Algeria’s Finance Law for 2026, published on 31 December 2025, sets the national budget and introduces key tax reforms, including stricter rules for non-resident companies and permanent establishments, incentives for green investments and startups, and expanded VAT measures. The law also mandates electronic filing, raises VAT penalties, and introduces a voluntary tax regularisation scheme, effective from 1 January 2026.
Algeria’s Ministry of Finance has gazetted the Finance Law for 2026 on 31 December 2025.
The Finance Law for 2026 sets out the national budget, defining projected revenues, spending limits, and the overall financial framework for state operations. It also introduces updates to tax and legal provisions, manages special purpose funds, and implements targeted economic measures, including incentives for green investments and support for startups and microenterprises.
The main tax measures are as follows:
Withdrawal of actual profit tax regime for non-residents
The optional real (actual) profit tax regime has been abolished for non-resident companies without a permanent establishment in Algeria, which will now be taxed solely through withholding tax on gross income. The Finance Law introduces new provisions targeting non-resident companies, defines their Algerian-source profits, and establishes a 10% withholding tax on dividends.
Stricter tax rules for foreign companies and permanent establishments (PEs)
- Non-resident companies operating through a permanent establishment (PE) in Algeria are expressly subject to the same obligations as Algerian companies under the real profit regime, including the requirement to submit copies of all concluded contracts and to notify the tax authorities of any amendments, modifications, or terminations.
- Net profits earned in Algeria by branches or PEs of foreign companies are deemed distributed and taxed accordingly, even if the profits are not remitted to the head office, with the distribution tax due at the same time as the corporate income tax (IBS).
- The deductibility of intra-group transactions involving PEs has been restricted, as payments to a head office or between PEs of the same group—such as royalties, service fees, commissions, and interest—are no longer deductible, except where they represent reimbursement of actual costs incurred with independent third parties.
Environmental and corporate tax incentives
A new environmental deduction allows companies to deduct up to 5% of taxable profit for qualifying investments in green hydrogen, reforestation or afforestation, and renewable energy projects.
Startups and incubators
Entities with a “startup” label are exempt from Income Tax (IRG) or Corporate Tax (IBS) for four years, while “incubators” receive a two-year exemption.
Renewable energy
Investments in green hydrogen, reforestation, and renewable energy projects are deductible from taxable profits up to a limit of 5%.
Scientific research
Large companies with a turnover of over DZD 2 billion must allocate 1% of their profits to research and development or face a compensatory tax.
Mandatory electronic tax filing
Taxpayers under the real profit or simplified tax regimes are now required to file tax declarations electronically where their local tax office operates the “Jibayatic” information system.
Voluntary tax regularisation scheme
A voluntary fiscal regularisation scheme has been introduced, allowing individuals or entities to regularise their status by settling their tax liability with a 8% unique dischargeable tax before 31 December 2026.
Wealth and property tax
Declarations for the wealth tax must now be submitted electronically every four years.
Extension of reduced VAT rate
The 9% reduced VAT rate has been extended to cover residential building rehabilitation, healthcare catering and accommodation, state-approved vocational training services (including related lodging), public bus transport, and the import and local sale of aquaculture feed and raw materials.
VAT exemptions for energy infrastructure
A VAT exemption has been introduced for goods, works, and services used under contracts dedicated exclusively to infrastructure and investment projects for the production, transport, distribution, and marketing of electricity and natural gas through pipelines.
Increase in VAT penalties
VAT-related penalties have been significantly increased, including a general violation penalty of DZD 25,000 and a penalty of DZD 100,000 for fraudulent actions, replacing much lower previous fines.
The measures will take effect from 1 January 2026.
Earlier, Algeria’s government submitted the draft Finance Bill for 2026 to the parliament following its approval by the Council of Ministers on 5 October 2025.
