Algeria’s legal system is based on a combination of civil law, where most laws are codified, and Islamic law. Most of the civil law provisions are based on French civil law. As to Islamic law, it mainly regulates family-related matters.

The Algerian Constitution provides for an independent judicial system where judges are accountable to a High Council of the Judiciary.

The Algerian court system is articulated around two distinct orders:

• a judicial order comprising civil and criminal courts; and
• an administrative order comprising administrative courts dealing with disputes involving administrative authorities in their relations with one another or with private individuals.

Each of these two branches has a double level of jurisdiction with common courts and courts of appeals. At the top of the court system rest a Supreme Court for civil and criminal matters and a State Council for administrative disputes.

All foreign investments made in a convertible foreign currency in a sector producing goods or services may benefit from general investment guarantees (including a transfer guarantee) without, in principle, having to require approval. Investments should nonetheless be registered with the Algerian Investment Promotion Agency to properly secure application of investment guarantees (see 2.2 Procedure and Sanctions in the Event of Non-compliance).

In addition, foreign investments may benefit from incentive regimes subject to the approval of the Algerian Investment Promotion Agency. Under Law No 22-18 of 24 July 2022 on investment, foreign investors may benefit from one of three new incentive regimes based on specific sectors (Sector regime), specific geographical zones (Zones regime) and growth potential (Structuring investments regime). During their implementation and exploitation, eligible investments benefit from temporary exemptions from customs duties, VAT, corporate income tax, business activity tax or property tax for a duration of three to five years in the implementation phase and five to ten years during exploitation.

Furthermore, investments in certain sectors are subject to specific conditions. In 2020, the government eliminated the “51/49” restriction that required majority Algerian ownership for all new investments, while it maintained the requirement for “strategic sectors” such as energy, mining, defence, transportation infrastructure, and pharmaceutical manufacturing (with the exception of innovative products). The 2021 Finance Law reinstated the requirement for any company importing items into Algeria with an intent to resell.

To simplify procedures, foreign investments must now be registered with the Algerian Investment Promotion Agency’s national desk (guichet unique) responsible for major projects and foreign investments.

Failure to register the investment will have different consequences depending on the applicable regime:

• investments eligible for tax incentives will not be granted the expected benefits; and
• investments that are not eligible for specific incentives regimes are, in principle, not affected and may still benefit from general investment guarantees. However, lack of registration may turn out to be inconvenient for foreign investors when exercising their rights with the administration.

There are several formal and substantive conditions, but the most important is to invest in convertible foreign currency in a sector producing goods or services.

If a foreign investor has benefited from an incitation regime, failure to comply with certain obligations (eg, submission of a progress report on the project to the Algerian investment promotion agency) will result in the withdrawal of the benefits granted.

Law No 22-18 of 24 July 2022 on investment created a national commission for investment appeals (Haute commission nationale des recours liés à l’investissement) to receive appeals by investors in the event of unfavourable decisions by competent authorities. The commission must rule within a one-month deadline.

The most common types of company are Sociétés à responsabilité limitée and Sociétés par actions as they limit the liability of their members to their contributions to the company’s share capital.

Société à Responsabilité Limitée — SARL (Limited Liability Company)

The SARL is a widespread and easy to incorporate corporate vehicle. It comprises at least two members and the minimum capital is set at DA100,000 divided into shares of DA1,000.

The SARL may consist of only one member and is, in this case, called an Entreprise unipersonnelle à responsabilité limitée – EURL (Single Person Limited Liability Company).

Société par Actions — SPA (Joint Stock Company)

The SPA is adapted to larger businesses and must comprise at least seven shareholders. The minimum capital is set at DA4 million if the company offers its shares to the public and DA1 million otherwise.

