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5.3. Tax Consolidation / Group Treatment

In Algeria, consolidation is possible (90% ownership requirement). Note, however, that oil and gas companies are excluded from this regime. A tax consolidation group may consist of an Algerian parent company and Algerian subsidiaries in which the parent company owns directly at least 90% of the capital if both of the following conditions are satisfied: (1) The capital of the parent company is not owned partially or totally by the subsidiaries; and (2) 90% or more of the parent company is not owned by another company eligible to be a parent company.

For consolidation to take effect the parent company must make the election for a four-year period and the election must be accepted by the affiliated Algerian group companies.

The group tax consolidation regime is based on the consolidation of the balance sheets of the affiliated companies with the parent company and the following rules apply: (1) If the activities of affiliated companies are subject to different corporate income tax rates, the profits resulting from the consolidation are taxable under each rate, according to the

share of reported turnover for each business segment.; (2) intra-group dividends are exempt from taxation; (3) intra-group asset transfers are tax-exempt; and (4) reinvested profits are subject to the reduced corporate income tax rate if they have been used to purchase up to the required 90% of shares and similar securities of other companies in the same group.