The 2026 draft Finance Bill proposes comprehensive fiscal reforms, including amendments to corporate and personal income taxes, VAT, customs and excise duties, environmental taxes, and other administrative measures.
Algeria’s government has submitted the draft Finance Bill for 2026 to the parliament following its approval by the Council of Ministers on 5 October 2025.
The main tax measures include:
Abolition of the optional real profit regime
The option previously available for non-resident companies without a permanent establishment in Algeria will no longer be available to be taxed via withholding tax; instead, they will be taxed under the real-profit tax regime. This aims to simplify fiscal management and counter practices adopted by foreign companies that erode the taxable base by overestimating deductible charges.
EPC contracts
For non-resident companies involved in single turnkey (EPC) contracts encompassing services, equipment delivery, and works execution, the taxable base (for IBS or IRG) must include all profits realised in Algeria, specifically including profits related to equipment provision, even if billed separately or cleared in the name of the contracting party. This measure aims to ensure equal fiscal treatment between foreign and national companies and safeguard Treasury interests.
Contract reporting obligations for non-resident companies
Non-resident companies without a permanent establishment are now required to submit copies of all contracts and amendments concluded in Algeria. Additionally, they must notify authorities of any new contracts, even with existing clients, as well as contract terminations.
Taxation of branch profits
Profits earned in Algeria by branches or permanent establishments (PEs) of foreign companies will be treated as distributed and taxed accordingly, even if not transferred to the head office. The payment schedule for this distribution tax will align with the corporate income tax (IBS) payment timeline.
Changes in permanent establishment (PE) deductions
To align domestic law with international tax conventions, certain expenses between a stable establishment (branch) and its head office (such as royalties, commissions, or interest payments for internal services) are declared non-deductible for calculating taxable results.
Voluntary tax regularisation scheme
A new voluntary tax regularisation program allows individuals and companies to declare previously undeclared income by paying a flat 10% tax by 31 December 2026.
Dividend tax reduction
The withholding tax rate on dividends paid to resident individuals is proposed to be reduced from 15% to 10% to stimulate savings and capital formation.
Start-up support
Certified start-ups will benefit from a 4-year exemption from corporate income tax (IBS), with the possibility of a 2-year extension. Accredited start-up incubators will also enjoy a 2-year IBS exemption, renewable for an additional 2 years.
Green investment deduction
Expenses incurred by companies for investments in green hydrogen development, reforestation, or renewable energy projects may be deducted from their taxable profit, up to 5% of the annual taxable profit.
Sovereign sukuk
Products and capital gains from the sale of sovereign Sukuk (Islamic financial certificates) with a minimum maturity of five years are proposed to be exempted from corporate income tax (IBS).
Extended VAT exemptions
Exemptions from VAT for imports and sales of dry vegetables, rice, fresh fruits, vegetables, consumption eggs, broiler chickens, and turkeys are extended until 31 December 2026.
Reduced VAT rate extensions
The 9% reduced VAT rate now applies to renovation of old residential buildings, healthcare-related catering and accommodation, vocational training with associated services, and public bus and rail transport.