To incorporate a company in Algeria:

• applicants must deposit the start-up capital with a bank (for non-resident shareholders, the funds are deposited in the name of the company in an Algerian bank account opened in a foreign currency) and obtain a deposit certificate;
• applicants must sign the company’s constitution documents (ie, articles of association), which must be drawn up by a public notary; and
• a notice of the company’s incorporation must then be published at the Official Bulletin of Legal Announcements (BOAL).

In addition, registration of the company with the trade registry is mandatory and confers legal status upon the company.

After incorporation, there are a number of additional registrations required from the company, including with different social security and tax departments.

Private companies have reporting obligations in relation to corporate or financial matters such as:

• publication of annual accounts;
• modification of the share capital;
• modification of the headquarters or of the management of the company; and
• mandatory reporting when the net equity of the company falls under one fourth of the share capital.

Société par Actions — SPA (Joint Stock Company)

SPA is administered by a single board of directors made up of at least three members and up to 12 members. The board of directors can act on behalf of the company in all circumstances, subject to the powers expressly granted to it by the shareholders and within the limits of the company’s objects.

Alternatively, the company’s by-laws can provide for a two-tiered board structure with a directoire (management board) and a conseil de surveillance (supervisory board) which exercises permanent control and monitoring of the company.

Société à Responsabilité Limitée — SARL (Limited Liability Company)

SARL is managed by one or more natural persons with wide-ranging powers to act in all circumstances on the company’s behalf.

Under Algerian law, the directors are liable individually or jointly to the company or to third parties, either for breach of applicable laws or regulations, breaches of the company’s articles of association, or for faults committed in their management.

In addition, directors may incur criminal sanctions for specific offences (eg, failure to comply with mandatory reporting obligations, misuse of company funds).

Algerian employment law is mainly articulated around the following sources:

• Law No 90-11 of 21 April 1990, which is the fundamental law for employment relationships and related matters as well as other specific texts;
• case law;
• collective bargaining agreements; and
• companies’ internal rules.

An employment contract exists when a person (the employee) undertakes to work, in return for remuneration, for the account and under the orders and control of another person (the employer). The execution of the employment contract entails a certain number of obligations for both the employee and the employer.

An employment contract usually sets out the employee’s job title and status, its duties, remuneration, working time, mobility provision and restrictive provisions (eg, non-compete).

Term

The work contract may be entered into for a fixed term or on a permanent basis. In the absence of a written contract, the employment contract is deemed to be permanent. Consequently, fixed-term contracts should always be written.

Fixed-term contracts cannot be used to fill permanent positions and are only allowed under specific circumstances:

• performance of non-renewable services;
• replacement of employees;
• performance of intermittent, periodic work; and
• a temporary increase of activity or seasonal work.

Trial Period

Newly hired employees are subject to a trial period which may last up to six months for low-skilled workers and up to 12 months for higher-skilled jobs. The trial period is usually set by the collective bargaining agreements per categories of employees.

In Algeria, the legal workweek runs from Sunday to Thursday with a standard working time of 40 hours. The length of a workday may not exceed 12 hours.

This standard working time may be:

• reduced for people working in particularly arduous and dangerous jobs or jobs involving physical or nervous strain; or
• increased for certain jobs involving periods of inactivity.

Overtime hours are allowed only under certain imperative circumstances and may not exceed 20% of the legal workday (within the above-mentioned maximum 12 hours a day). The hourly rate is increased by 50% minimum. 

Executive Decree No 90-290 of 29 September 2019 regulating managers’ employment contracts provides that managers benefit from the same rights as employees under applicable law, subject to the specific provisions provided for in their employment contract. As such, managers’ rights and obligations under their employment contract are not subject to collective bargaining and may be individually negotiated.

Under Law No 90-11, the employment relationship ceases as a result of:

• nullity or abrogation of the employment contract;
• expiry of a fixed-term employment contract;
• resignation by the employee;
• dismissal by the employer;
• total incapacity to work, as defined by law;
• redundancy in relation to downsizing;
• cessation of the activities of the employer;
• retirement of the employee; or
• death of the employee.

