}} PROFILE CONTENTS

INTRODUCTION 2

LEGAL AND REGULATORY 4

TAXATION 6

BANKING 8

PAYMENT INSTRUMENTS 9

PAYMENT SYSTEMS 10

CASH MANAGEMENT 11

ELECTRONIC BANKING 12

TRADE FINANCE 13

USEFUL CONTACTS 15

Please note that rules, regulations and market practice are not necessarily documented and are subject to interpretation. In addition, they may change rapidly for economic, political and social reasons. As a result, the de facto enforcement and interpretation of regulations and market practice may diverge from the formal regulatory framework described in this country report. If you are planning any business activity in the country, we would recommend that you seek independent advice on the latest market and regulatory developments as well as legal and tax advice.

Algeria

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}} INTRODUCTION

General

Capital/Other major cities: Algiers/Oran, Constantine, Djelfa, Batna, Setif, AnnabaArea: 2,381,741 km2

Population: 37.36mLanguages: Arabic (official), French, Berber dialects

Currency: Algerian dinar (DZD)Country telephone code: 213

Weekend: Friday and SaturdayNational holidays:

Source: www.goodbusinessday.com.

2nd half 2013 — 5 Jul, 8, 9 Aug*, 15, 16 Oct*, 1, 5*, 14* Nov2014 — 1, 14* Jan, 1 May, 5, 29*, 30 Jul, 5, 6, 25 Oct*, 1, 3* Nov2015 — 1, 3* Jan, 1 May, 5, 18*, 19* Jul, 24, 25 Sep*, 13, 23 Oct*, 1 Nov

Business/Banking hours: 08:00–16:00 (Sun–Thu)09:00–15:00 (Sun–Thu)

Stock exchange: Bourse d’Alger* The date shown may vary by plus or minus one day. These dates are derived by converting from

a non-Gregorian calendar (e.g., Muslim or Hindu) to the Gregorian calendar. Some of these dates cannot be determined in advance with absolute accuracy, even by the governing authorities. In the case of Muslim dates in particular, the feast days are determined by the sighting of a new/full moon.

Government

Legislature

}} Presidential republic with a bicameral parliament composed of the People’s National Assembly (al-Majlis al-Sha’abi al-Watani) and the Council of the Nation (al-Majlis al-Umma).}} People’s National Assembly – 462 members directly elected to serve

five-year terms.}} Council of the Nation – 144 members of whom a third are appointed

by the president. The remaining members are elected by indirect vote. Members serve six-year terms. }} The president is elected every five years.

Head of state

}} Abdelaziz Bouteflika, president since 28 April 1999.

Political leader

}} Abdelmalek Sellal, prime minister since 3 September 2012.

Sectoral distribution of GDP (% of GDP)

Agriculture 8.9%Industry 60.9%Services 30.2% (2012 estimate)

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Economy 2006 2007 2008 2009 2010 20112012

Q1 Q2 Q3 Q4

Exchange rate* (DZD/USD) 72.647 69.292 64.583 72.647 74.386 72.938 75.148 75.624 80.435 NA

Interest rate* (MMR) (%) 2.05 3.13 3.27 3.68 3.22 2.14 NA NA 0.47 NA

Consumer inflation** (%) + 2.3 + 3.7 + 4.8 + 5.8 + 3.9 + 4.5 + 9.0 + 9.5 + 8.0 NA

Unemployment (%) 12.3 13.8 11.3 10.2 10.0 NA NA NA NA NA

GDP volume growth** (%) + 2.00 + 3.00 + 2.40 + 2.40 + 3.30 + 2.50 NA NA NA NA

GDP (DZD bn) 8,515 9,367 11,090 10,034 12,050 13,762 – – – –

GDP (USD bn) 117 135 172 138 162 189 – – – –

GDP per capita (USD) 3,510 3,986 4,987 3,952 4,567 5,294 – – – –

BoP (Goods/Services/Income) as % GDP + 23.3 + 21.0 + 18.4 – 1.6 + 5.9 NA – – – –

* Period average. ** Year on year. Source: IMF, International Financial Statistics, February 2013, and World Bank Data.

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}} LEGAL AND REGULATORY

Central bank}} Established in 1962, the Banque d’Algérie is an autonomous institution

operating in accordance with Act No 62-144 instituting the statutes of the Banque Central d’Algérie, Law No 86-12 of 19 August 1986 and Law No 90–10 of 14 April 1990.

