As Algeria embarks on the journey to revamp its fiscal framework, embracing essential international reforms can unleash tremendous economic opportunities. By learning from the achievements of other countries, we can envision tangible benefits for our economy.

Essential reform areas and their potential benefits:

Simplification & modernization:

By simplifying its tax code, New Zealand managed to reduce administrative expenses by 15%. Algeria could achieve similar results by simplifying tax compliance, potentially lowering costs for both businesses and the government by up to 20%, thereby fostering a more conducive environment for entrepreneurs. Implementing a digital tax administration system, akin to Estonia’s, could enhance taxpayer compliance and cut filing times by as much as 70%, resulting in substantial savings in dinars each year.

Expanding the tax base:

The informal economy in Algeria represents 40-50% of the GDP, a stark contrast to Brazil’s 15%, which has successfully integrated informal businesses into the tax system. By adopting similar voluntary registration and tax policies, Algeria could see a boost in tax revenues by 10-15%, providing essential funding for infrastructure and social initiatives.

Moreover, addressing corporate tax avoidance, as the UK has done with its transfer pricing regulations, could prevent Algeria from losing up to $500 million in tax revenue each year, ensuring that multinational corporations contribute their fair share.

Fairness & equity:

Implementing a progressive tax system similar to Canada’s could significantly narrow Algeria’s wealth inequality, which currently exceeds OECD averages by 10%. By ensuring that the wealthiest 10% contribute a larger share, we can redirect these resources into vital sectors like industry and infrastructure, benefiting millions of Algerians.

Additionally, reforming tax incentives (following Ireland’s targeted strategy) would position Algeria to attract foreign investment in key sectors, potentially adding billions to our GDP while promoting fairness in the marketplace.

International cooperation:

As global trade continues to expand, Algeria must proactively address the challenges of double taxation that can hinder investment opportunities. By establishing additional tax treaties similar to Singapore’s extensive network of over 80 agreements and enhancing transparency in line with the OECD’s Common Reporting Standard, Algeria can safeguard its tax revenue and potentially recover around $100 million each year through improved financial clarity.

Implementing these reforms will allow Algeria to significantly enhance its tax framework, making it more efficient, fair, and appealing to investors. A more organized and just tax system will not only attract investment but also promote sustainable economic growth, ultimately benefiting the entire population.

To deepen your understanding of taxation and accounting, we encourage you to explore more Walvis articles.