Dismissal

Dismissal by the employer must be carried out in accordance with the law and the company’s internal rules, particularly with regard to notification of the decision to the employee and the requirement to hold a preliminary hearing for the employee.

Only two types of dismissal are allowed under Algerian law: dismissal for serious misconduct; and dismissal as a result of a reduction of the workforce (redundancy).

Disciplinary dismissals are allowed under the following specific circumstances and result in dismissal without notice or compensation:

• wrongdoings committed in the course of work and punishable under criminal law;
• refusal to follow instructions without justification;
• disclosure of confidential information;
• participation in a concerted collective ‘work stoppage’ in violation of applicable law;
• acts of violence, intentional property damage, or alcohol or drug consumption in the workplace; or
• refusal to perform a notified requisition order in compliance with legal provisions.

Employees who are dismissed on this ground may be eligible for compensation depending on the circumstances.

Pursuant to Law No 90-11, the employer can proceed to a reduction in the workforce, when economic reasons justify the measure. The reduction of the workforce results in simultaneous individual redundancies and is only decided after the negotiation of a collective bargaining agreement.

In addition, the employer is required to use all means likely to reduce the number of redundancies by implementing specific measures:

• transfer of employees to other activities or to other companies;
• reduction of working hours;
• implementation of part-time work; and
• retirement of employees.

Employees who are dismissed on this ground may be eligible for compensation depending on the circumstances and the outcome of the bargaining process. 

The right to organise is recognised both for employees and employers, who may form unions to defend their interests.

Employees are represented by the following bodies when more than 20 persons are employed:

• staff delegates at every worksite comprising more than 20 employees; and
• a representative committee made up of elected staff delegates and instituted at the employer’s headquarters.

In case there is only one single worksite, the elected staff delegate enjoys the privileges granted to the representative committee.

Taxation of salaries covers salaries, stipends, indemnities, emoluments, pensions and life annuities.

Except for remuneration, benefits, non-monthly bonuses and gratuities which are taxed under a 10% withholding tax, all earned income is taxable on the basis of a final withholding at source, withheld by the employer in accordance with a monthly-adjusted progressive tax on global income rate up to 35%. The final amount of tax is only determined after the application of specific abatements and additional reductions.

Legal entities present in Algeria are subject to different taxes according to whether they are residents or not.

Resident Legal Entities

Corporate income tax (CIT)

Profits earned by resident companies are subject to an annual tax on corporate profits. Taxable profits cover all operations of any kind carried out by the company, including the sale of assets.

CIT rates are set per business segments as follows:

• 19% for production of goods;
• 23% for building activities, public works and hydraulics as well as tourist and thermal activities (excluding travel agencies); and
• 26% for other activities.

A reduced rate set at 10% applies to:

• reinvested profit by manufacturing companies through acquisition of production equipment related to the activity carried out; and
• reinvested profit resulting in the acquisition of equity shares and stocks or similar securities of at least 90% in the share capital of another manufacturing, construction or service companies, subject to paying up the total amount of the share acquisition.

Value-added tax (VAT)

VAT is applied on the supply of goods or services and includes all economic activities conducted in Algeria. The standard VAT rate is 19%. A reduced rate of 9% applies to various items listed by law.

Tax on professional activity (TPA)

The TPA is a tax on professional activities based on overall sales or gross revenues. The standard rate is set at the rate of 1.5% and may benefit from rebates on specific revenues.

Non-resident Legal Entities

In the absence of applicable tax treaties, non-resident companies are taxed on income from Algerian sources, according to different tax regimes depending on the nature, duration and location of the activity carried out.

Service providers

Unless a tax treaty applies, non-resident companies providing services are subject to a withholding tax of 30% which covers CIT, TPA and VAT. This tax is calculated based on the gross amount of all services invoiced.

Construction

Non-resident companies performing a construction contract are deemed to have a taxable entity in Algeria and are subject to the common tax regime with some specificities and are taxed on their actual income to CIT, TPA and VAT.