Bank supervision}} The Banking Commission supervises the banking sector within Algeria.}} The Money and Credit Council is responsible for licensing and regulation.

Resident/non-resident status}} A company is considered resident in Algeria if it is incorporated there.

Branches of foreign companies and permanent establishments are also considered to be resident for tax purposes.

Bank accounts}} Foreign exchange accounts can be held by residents domestically. These

accounts can be credited with convertible foreign currency transfers from abroad and can be used to make foreign currency payments. Neither foreign exchange accounts nor domestic currency (DZD) accounts can be held by residents abroad. Resident domestic currency accounts are not convertible into foreign currency. }} Non-resident bank accounts are permitted in both foreign and domestic

(DZD) currency. Outward transfers from non-resident DZD accounts are subject to the approval of the Banque d’Algérie. Non-resident domestic currency accounts (CEDAC accounts) are freely convertible into foreign currency.}} Interest can be offered on savings accounts and demand deposits.}} Overdraft facilities are available to residents, subject to authorisation from

the Banque d’Algérie.

Reporting}} All transactions between residents and non-residents must be reported to

the Banque d’Algérie on a monthly basis. }} Banks are responsible for submitting transactions data to the central bank

on behalf of their clients. }} Transactions data is submitted electronically.

Exchange controls}} The Algerian dinar (DZD) is Algeria’s official currency; the de jure

exchange rate is managed floating, while the de facto exchange rate is categorised as other managed arrangement. }} The Money and Credit Council delegates the implementation of exchange

controls to banks and financial institutions.}} All export proceeds are required to be repatriated within 120 days of the

delivery date, and 50% deposited with commercial banks. Proceeds from the export of hydrocarbons and mineral products must be surrendered to the Banque d’Algérie.

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}} Capital funds may be transferred abroad by residents to finance operations which complement those undertaken in Algeria, subject to the Money and Credit Council’s approval. Any foreign currency proceeds from such operations must be surrendered. }} Resident purchases abroad require the authorisation of the Money and

Credit Council.}} Non-residents are not permitted to issue securities in Algeria. }} Residents, including banks and other financial institutions, are not

permitted to grant commercial or financial loans/credits to non-residents. }} Financial credits from non-residents to residents to finance domestic

investments have been suspended. }} Foreign investment in domestic banks requires the authorisation of the

Money and Credit Council.

Anti-money laundering/counter-terrorist financingSupplied by BCL Burton Copeland (www.bcl.com). Data as at December 2012.

}} Algeria has enacted anti-money laundering legislation (Articles 104-110 of the Finance Law 2003 and the Law for the Prevention and the Fight Against Money Laundering and Terrorism Financing 2005, as amended by Ordinance No 12 of 2012).}} Algeria is a member of the Middle East & North Africa Financial Action

Task Force (MENAFATF).}} In October 2012, the FATF (Financial Action Task Force) issued a public

statement acknowledging that in October 2011 Algeria had made a high-level political commitment to work with the FATF and MENAFATF to address its strategic AML/CFT deficiencies and steps had been taken towards improving Algeria’s AML/CFT regime by enacting AML/CTF legislation. The FATF encouraged Algeria to address its deficiencies and continue the process of implementing its action plan.}} Algeria has established a financial intelligence unit (FIU), the Cellule du

Traitement du Renseignement Financier (CTRF), an independent unit housed within the Ministry of Finance. }} Account opening procedures require formal identification of the customer.}} Beneficial owners and occasional customers must also be identified.}} Financial institutions must conduct ongoing monitoring of a business

relationship, including ensuring that transactions are consistent with the customer’s business and risk profile.}} All payments exceeding DZD 50,000 made by residents must be made by

cheque, wire transfer, payment card, bill of exchange, promissory note, or other official bank payment. Non-residents are exempt.}} Financial institutions in the broadest sense are required to report

suspicious transactions to the CTRF.}} Individuals entering or exiting Algeria must declare foreign currency to the

customs authorities.}} All records must be kept for at least five years after the end of the

business relationship.

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}} TAXATIONAll tax information supplied by Deloitte Highlight 2012 (www.deloitte.com).

Resident/non-resident }} Tax residence is not legally defined in Algeria. Companies incorporated

in the country are treated as resident. Branches and permanent establishments of non-resident head offices are taxed on their Algerian-sourced income.

Tax authorities}} Direction des Grandes Entreprises (DGE).}} Direction Générale des Impôts (DGI).

Tax year/filing}} The tax year is the calendar year.}} Large companies that fall within the jurisdiction of the DGE must pay their

provisional tax instalments by the following dates:}} the first by 20 March; }} the second by 20 June; and}} the last by 20 November.

