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12.4.1. Main Rules

Legal Framework

Transfer pricing in Algeria is governed by:

  • Article 141bis of the Algerian direct tax code
  • Article 192 of the Algerian direct tax code
  • Article 20ter of the Algerian tax procedure code
  • Article 169bis of the Algerian tax procedure code

A Decree of 17 November 2020 (published in the Official Gazette of 2 January 2021 and replacing an earlier Decree of 12 April 2012) lays out the types of taxpayers required to comply with the transfer pricing documentation and the content thereof.

The regulations essentially mandate that transactions between related parties must be conducted at arm’s length. In particular, they empower the tax authorities to make the necessary adjustments every time the conditions of a transaction with related parties deviate from the conditions which would have prevailed had the parties been independent, and result in the shifting of profits abroad. The regulations include a non-exhaustive list of such conditions leading to the shifting of profits abroad, including:

  • Increasing or decreasing the purchase or sale price;
  • The payment of excessive royalties;
  • The granting of credits with no or a reduced interest rate;
  • The waiver of interest stipulated by a loan agreement;
  • The granting of advantages which are disproportional to the services received; or
  • By any other means.

Where the taxpayer fails to justify the transfer price of its transactions with related parties, the tax authorities are empowered to readjust the taxpayer’s profits by reference to the profits of independent enterprises in similar situations.

Definition of Related Parties

Parties are deemed to be related for transfer pricing purposes where a non-resident is directly or indirectly involved in the management, control or capital of a resident person, a resident person is directly or indirectly involved in the management, control or capital of a non-resident person, or a third party is directly or indirectly involved in the management, control or capital of both parties. In either case, the relationship differs from the relationship between two independent parties.

Applicable TP Methods

While not included in any specific regulation, the transfer pricing methods under the OECD guidelines are generally acceptable, including:

  • Traditional Methods:
    • Comparable uncontrolled price (CUP) method
    • Resale price method
    • Cost-plus method
  • Transactional Profits Methods:
    • Profit split method
    • Transactional net margin method

Use and Availability of Comparables

Comparables are not covered in any regulation, but comparables sourced from global or regional databases that are reasonable and reliable will generally be accepted.