Transfer Pricing in Algeria

The legal framework

Algeria has no OECD transfer pricing country profile and sits outside the Inclusive Framework, so domestic law is the only starting point. The operative rule is Article 189 of the Code des impôts directs et taxes assimilées (CIDTA), rewritten by Article 7 of Law 23-15 of 5 November 2023, which also repealed the older Article 141 bis. For corporate income tax (IBS), profits shifted indirectly by any means to a dependent or controlling enterprise, in Algeria or abroad, are added back to taxable results, measured against what would have been earned without the link. The Direction Générale des Impôts (DGI) reads this as a full arm's length standard and notes that Article 189 mirrors the associated-enterprises article of Algeria's treaties (DGI instruction of 6 June 2024, sections A and B.1).

Dependence is defined both mechanically and factually. Article 189(2) catches holdings above 50 per cent of capital or 40 per cent of voting rights, directly or through intermediaries, and any case where one enterprise in fact exercises decision-making power over another or both sit under common control. The instruction adds de facto cases, such as a shared manager or a dominant exclusive supplier, and confirms the burden of proof rests with the administration.

Two features distinguish Algeria from a textbook OECD regime. First, Article 189(3) drops the dependence condition altogether where the counterparty is in a privileged tax regime, defined by Article 141 quinquies as a jurisdiction where the tax borne is at least 40 per cent lower than the Algerian equivalent. The DGI applies the test item by item, so a treaty rate of 1.5 per cent on interest against 15 per cent domestically suffices. Second, scope is wide: purely domestic intra-group dealings, head-office-to-PE transactions in either direction and transactions without consideration are all covered, and the rule extends to hydrocarbons profit taxes under Law 19-13.

Methods, comparables and benchmarking

The OECD Guidelines have no statutory status, but the DGI's 2024 instruction imports their architecture wholesale: delineation of the transaction, comparability factors, the five methods, the tested party and the interquartile range (section C). Practitioners treat the Guidelines as the interpretive aid the legislation points to (Grant Thornton, January 2025).

The CUP method is preferred where it is as reliable as any alternative; resale price, cost plus, TNMM and profit split follow. A sixth method is admissible only if the file explains why the five were less appropriate, and a file that skips that explanation is incomplete (section C.3). The administration adopts the taxpayer's method if it is the most appropriate; otherwise it substitutes its own.

The tested party is the less complex entity with reliable comparables, and it may be the foreign affiliate (section C.4.2). Nothing requires Algerian comparables: commercial databases of filed accounts are accepted, geography is one selection criterion among several, and the full search process, from strategy to rejection reasons, must be documented. Given the scarcity of Algerian financial data, regional or global sets are the norm (TPA Global, 2022).

On the range, the DGI follows common practice: interquartile when the sample allows, no adjustment inside the range, and adjustment to the median where the taxpayer falls outside unless auditors justify another point (section C.4.4). Data should be the most recent available at the invoicing date, and any multi-year approach or comparability adjustment must be explained in the local file (Order of 15 February 2024, Article 4).

Documentation: what the DGI expects

The documentation duty is triggered by size, not transaction volume. Article 151 ter CIDTA covers any enterprise established in Algeria, including a permanent establishment, with turnover excluding tax or gross assets of DZD 1 billion or more, plus any enterprise holding more than 50 per cent of the capital or 40 per cent of the votes of such an entity, or itself so held. Below the line, Article 189 still applies.

Two obligations follow. The first is the annual transfer pricing declaration, e-filed on Jibaya'tic with the results return by 30 April, though the DGI has extended the date every year and FY2025 filings ran to 30 June 2026. It asks for the ultimate parent, group TP policy, group intangibles and their owners, restructurings, a summary of related-party transactions, intra-group loans, transactions without consideration and any foreign APAs or rulings, in dinars and in fields capped at 200 characters.

The second is the documentation under Article 169 bis of the Code des procédures fiscales (CPF), which must be on the table on the first day of an on-site audit rather than filed annually. The Order of 15 February 2024 (JO no 21 of 24 March 2024) prescribes a master file and local file in all but name: group structure, supply chain, intangibles, financing and consolidated accounts; then management structure, functional and comparability analysis per transaction category, method and tested-party justification, comparables search, intercompany agreements and reconciliation to the statutory accounts. Paper and electronic copies are both required, the electronic version must permit recalculation and sorting rather than scanned images (instruction, D.2.3), and Arabic or French is expected.

If the file is absent or incomplete, the DGI serves a formal notice allowing 15 days to cure. A file is incomplete when any item in the Order is missing or when it recites principles without applying them to the audited entity (D.2.5). Records must be kept for ten years (Law 24-08, Art 99 amending Art 64 CPF).

Audits, penalties and the enforcement climate

Law 23-15 replaced a modest penalty regime with one that bites. Failure to file the annual declaration, or filing an incomplete or inaccurate one, costs a fixed DZD 15 million (Art 192(3) CIDTA). Failing to answer the 15-day documentation notice, or answering incompletely, costs 2 per cent of the transactions concerned for each audited year, with a floor of DZD 10 million per year (Art 194(7)). The floor applies even where no reassessment follows. Sources still quoting the old DZD 2 million fine and 25 per cent of transferred profits are out of date.

