January 23, 2023 | 2 weeks ago

Wealth Tax: Implementation depends on digitalization

The much-publicized wealth tax is due to come into effect as of this year, in accordance with the 2023 budget.

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This long-awaited measure is set out in Article 34, which states that tax officials can now conduct in-depth investigations into the overall tax situation of natural persons with a tax domicile in Algeria. Experts hail the introduction of the new tax, but fear implementation difficulties due to the slow pace of digitalization.

Abderrahmane Hadef, a consultant and geo-economist, says the implementation of the tax depends on the digitalization of the tax system and the land registry. “It is above all a question of the widespread use of technologies for the collection of statistical information.” However, he believes that the measure can be applied to "already known large fortunes".

As for its generalization, it might take longer, he said, because of the lack of a reliable and comprehensive statistical system. To this end, Hadef recommends speeding up the process of modernizing individual data collection techniques. He said that information should be made available in real time, while noting that this requirement also addresses the issue of targeting state subsidies that the government is preparing to review based on household income.

The consultant believes that in order to make this wealth tax a success, consideration should be given to the instruments and enforcement mechanisms that should allow for the collection of information to decide who is ‘wealthy’ and who is not. He also mentioned in this context the importance of setting the legal “threshold” for the wealth affected by this tax, not yet determined by the government.

The economist Abdelkader Berriche points out that the wealth tax originally introduced to promote and support investment also applies to Algerians abroad. It is a question of broadening the tax base in accordance with the instructions of the President of the Republic aimed at establishing a fair tax policy.

January 23, 2023 | algeria-logo