Deductible expenses: the thresholds you use probably date from 2021

1. 1. Why your add-back schedule may simply be wrong

The right to deduct is usually lost over a number: the unit value of a gift, an invoice paid in cash, the depreciation base of a car. Those numbers were amended repeatedly since 2020, while memos, trainings and Excel schedules still circulating predate the changes. The error is silent: nothing blocks the return — it surfaces at the first audit, as reassessed duties and penalties.

A methodological caution: a higher ceiling does not make everything deductible. Each increase carries its own conditions, while two new rules — detailed below — tightened the screws since 2022.

2. 2. Under what conditions is an expense deductible at all?

Until 2022 these conditions lived in administrative doctrine; article 42 of the 2022 Finance Act made them statutory law by inserting article 140 bis into the CIDTA. An expense is deductible only if all four conditions are met simultaneously:

This statutory upgrade reverses the burden of proof. Before 2022 one could debate a doctrinal condition; today the auditor applies a statute, and the company must demonstrate compliance document by document. Which makes the rest of this article operational: every ceiling below presupposes these four conditions are already satisfied.

3. 3. Which ceilings apply to the expenses every company pays?

The heart of the subject: ceilings hitting ordinary spending — what almost every company records each year.

For passenger vehicles three independent ceilings stack up: depreciation base limited to 3,000,000 DZD acquisition value (unless the vehicle is the main operating asset), annual lease capped at 200,000 DZD, maintenance-repair capped at 20,000 DZD per vehicle. One car can cost you deductibility on all three fronts at once.

4. 4. Interest on partners' current accounts: where deduction stops

The partners' current account is the informal financing workhorse of Algerian SMEs — and one of the most frequent reassessment points. Article 141-1 of the CIDTA frames the deduction of interest paid to partners on sums left with the company beyond their capital shares:

Three remarks complete the table. First, the first two conditions are cumulative: capital paid up to three quarters suffices to forfeit the entire deduction. Second, sums placed by the company at partners' disposal are deemed distributed — the reverse loan triggers its own treatment. Third, commercial law separately prohibits corporate advances to partners (article 590): money leaving towards the manager follows its own channels, detailed in Taking money out of your company: what each channel really costs.

The same article governs two neighbouring financings: interest on loans between related companies, deductible within the same rate limit, and technical, financial or accounting assistance fees invoiced by a company established abroad, deductible up to 20 % of overheads and 5 % of turnover — cumulative caps of which the stricter prevails, raised to 7 % for engineering consultancies.

5. 5. What is never deductible — and the lock installed in 2026

Article 169 of the CIDTA lists charges definitively excluded from the taxable result. Beyond the ceilings already seen, five exclusions structure the return:

• expenses, charges and rents relating to buildings not allocated to the operation — the family villa, even booked through the accounts, deducts nothing;
• fines, settlements, confiscations and penalties of any kind, plus contractual penalties paid to persons not taxable in Algeria (article 169-5);
• costs borne for a third party unrelated to the activity — settling a business friend's invoice in your company's name is a double loss;
• the unsubstantiated or operation-unrelated fraction of reception expenses, restaurants, hotels, shows;
• since 1 January 2026, sums paid for purposes other than reimbursement of actual costs by a permanent establishment to its head office or offices: royalties, fees, commissions, management activity, intra-group loan interest (article 169-6, created by article 16 of FA 2026).

This last case changes the picture for subsidiaries of foreign groups. Only the documented reimbursement of actual costs remains deductible: every flow towards the parent must now be justified by its effective cost, invoice and allocation in support. Technical-assistance contracts, management fees and intra-group loans signed before 2026 should be reread against this standard. For the foreign investor preparing their structure, Financing your subsidiary: which money can come back out covers these flows upstream.

6. 6. A worked example: what does an outdated schedule cost?

Take a company with turnover of 75,600,800 DZD and an accounting result of 18,549,500 DZD presenting six classic situations. Here is how the extra-accounting adjustments compute under current ceilings:

The lesson fits one comparison: under the old figures still circulating (500 DZD gifts, cash blocked at 300,000 DZD), the same file produced a gift add-back of 388,000 DZD instead of 188,000 DZD — 200,000 DZD of tax overpaid without obligation. The mirror error, under-adjusting because you believe ceilings more generous than they are, is settled at audit instead, with interest and surcharges. Either way, in our engagements, the add-back schedule is the least-read piece of the return — and the most profitable to audit once a year, before the administration does it for you.

FAQ — Frequently asked questions

BENSAID Farouk

Financial & Economic Research Consultant — ProfitPilot NextGen Consulting

Certified sole trader and expert in financial studies, risk analysis and market research for SMEs, startups and investors in Algeria. View full profile