Mohamed Yahiaoui (محمد يحياوي), head of the National Council of the National Chamber of Accountants (الغرفة الوطنية لمحافظي الحسابات), revealed reform proposals submitted by the Chamber to public authorities for the 2027 Finance Law project. The Chamber's proposals aim to balance the interests of the state, institutions, and banks, while also expanding the tax base and improving collection quality. These reforms are further intended to enhance transparency and compliance within the financial system. Specifically, the Chamber emphasizes that these reforms are designed to balance the interests of the state, institutions, and banks, alongside expanding the tax base and improving the quality of tax collection. The Chamber stated that the reforms would provide a more stable legal and financial environment for institutions, allowing banks to rely on more reliable financial information. This stability is key for fostering economic growth and investor confidence. The National Chamber of Accountants also called for the 2027 Finance Law to initiate an integrated reform of the financial, tax, and banking control system.
Financial Compliance Certificate Proposal
The proposed reforms aim to transition from a post-control logic to one focused on prevention, compliance, and risk management, intended to support investment and improve relations between institutions, tax administration, and banks. This shift in approach is designed to create a more proactive and collaborative financial ecosystem. Among these proposals is the creation of a 'Financial and Banking Compliance Certificate', which would be issued by an accountant following an independent review of an institution's financial, tax, and banking status. The National Chamber of Accountants stated that this certificate draws inspiration from tax compliance audit experiences in various countries, adapted specifically for the Algerian economy. This adaptation ensures its relevance and effectiveness within the local financial landscape.
The certificate would encompass a financial compliance section, which would cover an institution's financial statements, the quality of its results, cash flows, financial structure, and its ability to continue as a going concern. This full review aims to provide a clear picture of the institution's financial health. Additionally, it would include a banking compliance section, tasked with evaluating adherence to bank commitments, repayment capacity, financing structure, and overall financial risk management. This dual focus ensures that both internal financial integrity and external banking relationships are thoroughly assessed. The Chamber anticipates that the adoption of this certificate would lead to increased voluntary compliance and enhanced financial transparency. It is expected to reduce tax disputes, accelerate the review process for financing files, and ultimately improve the quality of credit decisions, particularly for Small and Medium-sized Enterprises (SMEs). The improved transparency and reliability of financial information are seen as key drivers for supporting investment and strengthening the relationship between institutions, the tax administration, and banks.
EURL Legal Framework Clarification
A proposal has been made to settle the legal framework for auditing single-person limited liability companies (EURL). The National Chamber of Accountants noted an existing overlap between the Commercial Code and the Finance Laws of 2010 and 2011 concerning EURL audits. This overlap has created ambiguities and inconsistencies in regulatory requirements for these entities. To address this issue, the Chamber submitted a technical memo to the Minister of Internal Trade and National Market Regulation. The memo specifically proposes the inclusion of explicit provisions in the 2027 Finance Law. These provisions aim to clarify the legal status of EURLs, thereby resolving ambiguities in their auditing requirements. The Chamber seeks to streamline regulations and ensure consistency across different legal texts, providing greater certainty for EURL operators and auditors alike.
Tax System for Capital Operations
The National Chamber of Accountants proposed a review of the tax system for operations involving the social capital of commercial companies. These operations include capital increases, capital decreases, stake or share transfers, and intergenerational transfers. The Chamber suggested reducing registration fees on capital increases, whether these involve cash or in-kind contributions. It also proposed studying the exemption or symbolic taxation of integrating reserves and carried-forward profits. This could incentivize companies to strengthen their capital base and retain earnings.
The Chamber called for a legal distinction between capital reduction undertaken to absorb losses and reductions involving reimbursements to partners. This distinction is key for clear tax treatment and financial reporting. For stake and share transfers, the accountants proposed reviewing registration fees and clarifying valuation rules, recommending the use of accounting experts or auditors. The involvement of certified professionals would lend credibility and accuracy to valuations. They also put forward a preferential tax system for capital gains, provided that sale proceeds are reinvested within active companies. This measure aims to encourage productive investment and economic dynamism.
A preferential system for capital transfer within families was proposed, aiming to reduce property transfer fees for cases of death or gift, subject to conditions of continued activity and a specific holding period. This would facilitate the smooth generational transition of businesses while ensuring their ongoing operation. The Chamber additionally proposed generalizing the mandatory prior tax consultation mechanism for capital operations. This mechanism would allow companies to obtain official guidance on the tax implications of their capital transactions before they are executed, reducing uncertainty and potential disputes. To streamline processes, digitizing registration procedures and linking them to the National Center for Commercial Registry platforms was suggested. Finally, a unified practical guide for calculating fees and valuing operations is to be prepared in coordination with the General Directorate of Taxes and professional bodies. This guide would ensure consistency and clarity in the application of tax regulations across the board.