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6.3. Depreciation and Amortization

When calculating Algerian taxable income, fixed assets owned by an enterprise are normally depreciated over their normal useful life using one of the following three methods:

  • Straight-line method
  • Progressive method
  • Declining-balance method

The primary method used for tax purposes is the straight-line method, although the progressive or declining-balance methods may be used on election. Under the declining method, the depreciation factors are multiplied by 1.5 where the useful life is 3 to 4 years, by 2 if the useful life is 5 to 6 years, and by 2.5 if the useful life is in excess of 6 years. Regardless of the method chosen, the depreciation of fixed assets must be in accordance with:

  • Generally accepted limits
  • Best practices for each type of industry, business or operations
  • Rules provided in Algerian tax legislation in regard to the depreciation system