Group companies

Although the investment regulatory framework has evolved, non-resident foreign companies still frequently associate with a local firm to execute a contract, thus complicating the tax treatment of the contract.

Under Algerian law, groups are transparent entities for tax purposes. A group cannot generate sales by itself and it is the members of the group that are deemed to be generating the profits and are therefore taxed accordingly.

Algerian law provides for various tax incentives. Tax incentives can be granted to new investors, subject to the application of a specific request with the National Agency for the Promotion of Investment (see 2.1 Approval of Foreign Investments). Other incentives can be granted for start-up businesses under CIT, TPA and VAT to promote entrepreneurship.

Tax consolidation consists of preparing a single balance sheet for all corporations belonging to a group representing the overall activities of the group.

Under Algerian law, tax consolidation is allowed only when the parent company opts for this specific regime and all group companies give their consent. It should be noted that the option, when selected, is irrevocable for a period of four years.

Article 141 of the CIDTA provides for full deductibility of interest on loans paid to shareholders concerning trading operations. However, the use of this type of financing allows companies to deduct interest on debt that may be artificial, or even to deduct interest instead of capital increases.

Article 2 of the FL 2019 now provides for the deductibility of these charges to the average effective interest rates communicated by the Bank of Algeria, with a double condition that the capital has to be fully paid up and the sums available to the company should not exceed 50% of the capital.

In Algeria, all transactions carried out with related parties are subject to transfer pricing documentation requirements, including transactions made with companies located in Algeria. The companies concerned have to produce, in support of their annual declaration, documentation to justify their transfer pricing policy in the context of these transactions.

Failure to produce or the incomplete production of the documentation within the prescribed deadlines leads to:

• reinstatement of the transferred profits plus a fine equal to 25% of these profits; and
• an additional penalty of DA2 million (equivalent to USD20,000).

Accounting audits or spot checks are conducted in order to verify the authenticity of tax declarations and reliability and probative value of the accounting entries.

Tax treaties are also an effective means to prevent international tax evasion as well as through communication between the authorities. In this regard, Algeria has an increasingly developed treaty network.

Under Ordinance No 03-03 of 19 July 2003, there is market concentration when:

• two or more previously independent undertakings merge;
• one or more natural persons already holding control of at least one undertaking, or one or more undertakings, acquire, directly or indirectly, whether by acquisition of capital or assets, contract or by any other means, control of the whole or parts of one or more other undertakings; or
• a joint venture operating, on a long-term basis, as an autonomous economic entity is created.

A merger notification to the Algerian Competition Council is required when a concentration aims to achieve a threshold in excess of 40% of the sales or purchases made on a market.

Algerian competition law does not provide for a specific timeline for filing the notification or for the competition council to rule on the transaction. The law nonetheless provides that during the period required for the competition council to review the notification, the authors of the concentration may not take any measure that would make the concentration irreversible.

Under Ordinance No 03-03 of 19 July 2003, concerted practices and actions which have the effect of restricting or distorting free competition within a market or a market segment are prohibited, in particular when:

• restricting market access or the exercise of certain activities;
• limiting or controlling production, opportunities and investments;
• sharing markets or sources of supply;
• precluding pricing by market forces by artificially favouring price increases or reductions;
• applying, with regard to business partners, unequal conditions to equivalent transactions, thereby placing them at a competitive disadvantage;
• making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which have no connection with the subject of such contracts; and
• allowing the granting of a contract in favour of the perpetrators of these restrictive practices.

Under Ordinance No 03-03 of 19 July 2003, any abuse of dominant or monopolistic position in a market or market segment is prohibited when consisting of:

• restricting market access or the exercise of certain activities;
• limiting or controlling production, opportunities and investments;
• sharing markets or sources of supply;
• precluding pricing by market forces by artificially favouring price increases or reductions;
• applying, with regard to business partners, unequal conditions to equivalent transactions, thereby placing them at a competitive disadvantage; and
• making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which have no connection with the subject of such contracts. 

