Algeria has adopted its 2026 State Budget Law, which sets out the main parameters of government revenues and expenditures, medium-term macroeconomic targets, and a range of tax and customs measures of practical relevance to foreign companies.
Key budget figures
According to the Budget Law, state revenues for 2026 are projected at DZD 8,009 billion (USD 61.6 bn), including DZD 2,697 billion (USD 20.7 bn) in tax revenues from the hydrocarbon sector.
State expenditures are planned at DZD 17,636 billion (USD 135.6 bn).
The budget deficit is estimated at DZD 9,627 billion (USD 74 bn).
Main areas of public spending
Budget funds are expected to be allocated, among others, to the following sectors:
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National defence — USD 24.7 bn
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National education — USD 14.2 bn
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Hydrocarbons and mining — USD 757 mn
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Industry — USD 362 mn
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Pharmaceutical industry — USD 4.8 mn
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Agriculture — USD 6.8 bn
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Energy and renewable energy — USD 1.03 bn
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Internal affairs and transport — USD 11.8 bn
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Domestic trade and market regulation — USD 999 mn
Infrastructure investments
Key infrastructure allocations include:
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Water infrastructure — USD 4.08 bn
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Railway infrastructure — USD 3.2 bn
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Road construction — USD 2.9 bn
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Ports and port infrastructure — USD 400 mn
Macroeconomic targets
The Budget Law provides for:
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GDP growth of 4.1% in 2026,
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industrial sector growth of 6.3%.
The medium-term forecast assumes:
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GDP growth of 4.4% in 2027,
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GDP growth of 4.5% in 2028.
The Law also reiterates Algeria’s policy objective of economic diversification, including reducing dependence on hydrocarbons and strengthening other sectors.
Provisions of particular importance for foreign investors
The Budget Law includes several clarifications and provisions aimed at increasing tax certainty for non-resident companies operating in Algeria:
1) Clarification of taxable profit for non-resident entities
The updated approach specifies that taxable profit refers to net profit after taxes generated in Algeria during the financial year, irrespective of whether such profit is actually repatriated to the company’s head office abroad.
2) Strengthened “global taxation” principle for EPC contracts
For non-resident companies performing EPC contracts, taxable profit should now reflect the full profit generated in Algeria, including profit related to equipment supply — even when:
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such equipment is invoiced separately by the head office abroad, and/or
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customs formalities are processed in the name of an Algerian contractor.
3) Tax regime for representative offices of foreign companies
Representative offices of foreign companies, regardless of their legal form in Algeria, will be subject to the general taxation rules applicable to Algerian-incorporated companies.
4) Responsibility for compliance with tax obligations
The new rules remove the formal obligation of tax authorities to notify foreign companies of their tax liabilities, as such obligations are now clearly defined by applicable tax legislation. Companies are expected to independently ensure compliance and timely fulfilment of tax obligations.
Social measures and support for domestic consumption
The 2026 Budget Law:
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introduces no new taxes that may affect purchasing power,
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maintains the social orientation of the state through social transfers and subsidies for essential goods,
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extends tax and customs relief on selected commodities, including crude soybean oils, coffee, dried vegetables and meat.
Expanded application of the reduced VAT rate (9%)
The reduced 9% VAT rate (standard rate: 19%) is extended to include, among others:
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renovation of older housing stock,
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selected medical services,
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passenger bus transportation,
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vocational training.
Sector-specific incentives and investment support measures
The Budget Law provides targeted incentives for a number of priority sectors, including:
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import of equipment for solar panels: customs duty reduced to 5%
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hydrogen electrolyzers: exempt from customs duties
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inputs for fisheries and aquaculture: exempt from customs duties + VAT at 9%
Companies are also allowed to deduct from taxable income certain expenses related to investments in:
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“green” hydrogen development,
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afforestation and reforestation,
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renewable energy projects.
At the same time, the overall amount of such deductions may not exceed 5% of taxable profit for the relevant fiscal year.
In addition, the state introduces an exemption from duties and taxes for the import of up to 10,000 units of passenger vehicles with a capacity of 10 seats or more.
Micro-imports: introduction of a unified tax
Taxpayers engaged in so-called micro-import operations (self-employed individuals transporting goods from abroad for resale in Algeria) will be subject to:
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a unified tax of 0.5% of the value of imported goods,
in addition to:
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customs duties, and
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a fixed surcharge of 30% for each import operation.
Source
Prepared based on information published by the Trade Representation of the Russian Federation in Algeria (Telegram channel):