Reassessed tax carries the general surcharges of Art 193: 10, 15 or 25 per cent by amount, at least 50 per cent for fraudulent manoeuvres and 100 per cent where tax should have been withheld. There is no documentation-based penalty protection; the only shield is a result inside the arm's length range, which is not adjusted (instruction, C.4.4).

The ordinary limitation period is four years (Art 39 CPF), but a treaty information request extends it to 31 December of the second year after the request, provided the taxpayer is told within 60 days (Art 39 bis), and lengthens the audit itself by a year (Arts 20(5) and 20 bis(4), re-enacted by LF 2026).

The instruction reads as an audit manual, targeting head-office charges to PEs, flows to privileged-regime jurisdictions, interest-free or cheap loans, royalties out of proportion to value, and pricing with no consistently applied method. The 2026 audit suspension that accompanies the voluntary regularisation scheme excludes large, hydrocarbons and foreign-capital taxpayers, so TP audits of DGE files continue.

Dispute resolution and advance certainty

There is no advance pricing agreement programme; Article 151 ter merely asks taxpayers to disclose APAs obtained elsewhere. The nearest instrument is the rescrit fiscal under Arts 174 bis and 174 ter CPF: a DGE taxpayer that puts a precise, complete written question to the administration before the filing deadline is protected if the DGI takes a position, or stays silent, for four months. It binds only on the facts presented; nothing excludes pricing questions, though we know of no such use.

Domestically, a reassessment is contested by a réclamation to the DGE director or wilaya tax director, admissible until 31 December of the second year after assessment; six months of silence at that level is an implicit rejection, stretching to eight where the central administration's conforming opinion is required (four months applies only to claims decided by a centre des impôts or centre de proximité). The taxpayer then chooses, within four months, between the recours commission and the tribunal administratif, and commission recourse is barred once the tribunal is seised. Tribunal judgments go on appeal to the tribunal administratif d'appel; the Conseil d'État hears only cassation (Arts 89 bis and 90 CPF). A 20 per cent deposit of disputed tax secures a stay of collection for claims arising from a tax audit, but not where fraud surcharges have been applied (Arts 74 and 80(2) CPF). No published Algerian TP judgment could be identified.

Internationally, relief from double taxation depends entirely on treaty mutual agreement articles (about 32 agreements are in force), as there is no domestic corresponding-adjustment rule. Algeria signed the BEPS MLI on 27 June 2024 but has not ratified it, so the Article 16 MAP standard does not yet apply. The Multilateral Convention on Mutual Administrative Assistance enters into force for Algeria on 1 November 2026, and Art 61 bis CPF (LF 2025) already authorises exchange of information; expect auditors to use it.

Pillar Two and what changes in 2026

Algeria has enacted no GloBE rules, no QDMTT and no IIR, and has announced none; the 2025 and 2026 finance laws are silent. Standard IBS rates remain 19 per cent for production, 23 per cent for construction and tourism and 26 per cent otherwise (Art 150 CIDTA), so Algerian entities will rarely trigger a parent's top-up, though the calculation must still be run. Amount B is likewise untouched: Algeria is neither a covered jurisdiction nor an opt-in, and the DGI requires a full comparability analysis for distributors.

The real 2026 changes are in Law 25-17 of 14 December 2025. New Art 169(6) CIDTA codifies the non-deductibility of royalties, fees, commissions and interest a PE pays its head office, other than reimbursement of actual costs; the instruction's Annex I already listed 19 treaties whose Article 7(3) does the same. PEs must meet full real-regime obligations (Art 153 ter) and lodge a copy of each contract within the month after installation, with ten days for any amendment or termination (Art 161); the option for foreign companies to elect the real regime without a PE has gone; single EPC contracts are taxed in full in Algeria including offshore supply (Art 140(5)); and a branch's after-tax profit is deemed distributed and self-assessed (Arts 46(9) and 356 quinquies), with the 15 per cent withholding of Art 150(2) still applying to non-resident companies. For construction and energy groups this reshapes the PE profit-attribution file.

How practitioners should respond

First, test the threshold every year, including at the shareholder link: a small Algerian subsidiary of a DZD 1 billion group is in scope, and an audit that reconstitutes turnover above the line triggers the DZD 15 million fine retrospectively. Second, treat the local file as audit-day material. It must exist, in French or Arabic and in recalculable electronic form, before the first on-site visit; 15 days is too short to build a benchmark from scratch. Third, price PE dealings on the assumption that head-office charges will be disallowed under Art 169(6) and that free services or secondments will be noticed. Fourth, map every counterparty against the 40 per cent privileged-regime test, item by item, because dependence need not be proven for those flows. Fifth, expect foreign information requests to lengthen both the audit and the limitation period, and calendar the 60-day notification. Finally, with no APA and no domestic corresponding adjustment, build the treaty MAP position into the defence file from day one; the stay deposit is 20 per cent, the appeal court sits between the tribunal and the Conseil d'État, and no Algerian court has yet published a transfer pricing ruling.