Sabadell International Business
Exporting to Algeria
Opportunities for Spanish companies in Algeria
Algeria’s proximity to Europe favours the delocalisation of energy-consuming industrial activities, as well as commercial exchanges.
- Facilities provided by the Government.
- Five-year government plans for developing the Algerians‘ country and well-being.
- Qualified, young and competitive labour.
- The economy depends completely on income from oil (98% of its exports), which makes it very vulnerable.
- The Administration is very slow in performing administrative processes.
- Generalisation of the 49/51 rule, in force since 2009, which requires there to be a majority percentage of resident Algerians in any foreign investment project.
- Access to territorial industrial tax.
Appealing investment opportunities in a large number of sectors:
- Prevention of tax evasion in the field of recovery of income and wealth taxes.
- Right to transfer the company’s profits after the close of the financial year and payment of corporate income tax (IBS).The foreign party has to pay a 15% tax on the amount to be transferred.
- There are exemptions in payment of corporate income tax (IBS) and professional activity tax (TAP) for any investors who create over 100 new jobs of work.
- Forms of aid for investment through public and private institutions with a programme for investment through public and private institutions with a programme for the more burdensome public sector and with advantages.
- Good prospects in the medium term with the increase of exports beyond hydrocarbons.
- Weakness of the currency. Weaknesses of exchange reserves.
- Prospects for development of renewable energies, tourism and agriculture.
Banco Sabadell in Algeria
The representative office, opened in 2004, had the privilege of being the first Spanish financial institution in Algeria.
It benefits from a lengthy operative and commercial experience and has in-depth knowledge of the Algerian financial system. Banco Sabadell in Algeria is a member of the Algerian- Spanish Circle of Trade and Industry (CCIAE) and has very good relations with the main public and private agents and bodies.
- Professionalism and quality service.
- Support for Spanish companies or their subsidiaries in Algeria, interested in foreign trade operations or investment, introducing them to local banking.
- Monitoring banking transactions.
- Cooperation with Spanish companies participating in commercial and economic missions, arranging meetings and visits to suit their needs.
Business structure in Algeria
Incorporating a foreign company
Representative office / Liaison Office:
Its business only involves managing the interests of the company or its subsidiaries.
It is not allowed to perform business or transactions which entail earnings.
Incorporating an Algerian company
Foreign businesses or subsidiaries cannot be established in Algeria unless they have an Algerian partner, required to own 51% of the capital against 49% owned by the foreign party.
Limited Liability Companies – SARL
- Foreign and Algerian partners (natural persons or legal entities).
- Minimum declared capital: 1000 euros (490 euros from the foreign partner).
- It is important to understand the law and its application properly, having a good legal advisor.
Sociétés en Nom Collectif (SNC)
- No minimum capital is required.
Sociétés en Commandite Simple (SCS)
The company is run by one or several managers
The foreign company rendering a service in Algeria will be subject to a 24% tax withholding of the income from each invoice.
The mixed company has great tax advantages for access to national and international competitive tenders
Foreign companies can open an internal non-resident account (INR) and a convertible account in dinars (CEDAC) while its projects are being performed.
Means of payment in Algeria
For all collections the Algerian party must direct debit the operation 30 days before the B/L date, as well as paying in 120% of the invoice amount for any products intended for direct resale.
Exports to Algeria
- Documentary credit:
irrevocable and optionally confirmed. This is the safest form of payment collection. It is subject to internationally accepted ICC rules and the rules of the Bank of Algeria.
collection management of commercial documents with the purchaser by a bank in Algeria. This is more flexible and less costly than documentary credit, but does not guarantee collection. These are generally remittances with sight payment.
transfers are allowed for collecting operations for imports of goods and services, according to the Financing Law of 2017.
Imports from Algeria
- Documentary credit:
irrevocable and optionally confirmed. This is the safest form of payment.
- Documentary remittance:
collection management of commercial documents with the purchaser by a Spanish bank. Often with an effect payable at 360 days.
- Simple transfer:
common payment and collection method.
International negotiation protocol in Algeria
- Respect the country’s customs and laws.
- Avoid referring to conflicts with neighbouring countries or political or religious comments.
- It is highly important to have an interpreter/translator speaking the local language.
- Be patient and know how to listen. It is best to get in touch with a local agent to facilitate negotiations.