}} Each prepayment is 30% of the previous year’s corporate income tax liability.}} Final tax payments are due by 30 April following the close of the tax year,

along with the statutory return and the appropriate financial statements.

Corporate taxation }} Residents and non-residents are subject to tax on profits from activities in

Algeria. }} There are various corporate income tax rates:}} 19% for manufacturers, real estate developers and tourism;}} 25% for traders and the service sector.

}} There is no surtax.}} Losses may be carried forward up to four years but cannot be carried

back.}} There is an alternative annual minimum corporation tax of DZD 5000.

Advance tax ruling availability}} There is no legal system for advance tax rulings, but companies may ask

the tax authorities for their non-binding interpretation of tax provisions.

Capital gains tax}} Gains realised on business assets of less than three years are classified

as short-term capital gains. These gains are subject to income tax on 65% of the gain.}} Gains on business assets of more than three years are classified as long-

term capital gains. These gains are subject to income tax on 30% of the gain.}} Capital gains arising within a group of companies are tax-free.}} Rollover relief is available where a company undertakes to acquire similar

assets within three years.

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Withholding tax (subject to tax treaties)

Payments to: Interest Dividends Royalties Other income/fees

Resident companies 10%* None – Taxed as income

Non-resident companies 10% 15% 24% 24%

* Creditable against corporation tax.

Tax treaties/tax information exchange agreements (TIEAs) }} Algeria has tax treaties with 19 countries.

Thin capitalisation}} There are no thin capitalisation rules.

Transfer pricing}} Even though there are no specific transfer pricing rules, the Finance Law

2007 enables Algeria to tax all income that would have arisen in Algeria, on transactions between resident and non-resident related parties, but for the fact that they were not made at arm’s length.}} All entities registered with the tax department responsible for

multinational companies (DGE) must, when requested by the Algerian tax administration, submit documentation within 30 days to support their transfer pricing practices.

Stamp duty}} Most documented private and administrative activities are subject to

stamp duty.

Capital taxes}} There are no capital taxes in Algeria other than a 0.5% charge on the

initial formation of a company.

Sales taxes/VAT (incl. financial services)}} VAT registration is required for service providers with DZD 100,000 or

over annual turnover and DZD 130,000 turnover for other companies.}} The standard rate of VAT is 17%.}} There is a reduced rate of 7% on, inter alia, basic foods, pharmaceutical

products, newspapers and books, agricultural inputs, fuel and diesel oil, and propane and butane gas.}} Exports are zero rated.

Payroll and social security taxes}} There are no payroll taxes in Algeria.}} Social security contributions (for both pensions and health care) of 26% of

salaries are payable by employers.}} A tax is imposed on companies that do not spend 1% of their turnover on

training.

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}} BANKING

Major banksBank

Total assets (USD millions) 31 December 2011

Banque Extérieure d’Algérie 31,887*

Banque Nationale d’Algérie 21,327

Banque de l’Agriculture et du Développement Rural

11,525**

Banque de Développement Local 4,867**

BNP Paribas El Djazaïr 2,247*

Société Générale Algérie 2,198

Banque Al-Baraka d’Algérie 1,375**

* Data as at 31 December 2010. ** Data as at 31 December 2009.Source: www.bankersalmanac.com, March 2013.

Overview}} There are 20 banks (including one branch of a foreign bank, HSBC) and

eight other financial institutions operating in Algeria. There are also seven representative offices of foreign banks. }} The Algerian banking sector is dominated by state-owned institutions:

Banque Extérieure d’Algérie (BEA), Banque Nationale d’Algérie, Banque de l’Agriculture et du Développement Rural and Banque de Développement Local. These large state-owned institutions control over 85% of the banking sector’s total assets; the BEA controls approximately 50% of the sector’s total assets.}} Foreign banks including France’s Société Générale, BNP Paribas, Natixis,

and Crédit Agricole (through Calyon Algérie) as well as the UK banking group, HSBC, are active and prominent in Algeria. }} A number of Middle Eastern banking groups have built majority-

shareholdings in some of the country’s banks including: Bahrain’s Albaraka Banking Group (the main shareholder of Banque Al-Baraka), Kuwait’s Burgan Bank (via Gulf Bank) and Lebanon’s Fransabank (via Fransabank El Djazaïr).

