Setting Up a Company and Doing Business in Algeria

Company Formation in Algeria

With a population of 42 million and a market size ranked 38th globally (out of 141 economies in the 2019 Global Competitiveness Index), Algeria provides a vast consumer base for companies to expand and grow. The untapped Algerian market is an excellent opportunity for businesses to achieve significant profit margins, as the GDP per capita in Algeria, when adjusted for purchasing power parity (PPP), is equivalent to 78% of the world's average.

Algeria is Africa’s largest gas producer.

It may possess the world's 3rd largest reserves of shale gas. However, restrictions on foreign investment have contributed to limiting this industry's productivity; therefore, Algeria and its state-owned company, Sonatrach, are in great need of technology transfer, skilled engineers, and foreign technical know-how.

At World Company Setup, we assist our clients in doing business in Algeria. Our services include:

Algeria company incorporation
Assistance in finding an Algerian joint venture partner
Corporate bank account opening services in Algeria
Employee recruitment
Visa strategies
Office rental solutions.

Comparing Business Structures in Algeria

The following table provides a clear comparison of the different business entities available for foreign investors in Algeria, helping you make an informed decision based on your company's needs and timelines.

Comparison of different Algerian entities	Standard LLC (49% Foreign Owned)	Turnkey Solution	Nominee LLC	Free Zone LLC	Representative Office
Also known as	SARL	SARL	SARL	SARL	Liaison Office
Best use for the company?	All products and services	Client needs to close a local deal quickly	Foreign investment	Manufacturing/export trading	Market research
Time to invoice clients / sign sales contracts?	4 months	1 month	6 weeks	6 weeks	Cannot trade
Time to hire staff?	4 months	1 month	6 weeks	6 months	6 months
Time to sign a lease agreement?	2 weeks	2 weeks	2 weeks	4 weeks	2 weeks
Time for corporate bank account numbers?	5 months	1 month	6 weeks	6 months	6 months
Time to receive company registration / tax numbers?	4 months	1 month	6 weeks	6 months	6 months
Corporate tax rate on annual net profits?	19%	19%	19%	0%	Cannot trade
Limited liability entity?	Yes	Yes	Yes	Yes	No
Government incentives available?	Yes	Yes	Yes	Yes	No
Local joint venture partner required?	Yes	Yes	Yes	Yes	No
Government approval required for foreign owners?	Yes	Yes	Yes	Yes	Yes
Resident director/partner/legal rep. required?	Yes	Yes	Yes	Yes	Yes
Minimum paid-up capital?	US$1,000	US$1,000	US$1,000	US$1,000	US$20,000
Can bid for government tenders?	Yes	Yes	Yes	Yes	No
Corporate bank account location?	ABC Bank	BNP Paribas	Gulf Bank Algeria	BEA	Citi
Can trade finance be secured?	Yes	Yes	Yes	Yes	No
VAT payable on sales to local customers?	19%	19%	19%	19%	Cannot trade
Average total engagement timeline?	5 months	1 month	6 weeks	6 months	6 months

Advantages of Incorporating a Company in Algeria

The minimum requirements to establish an Algerian company are low: foreigners only need to appoint one director and one shareholder, with a minimum paid-up capital of just US$1,000 (DZD 100,000).
Our clients are not required to travel to Algeria to complete the company formation procedures and corporate bank account opening. Our firm can also assist in finding a professional, passive local shareholder to meet legal requirements.
Registering a business in Algeria is expected to become easier in the coming months, as the Algerian Government plans to remove the minimum capital requirement for establishing a local business.
Algeria is a particularly attractive country for setting up a company to provide services to the oil and gas industry. Algeria is Africa's largest gas producer and may hold the world's 3^rd largest shale gas reserves.
Due to past restrictions on foreign investment, the Algerian energy industry and its state-owned company, Sonatrach, have a significant need for technology transfer, skilled engineers, and foreign technical expertise.
With a population of 42 million and a large consumer market, Algeria offers a substantial base for companies to expand and grow. The untapped market presents a great opportunity for businesses to achieve high profit margins.

Requirements for Foreigners to Open a Company in Algeria

Foreigners are not permitted to wholly own an Algerian company and must find a local joint venture partner to hold a 51% stake. Our firm assists clients in complying with this requirement across all industries while minimizing its impact on the control and management of the company.
Foreigners wishing to start a business in Algeria are required to open a capital account, which will be used to inject the paid-up capital before the Algerian company is incorporated. Our firm can complete this requirement without our client needing to travel.
Before registering the company in Algeria, it is necessary to sign a lease agreement for physical office space. Our firm assists our clients in finding office space in Algeria without the need for them to travel.
Foreign companies are not permitted to open branches in Algeria. Only representative offices are allowed.

The corporate tax rate in Algeria is 19% for manufacturing activities and 26% for many other activities. Dividends are subject to a 15% withholding tax; only twenty-nine double taxation avoidance agreements, mostly with other African countries, have been signed to reduce such tax payments.