Intellectual property is governed by early legal and regulatory texts in Algeria.

Industrial inventions are protected by Ordinance No 03-07 of 19 July 2003 pertaining to patents and by Decree No 05-275 of 2 August 2005 on filing and issuance of patents.

Protected inventions falling under the scope of this regulatory framework (ie, new inventions resulting from an invention and likely to be used industrially) are granted a patent giving them exclusive rights to prohibit:

• the manufacturing, use and sale of the product; or
• the use, sale and importation of a product obtained with the protected process.

Under Ordinance No 03-07, the following are not considered inventions:

• scientific principles, theories and discoveries as well as mathematical methods;
• plans, principles or methods for the purpose of performing purely intellectual or playful acts;
• methods and systems of teaching, organisation, administration or management;
• methods of treating the human or animal body by surgery or therapy as well as methods of diagnosis;
• simple presentations of information;
• computer programs; and
• creations of an exclusively ornamental nature.

Registration

Patents are first filed with the Algerian National Institute of Industrial Property (Institut National Algérien de la Propriété Industrielle, INAPI).

An application for a patent may relate to only one single invention or to a plurality of inventions linked together in such a way that they form a general inventive concept.

The application must contain a description of the innovative nature of the invention and a certificate of payment of the fees.

Once the application is filed, it will be examined by the INAPI. If a condition is missing, the applicant is allowed to regularise his application within two months.

If the application meets the conditions set out by the regulations, the applicant receives a registration certificate. The patent is granted for a non-renewable period of 20 years, from the application filing date.

All patents are published in the Official Bulletin of Patents (Bulletin officiel des brevets).

Trade marks are governed by Ordinance No 03-06 of 19 July 2003 and by Executive Decree No 05-277 of 2 August 2005 setting the terms and conditions for filing and registering trade marks.

Under the regulations, a trade mark is a distinctive sign which aims to distinguish the products or services of a physical or legal entity from those of others. It includes all signs capable of graphic representation, in particular words (including personal names), letters, figures, designs or images, the characteristic shapes of goods or their packaging, colours (alone or in combination) which are intended and capable of distinguishing the goods or services of a natural or legal person from those of others. There are several categories of trade marks, including:

• product or brand name;
• service mark;
• trade mark;
• collective marks;
• certification marks; and
• well-known trade marks.

The following cannot be registered as trade marks:

• signs that do not constitute trade marks within the above-mentioned definition;
• signs belonging to the public domain or devoid of any distinctive character;
• signs consisting of the shape of the goods or their packaging, if such shape is imposed by the very nature or function of the goods or packaging;
• signs that are contrary to public policy or morality;
• signs that reproduce or imitate flags or other emblems, abbreviation or acronym, or the official sign or hallmark of a state or of an intergovernmental organisation, unless authorised by the competent authority of that state or organisation;
• signs likely to mislead the public as to the nature, quality, origin or other characteristics of the goods or services; and
• signs that are identical or confusingly similar to a well-known trade mark or trade name that is well known in Algeria for identical or similar products or similar to a mark that has already been the subject of an application registration.

Registration

Trade marks are filed with the Algerian National Institute of Industrial Property (Institut National Algérien de la Propriété Industrielle, INAPI). The application contains a reproduction of the trade mark and a description of goods and services which will be sold.

Registration of a trade mark is mandatory for any product or service offered, sold or put up for sale on the national territory.

If the application meets the conditions set out by the regulations, the applicant receives a registration certificate. The registered trade mark gives its holder a right of ownership over that trade mark, meaning that the trade mark can only be used with the prior authorisation of its owner.

Industrial drawings and models are protected under Ordinance No 66-86 of 28 April 1966 and by Executive Decrees Nos 66-86 and 66-87 of 28 April 1966.

