Main provisions of the law n ° 16-09 dated August 3, 2016 on investment promotion
The new law on investment promotion represents a significant development in the national legislative framework. It redefines the regime applicable to domestic and foreign investments in economic activities meant for goods and services production.
The investment covered by the law includes acquisitions of assets, new activities, extension and / or rehabilitation of existing activities, as well as equity investments in companies.
The law lists the various advantages but refers their implementation terms to the texts laid down by regulation.
Moreover, the law redefines the role of investment bodies,
especially that of the National Agency of Investment Development that should focus on improving the business climate, attracting investors and facilitating investment.
I. General provisions related to investment
The scope of the Act extends to:
• Investments for the creation, extension of production capacities and / or rehabilitation regarding activities and goods that are not excluded;
• Investments relating to the acquisition of goods, including renovated ones, constituting external contributions in kind as part of activities relocation from abroad;
• Investments relating to the acquisition of goods subject to the exercise of a purchase option by the lessee as part of the international leasing provided that such goods are brought into the national territory in mint condition.
Benefits provided for by the act include three regimes:
• Benefits that are common to all eligible investments;
• Aadditional benefits in favor of privileged and / or job-creating activities;
• Exceptional advantages in favor of investments of particular interest to the national economy.
Investments which have been registered at the National Agency of Investment Development (ANDI) and which are not included in the negative lists shall be entitled to benefit systematically from the realization advantages provided for by the law.
A. Common Benefits
- As part of the implementation phase:
The realization of the eligible investment benefits from the following advantages:
• Exemption from customs duties for imported goods;
• VAT exemption for goods and services imported or purchased ;
• Exemption from transfer fees against payment and from land publicity fees for all real estate acquisitions;
• Exemption from registration fees, the land publicity tax as well as from the domains compensation concerning
concessions for built and unbuilt properties;
• During the investment operation phase, a 90% reduction on the amount of the annual rental fee determined by the domains services;
• Exemption from the land tax of real estate properties, for a period of ten (10) years, from the date of acquisition;
• Exemption from registration fees for the constituent deeds of companies and of capital increases.
- As related to the operation phase:
The eligible investment benefits for a period of 3 years from the following advantages:
• An exemption from the corporate income tax;
• An exemption from the professional activity tax;
• A 50% reduction on the amount of the annual rental fee determined by the domains services.
B. Common advantages for investments located in the regions which development requires a particular contribution from the State
Besides the common advantages, investments located in regions which development requires a particular contribution from the State benefit from particular advantages, namely:
- As part of the implementation phase of the investment:
• The partial or full expenditure provided by the State for Infrastructure expenses;
• For the Far South: the reduction of the amount of the annual rental fee for the concession of land ranges from AD/m2
for 10 years to 50% of the amount beyond this period for the highlands and other regions to be supported, to the DA / m2
for a period of fifteen (15) years to 50% of the amount beyond that period.
- As part of the operation phase:
The common benefits are granted for a period of 10 years.
C. Additional benefits for privileged and / or job-creating activities
For investments in privileged and / or job-creating activities (over 100 positions), the duration of operation benefits is increased from three to five years.
D. Exceptional benefits for investments of particular interest to the national economy
Exceptional advantages are granted, through a negotiated agreement between the investor and the National Agency for Investment Development, to investments of particular interest to the national economy. Such advantages may be on an extension up to 10 years or the grant of an exemption or a reduction of customs duties, taxes and any other fiscal charges or subsidies, aids or financial support, as well as any facilities that might be granted.
E. Advantages which may be granted by the National Investment Council
Investments equaling or exceeding five billion Dinars are subject to the prior approval of the National Investment Council. The National Investment Council is empowered to grant exemptions or reductions, for a period that doesn’t exceed five (5) years, of fees and taxes including the VAT applied to the prices of goods produced as part of emerging industrial activities. In this context, these investments may benefit from the duty-free scheme for goods and materials used in the production of goods benefiting from the exemption from the VAT.
After the agreement of the National Investment Council, the benefits to be provided may be transferred to the contractors of the investor beneficiary who are responsible for the realization of the investment on behalf of the investor.
II. Guarantees granted to investments
The law reiterates all the guarantees provided by Ordinance n ° 01-03 dated August 20, 2001 on investment development, but adds a clause relating to investments realized from capital contributions in the form of imported cash. It guarantees the transfer of the invested capital and the resulting income and sets the conditions of this guarantee.
Therefore, subject to bilateral, regional and multilateral conventions signed by the Algerian State, foreign investors are treated fairly and equitably with regard to the rights and obligations attached to their investments.
For this purpose, guarantees are provided. They state that:
• The effects of changes or repeal of the law that may
intervene in the future do not apply to the investment made under this act unless the investor expressly requests it.
• Except for cases provided by the legislation in force, Investments realized may not be subject to administrative requisition. The requisition and expropriation are fairly and equitably compensated.
• Any dispute arising between the foreign investor and the Algerian State shall be submitted to the territorially competent Algerian courts, except bilateral or multilateral agreements concluded by the Algerian State on conciliation and arbitration or an agreement with the investor stipulating an arbitration clause that allows parties to agree on a compromise by ad hoc arbitration.
• Investments made from capital contributions in the form of cash imported through the banking channel and denominated in a convertible currency listed by the Bank of Algeria and given away to the latter and which amount is equal to or greater than minimum thresholds benefit from the transfer guarantee of the capital invested and the resulting income.
• Capital reinvestments of declared and transferable profits and dividends are allowed as external contributions.
• The transfer guarantee and the minimum thresholds concerned apply to contributions in kind.
• The transfer guarantee also covers the actual net income of the transfer and the liquidation of investments of foreign origin, even if their amount is greater than the capital originally invested.