OPEC member Algeria has imposed a requirement on investors to reinvest locally a part of their profits to the value of any tax breaks they received, according to the text of a decree published in the government gazette.
The decree setting out changes to article 142 of the tax code says, that starting in 2008 investors would have four years in which to make the reinvestment, and those that did not comply will have to repay any tax breaks and be subject to a fine.
The regulation, dated July 24 and published on July 28 on the website of the Journal Official government gazette, does not distinguish between foreign and Algerian investors or the energy and non-energy sector. But one analyst who declined to be identified said it was unlikely the measure would apply to energy companies, who form the largest single group of foreign investors by value.
Finance ministry officials were not immediately available to comment. The analyst said the measure appeared to be in line with comments made on July 26 by President Abdelaziz Bouteflika in which he attacked poor management of foreign investment and said he had been disappointed by its results.
Speaking to local government officials, Bouteflika said weaknesses in the implementation of economic policy had allowed some foreign investors to profit at Algeria’s expense and not reinvest earnings in the country. The main non-energy foreign investors are Egypt’s Orascom Telecom, Orascom Construction Industries and Qatar Telecommunications Co.
Africa’s second-largest country is struggling to reform a Soviet-style command economy dependent on oil and gas and is gradually recovering from 15 years of conflict between Islamist rebel groups and government forces. (Reuters)