Industrial drawings comprise any composition of lines, of colours, aimed at giving a special appearance to a product of industry or handicraft. Models refer to any plastic shape associated or not with colours or to any industrial product which can serve as a pattern to manufacture other units and which distinguishes itself from similar models by its configuration. Only original and new drawings and models are protected.

Registration

Industrial drawings or models are filed with the Algerian National Institute of Industrial Property (Institut National Algérien de la Propriété Industrielle, INAPI).

If the application meets the conditions set out by the regulations, the applicant receives a registration certificate. An industrial drawing or model validly filed with INAPI is protected for a period of ten years from the date of the filing.

Literary and artistic property rights are protected under Ordinance No 03-05 of 19 July 2003 on copyrights and related rights.

Copyrights protect creation in the literary and artistic fields, in particular:

• written literary works such as literary essays, poems or novels, scientific and technical research, computer programs and orally expressed works such as lectures, speeches and other works of a similar nature;
• all works of theatre and choreography;
• musical works with or without words;
• cinematographic works and other audiovisual works;
• works of visual and applied arts;
• drawings, sketches, plans, models of architectural and technical works;
• graphics, maps and drawings relating to topography, geography or science;
• photographic works and works expressed by a process analogous to photography; or
• clothing, fashion and ornamental creations.

Authors of protected intellectual productions have both moral and economic rights over their work. These rights are permanent, inalienable and transmissible to their heirs.

Registration

The owner of the copyright is presumed, until proof to the contrary, to be the individual or legal entity under whose name the work has been made available to the public or under which the protected works have been declared to the national office of copyright.

Various intellectual property rights are protected under Ordinance No 03-05 of 19 July 2003 on copyrights and related rights.

Software

Software is granted the same protection as other protected literary rights under Ordinance No 03-05 (see 7.4 Copyrights).

Databases

Ordinance No 03-05 specifically protects data compilations, whether in machine-readable or other form, which by reason of the selection or arrangement of their contents constitute intellectual creations.

Translations and Arrangements 

Ordinance No 03-05 also protects translations, adaptations, musical arrangements, editorial revisions and other original transformations of literary or artistic works.

Data protection is governed by Law No 18-07 of 10 June 2018 on the protection of individuals in the processing of personal data (the “Data Protection Law”).

The Data Protection Law has an extended scope and covers all information, on whatever medium, on an individual directly or indirectly identified or identifiable, in particular by reference to an identification number or to one or more specific elements of their physical, physiological, genetic, biometric, psychological, economic, cultural or social identity.

In addition, it should be noted that the EU General Data Protection Regulation (GDPR) applies to Algerian companies if they process personal data when:

• offering goods or services to individuals who are in the territory of the European Union; or
• monitoring the conduct of such individuals, in so far as such conduct takes place within the European Union.

Territorial Scope

The Data Protection Law applies to the processing of personal data:

• when carried out by a natural or legal person established in Algeria or in a state with legislation recognised as equivalent to the Algerian legislation on data protection; or
• when the person processing personal data is not established in Algeria but uses, in processing personal data, automated or non-automated means located in Algeria.

The Data Protection Law created an independent administrative authority for the protection of personal data. Its members have recently been appointed by Presidential Decree No 22-187 of 18 May 2022.

The authority is responsible for ensuring that the processing of personal data is carried out in accordance with the provisions of the Data Protection Law. In particular, the authority is responsible, inter alia, for the following:

• issuing authorisations and receiving declarations relating to the processing of personal data;
• receiving claims and appeals relating to the implementation of the processing of personal data authorising cross-border transfers of personal data;
• ordering actions necessary for the protection of processed personal data;
• ordering the removal or destruction of personal data;
• pronouncing administrative sanctions in accordance with the Data Protection Law; and
• establishing rules of good conduct in the processing of personal data.

The Algerian government has announced a fundamental reform on the decriminalisation of management acts for both private and public companies.