This flash summarises the main tax provisions of the 2016 Finance Act ("LF"), as published in Journal officiel 72 of 31 December 2015.
1. Direct taxation
Limitation in the reinvestment obligation
Article 2 of the Act reduces the obligation to reinvest to 30% of the gain part resulting from exemptions or reductions in company profit tax and business tax (see our Flash info Africa of 8 January 2016).
2. Turnover tax
Delivery of the approvals by the wilaya Director of taxes
Article 16 of the Act states that decisions to approve taxpayers for franchises of VAT on imports1 will now be made by the wilaya Director of taxes. As a reminder and until now, these decisions have been established by the regional tax Director. The change in the law will, in practice, enable taxpayers to obtain approvals faster2.
3. Tax procedures
► No re-inspection after an audit:
Article 20 (8) of the Code of Tax Procedures (CPF) has been amended by article 23 of the 2016 Finance Act to specify expressely that the tax authorities may not re-inspect records, invoices or documents already inspected for the same taxes and duties during an audit covering the same period.
However, the prohibition on new inspections does not apply if the taxpayer has used fraud or supplied incomplete or inaccurate information during the original inspection.
We believe that this change will improve taxpayer rights and protection. Thus, it should put an end to tax authority re-inspection of documents after audits covering the same period and the same taxes and duties have been completed.
► Organisation of appeals committees:
Under the changes introduced by the 2016 Finance Act3, tax assessments may be appealed through the following channels:
- Wilaya appeals committee4;
- Regional appeals committee5;
- Central appeals committee6.
The other changes introduced are:
- Opinions handed down by the above appeals committees are enforceable unless they are obviously in violation of the law or regulations. In this case, the Director of Big Size Companies Directorate ("DGE") or the wilaya Director of taxes will issue a rejection to the taxpayer with justification;
- The committees can hear appeals concerning direct taxes and similar duties, and turnover taxes;
- The wilaya and regional committees will now be chaired by a statutory auditor appointed by the professional organization to which he belongs. The central committee remains chaired by the Finance Ministry representative.
The changes will come into effect on 1 January 2017.
► Grounds for rulings given on disputes by the Director of Big Size Companies Directorate ("DGE"):
Extending the protection given to taxpayers, the DGE must now state the reasons and legal grounds for them in all his rulings on disputed decisions7.
1 Articles 42 and 42 bis of the Turnover Tax Code (CTCA).
2 There is no statutory deadline.
3 Articles 26 and 27 amending and supplementing Articles 81 and 81 bis of the Tax Procedure Code (CPF).
4 Daira (sub-prefecture) appeals committees have been abolished. Wilaya committees deal with disputes where tax and penalties combined do not exceed DA 20.000.000.
5 Regional committees deal with disputes where tax and penalties combined exceed DA 20.000.000.
6 The central committee deals with disputes where tax and penalties combined exceed DA 70.000.000 and with appeals brought by taxpayers that depend of the Big Size Companies Directorate.
7 Article 34 of the 2016 Budget Act, supplementing Article 172 CPF.