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}} PAYMENT INSTRUMENTS

Credit transfers}} Credit transfers can be paper-based or automated.}} Credit transfers are used by companies for salary and supplier payments.}} High-value (DZD 1 million or above) and urgent credit transfers are cleared

and settled via ARTS, the national RTGS system, on a same-day basis.}} Low-value (below DZD 1 million) and non-urgent electronic and paper-

based credit transfers are processed via ATCI.

Direct debits}} Direct debits are available in Algeria and are used for low-value recurring

payments such as utility bills.}} Direct debits are cleared by ATCI. Funds are available to the beneficiary

on a next-day basis.

Cheques}} The cheque is the dominant cashless payment instrument in Algeria,

in terms of both volume and value, and is used for both retail and commercial payments.}} Cheques are truncated into electronic items before being cleared by ACTI.

Final settlement is via ARTS. Funds are available to beneficiaries on T+2.

Card payments}} The use of payment cards in Algeria is limited but increasing. }} There were approximately one million payment cards in circulation at the

end of 2011. Debit cards account for the majority of all payment cards in circulation.}} Carte Interbancaire (CIB) debit cards are issued by most leading

commercial banks. Visa and American Express cards are also issued.}} The Society for the Automation of Interbank Transfers (SATIM) operates

Algeria’s national CIB debit card scheme and national ATM and EFTPOS networks. }} CIB debit card payments and ATM/POS transactions can be cleared by

SATIM. Currently, 16 banks and Algérie Poste participate in SATIM.}} Internationally branded debit and credit card payments can be processed

by the card-issuing companies. Banks’ proprietary card payments are processed internally.}} There were 1695 ATMs and 4,000 EFTPOS terminals in Algeria at the end

of 2011.

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}} PAYMENT SYSTEMS

Type}} ARTS (Algeria Real Time Settlement), Algeria’s national real-time gross

settlement (RTGS) system, is operated by the Banque d’Algérie.}} ATCI (Algérie Télécompensation Interbancaire), an automated clearing

system, is operated by the Centre de Précompensation Interbancaire (CPI), a company jointly owned by Algeria’s banks and the Banque d’Algérie,

Participants}} Algeria’s banks, the Banque d’Algérie, Algérie Poste and the Treasury

participate in the ARTS and ATCI systems.

Transaction types processed}} ARTS processes high-value (DZD 1 million or above) and urgent DZD-

denominated, electronic credit transfers. In addition, ARTS effects the final settlement of participants’ net balances originating from ATCI and SATIM.}} ATCI processes low-value (below DZD 1 million) and non-urgent electronic

and paper-based credit transfers and direct debits as well as cheque payments.

Clearing cycle detailsARTS

}} ARTS settles transactions in real time and with immediate finality.}} Payment instructions are submitted using SWIFT messages.}} Settlement takes place across the participant banks’ correspondent

accounts at the Banque d’Algérie.

ATCI

}} ATCI processes all electronic credit transfers, direct debits and cheques on a net settlement basis}} Cheques are truncated into electronic items before being processed. }} Final settlement takes place across participants’ accounts held at the

Banque d’Algérie via ARTS.

Currency centre holidays**

2nd half 2013 5 Jul, 8, 9 Aug*, 15, 16 Oct*, 1, 5*, 14 Nov2014 1, 14* Jan, 1 May, 5, 29*, 30* Jul, 5, 6, 25 Oct*, 1, 3* Nov2015 1, 3* Jan, 1 May, 5, 18*, 19* Jul, 24, 25 Sep*, 13, 23 Oct*, 1 Nov

* The date shown may vary by plus or minus one day. These dates are derived by converting from a non-Gregorian calendar (e.g., Muslim or Hindu) to the Gregorian calendar. Some of these dates cannot be determined in advance with absolute accuracy, even by the governing authorities. In the case of Muslim dates in particular, the feast days are determined by the sighting of a new/full moon.

**Source: www.goodbusinessday.com.

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}} CASH MANAGEMENT

Domestic

Notional pooling

}} Notional pooling is not available.

Cash concentration

}} Cash concentration is permitted between resident and non-resident companies with the same beneficial ownership.

Cross-border}} Cross-border payment instructions are routed via SWIFT and settled

through accounts held with correspondent banks abroad.

Lifting fees }} Percentage-based fees are applied on funds transfers between resident

and non-resident accounts.

