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(May 30, 2014) On February 24, 2014, Algeria adopted a new Mining Law, Law 14-05. It was published in issue 18 of the Official Gazette on March 30. (Imène Boukadoum & Madonna Gerber, Algeria: Entry into Force of the New Mining Law, LEXOLOGY (Apr. 29, 2014); Ridha Hamzaoui, Algeria: New Mining Law Published, TAX NEWS SERVICE (May 28, 2014), International Bureau of Fiscal Documentation online subscription database.)

The legislation replaces Mining Law 1-10, of July 3, 2001, and establishes two new bodies: the Algerian Geological Service Agency, which will manage the geologic infrastructure and compile information on mining resources, and the National Mining Agency, which will grant and renew permits to mine and to engage in exploration and prospecting. The National Mining Agency will also collect fees and taxes and audit the royalty declarations that are required of those holding permits to mine in the country. (Hamzaoui, supra.)

The new law states that in order to ensure that mining resources are well used, mining permits will be granted only when there is sufficient technical and financial ability to conduct research and mining operations. In order to encourage investment in the mining sector, the Law establishes exemptions from customs duties and value-added tax for capital equipment, materials, and services for prospecting and mining activities. (Id.; Boukadoum & Gerber, supra.)

All the fee and tax-related provisions of the Law will become effective as of January 1, 2015. In addition to the value-added tax exemption, they include:

· Administration fee

These fees are payable by those applying for new, renewed, or modified permits for mining reconnaissance; exploration; exploitation in a concession; or quarrying, artisanal mining, and mineral collection. The rates for initial permits range from DZD30,000 to DZD100,000 (about US$277-$1,260). Renewals or modifications of permits cost from DZD30,000 to DZD200,000. (Hamzaoui, supra.)

· Mining royalties

Royalties are charged for the exploitation of various kinds of minerals or fossils taken from either land or sea deposits. The payment is due annually, by the end of April, for the previous tax year, and rates range from 1.5% of the value of solid combustibles and metallic minerals to 6% for precious and semi-precious metals and gems. (Id.)

· Surface tax

This tax, which has both a fixed amount and a proportional rate, is levied annually on the area in which exploration or extraction is taking place and is in addition to any rent due to the landholder. (Id.)

· Deductions

Mining enterprises may deduct up to 10% of the taxable corporate taxes, with the requirement that the money saved be used for mining exploration in Algeria within three years. Any part of the deduction not so used will be considered part of the taxable base in the fourth year. (Id.)

· Set-Aside for Site Restoration

Mining permit holders must also provide annually for the rehabilitation of mining sites. The specific proportion of net revenue of mining companies that must be set aside for this purpose will be determined by the new National Mining Agency, but it will not exceed 2% of that net revenue. (Id.)

Author: Constance Johnson More by this author
Topic: Corporate income tax More on this topic
 Natural resources More on this topic
 Taxation More on this topic
Jurisdiction: Algeria More about this jurisdiction

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Last updated: 05/30/2014