. That threshold has generated increased oil tax revenues of the order of 300 million AD due to a depreciation of the Algerian currency. Furthermore, budget revenues from regular taxation have increased by 92 billion AD, reflecting an 8% increase compared to initial Finance Law forecast. Inflation is another unchanged indicator, considering that its rate has stabilized at 3.5%.

It is also worth mentioning that the increase registered respectively in budget revenues (392 billion AD) and in budget expenditures (283 billion AD) produced a budget deficit estimated at 1,700 billion AD.

The 2009 Supplemental Finance Law calls for tax relief to create jobs, stimulate small- to medium-sized enterprise (SME), and develop agriculture and tourism. In fact, it covers measures and policies included in President Abdelaziz Bouteflika’s program and aiming, notably, at creating jobs and encouraging investment in SMEs, particularly in the agricultural and tourist sectors.
The 2009 Supplemental Finance Law also provides for directly supporting employment namely through a supplementary two-year extension of tax relief on income tax and Professional Activity Tax (TAP) to help young entrepreneurs committed to creating five permanent positions within their firms. The law also calls for a 3- to 5-year extension of the tax relief period for corporate profits in favor of investors who create 100 permanent positions at project start-up.


The new law extends also beyond December 31, 2009, the benefits granted to unemployed people aged 35 to 50. It maintains as well the additional reduction of the corporate share of the benefits and provides coverage of the remainder out of the State budget.

The measures introduced by the new Finance law to support SMEs include the creation in each of the country’s provinces of a 48 billion AD investment fund intended as a contribution in the social capital of SMEs established by young entrepreneurs. The new law also assimilates to State endorsement the warranty granted to banks and financial institutions by the “SME Credit Guarantee Fund” to cover investment credits given to this type of enterprise.

Regarding access-to-housing incentives, the Finance law includes a provision granting income tax relief for rent paid on collective facilities used for housing purposes and not exceeding 80 square meters in surface area. This provision is intended to generate an increase in rental availability and a decrease in rental prices. Other measures aimed at facilitating housing access are provided for in the new law. They include a 1% interest granted by the Treasury to civil servants for housing acquisition, construction or extension as well as an interest subsidy granted to banks for the acquisition of collective housing by applicants whose income does not exceed current levels set for the national guaranteed minimal wage (SNMG) by official regulations.

The Finance law also includes tax relief measures benefiting agricultural development thanks to an exemption from value-added tax (VAT) until December 31, 2018, on rent paid for leasing silos, cold storage equipment and those used in milk-producing facilities. Farmers and investors in the agricultural sector will also enjoy relief from VAT payment whenever they buy harvesters made in Algeria and will benefit from reduced VAT rate (7% instead of 17%) for purchases of greenhouse plastic sheeting.

In the tourism sector, the new law introduces lower customs levies for a period of five (5) years on acquisition of equipment and furnishings used to renovate and upgrade existing facilities in keeping with regulations outlined in the tourism promotion plan “Qualité Tourisme Algérie” being implemented by the Algerian authorities. Other measures aimed at promoting tourism in Algeria include exemption from Professional Activity Tax (TAP) payment on income in foreign currency for any tourism-promoting activities, such as any tours, hotels, spas, and restaurants affiliated with the “Qualité Tourisme Algérie” program, as well as application of a reduced VAT rate (7% instead of 17%) for a period of 10 years to delivery of services related to such activities.
Promotion of national production and restriction of the recourse to importations are key measures of the 2009 Supplemental Finance Law, which obligates investors to give preference to national production as a precondition to eligibility for benefits associated with the General System of Investment Promotion and which limits the VAT exemption to national production.
Furthermore, the 2009 Supplemental Finance Law gives authority to the National Council on Investment (CNI) to grant, for a period limited to 5 years, exemption or relief from payment of taxes, dues, or levies on any locally-produced goods and related to the promotion of emerging industrial activities. This measure aims at extending the requirement to import brand new equipment to capital goods, including public works machinery, raw materials, and spare parts. Importing used goods or equipment, even renovated with warranty, is no longer authorized.

The new law also includes investment support measures and extends to all foreign investors the requirement of registration with the National Agency for Investment Promotion (ANDI). The new provision is not retroactive. However, it sets at 30% the minimal Algerian share in corporations involved in foreign trade activities and established after promulgation of the new Finance Law.

In keeping with the decision by the Algerian authorities to limit imports and to implement the principle of reciprocity, the new law authorizes the government to apply to exporters from some countries procedures and formalities matching those applied in those countries to Algerian exporters.

A number of measures reflecting increased Government expenditures have also been taken. They include the Solidarity Lump-Sum Grant, known as AFS, which has been raised by 2,000 AD per month and extended to all beneficiaries, increased government share in the Retirement Reserve Fund, coverage of pensions given to draftees and recalled security personnel who suffered physical injuries in the fight against terrorism, 50% increase in monthly stipends granted to university students and higher-level vocational training students, stipends of 12,000 AD per month to PhD students, increase to 2,000 AD (up from 300 AD) in monthly stipend dispensed to students in manual training schools, stipends of 500 AD allocated to trainees with the national soccer team, which gets incentive subsidies of 500 million Algerian Dinars.

Government capital expenditures have also increased to support economic and administrative infrastructures, agriculture, water resources, and socio-cultural facilities. Recipients include the National Investment Fund (75 billion AD), the Provincial Investment Fund (48 billion AD) targeting the country’s 48 Wilayas, or provincial administrative divisions, the Youth Employment Guarantee Fund, and the National Housing Fund. With 1 billion AD per Wilaya, the Provincial Investment Fund aims to foster the establishment of enterprises by young people. Its current objective is the creation of 20,000 enterprises.

Other provisions of the new law are worth mentioning as well, such as the right of preemption of the State and state-owned enterprises over shares transferred by or to foreign shareholders, and the increased tax tariffs for transactions involving new vehicles with a displacement superior to 2,500 cubic centimeters, as well as trucks and public works machinery. Tax for diesel vehicles of 2,500 cubic centimeters increases from 100,000 AD to 200,000 but varies between 340,000 AD and 500,000 AD for trucks and public works machinery. This tax should not only have a positive incidence on revenues hauled in by the Special Public Transportation Development Fund but it should also foster partnership in the area of transportation.