Short-term investments}} Interest can be earned on resident and non-resident savings accounts and

demand deposits.}} Time deposits are available in DZD. The minimum investment amount is

DZD 10,000. Interest rates are usually fixed at the time of the deposit.}} Foreign currency term deposits are available for a minimum term of one

month. Non-resident domestic currency (CEDAC) term deposits are usually available for terms ranging between two and six months. Interest rates on foreign currency and CEDAC deposits are set by the Banque d’Algérie.}} Medium-term notes are issued by banks for terms of between three

months and four years. They are negotiable instruments. }} Treasury bills (Bons du Trésor Cessible – BTCs) are issued by the Banque

d’Algérie for maturities of 13 or 26 weeks. Only financial institutions are permitted to bid for BTCs.

Custody and securities settlementAll custody information provided by GlobalCustody.net. This is an extract from www.globalcustody.net October 2012.

Depository

}} Algeria CSD.

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}} ELECTRONIC BANKING

}} Electronic banking is available in Algeria but usage is low.}} There is no bank-independent electronic banking standard in Algeria; each

bank offers its own proprietary systems for corporate banking purposes.}} Services available include balance and transaction reporting and payment

initiation. }} Internet banking is offered by Algeria’s leading commercial banks but is

not commonplace. While 40% of businesses use internet banking, overall internet penetration in Algeria stands at just 14% of the population. }} Mobile banking is offered by the country’s leading commercial banks.

Account-holders are able to access account information (including balance and transaction information) via SMS messages. There are over 35.4 million mobile phones in use in Algeria, a 90% penetration rate.

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}} TRADE FINANCE

Trading partners

Import France 15.1%, China 10%, Italy 9.9%, Spain 7.3%, Germany 5.4%, USA 4.6%.

Export USA 20.6%, Italy 14.2%, Spain 9.8%, France 8.9%, Netherlands 6.7%, Canada 6.1%, Brazil 4.4%.

Imports

Documents

}} In order to import goods into Algeria, a customs declaration, commercial invoice, packing list, bill of lading, and certified copy of the commercial registry are required. }} Imports also require an inspection report.

Licences

}} All importers are required to establish residency status by presenting a commercial contract or pro forma invoice to an authorised bank.}} Payments for imports require a letter of credit.

Taxes/tariffs and other fees

}} As a member of the Greater Arab Free Trade Area (GAFTA), Algeria has eliminated most trade tariffs with GAFTA’s 16 other member states. }} Algeria has established an free trade agreement with the European Union.}} Imports are separated into four groups for tariffs purposes. Tariffs are set

at zero, 5%, 15% and 30%.}} Most items may be imported freely. }} The Bellara Customs Free Zone permits duty-free imports and exports.

Prohibited imports

}} A negative list (of products that may not be imported) is in operation.}} Imports from Israel or of Israeli origin are prohibited.

Exports

Documents

}} In order to export goods from Algeria, a customs declaration, commercial invoice, packing list, bill of lading and certified copy of the commercial registry are required.

Licences

}} Export licences are required for restricted exports.

Taxes/Tariffs and other fees

}} No taxes are charged on exports from Algeria.

Prohibited exports

}} A negative list (of products that may not be exported) is in operation.}} Exporting items to Israel is prohibited.

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Financing imports and exports

Imports

}} Any financing of imports must be made through an authorised intermediary bank. Advance payments of more than 15% of an import’s total value must be authorised by the Banque d’Algérie. Advance payments must be accompanied by an advance payment guarantee.

Exports

}} There are no financing requirements for exports.

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}} USEFUL CONTACTS

Banque d’Algérie www.bank-of-algeria.dz

Leading banks Banque Extérieure d’Algérie www.bea.dz

Banque Nationale d’Algérie www.bna.dz

Banque de l’Agriculture et du Développement Rural www.badr.dz

Union of Maghrebin Banks www.ubm.org.tn

Ministry of Finance www.mf.gov.dz

Ministry of Commerce www.mincommerce.gov.dz

National Trade Register www.cnrc.org.dz

National Agency for the Promotion of Foreign Trade www.algex.dz

Ministry for Industry, of SME and Investment Promotion www.mipmepi.gov.dz

National Agency for Investment Development www.andi.dz

Bourse d’Alger www.sgbv.dz

SATIM www.satim-dz.com

HSBC contact details

HSBC Bank Middle East LimitedAlgeria Business CenterPins Maritimes Mohammedia16212 Algiers Algeria

Global Payments & Cash Management (+213 2189 4267) abdelkrim.oumerzouk@hsbc.com

Global Trade & Receivables Finance (+213 2189 4006) naim.benkhalfa@hsbc.com lizem.boumaiza@hsbc.com

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