The five-year forecast income statement: the twelve lines Algerian banks actually read

1. Who requires a forecast income statement, and over how many years?

Two recipients ask for it, and they do not ask for quite the same thing.

The investment administration

Executive Decree No. 26-154 of 14 April 2026, published in Official Journal No. 31 of 28 April 2026, rewrites Article 6 of Executive Decree No. 23-487 of 28 December 2023. An applicant for economic land must attach:

The model specifications annexed to the same decree go further. Their Article 17, "Financial capacity", refers to the financing plan in Article 14. It sets out an investment structure broken down by item (preliminary costs, buildings, production equipment, auxiliary equipment), then the split between equity contributions and bank loans. The investor signs up to figures, and those figures have to come from somewhere, which is the job of the forecast.

The bank

The document lists that banks publish themselves are even more explicit, and they agree on a point that many files miss.

• Crédit Populaire d'Algérie requires forecast balance sheets and income statements "sur la période du crédit", over the loan period. It also asks for a forecast financing plan over the loan period, alongside a "étude technico-économique détaillée" (checked on 11 October 2026).
• Banque Nationale d'Algérie asks for an opening balance sheet and forecast balance sheets "sur la durée du prêt sollicité", over the term of the loan requested (checked on 11 October 2026).

Hence the five years in the title, which are the top of the Annex V range; for the bank, their status must be clear. In our experience, an investment loan is usually repaid over five to seven years, grace period included. Five financial years therefore cover almost every file. This is professional practice, not a legal rule: if the offer runs over seven years, the forecast runs to seven.

2. Which twelve lines does the bank actually read?

A forecast income statement can run to forty lines. The credit analyst reads about twelve of them, in this order. The table below is our field reading grid: it reflects what we see in the files we take over, and it is not a published standard.

Grid drawn from our file-review practice; it has no normative value.

Line thirteen, the one that decides, is almost never written in the forecasts we take over. It is cash flow from operations (capacité d'autofinancement), and it is the subject of the last section.

3. What does a five-year forecast income statement look like?

The table below shows the expected layout, reduced to the lines that matter. The figures are purely illustrative. They come from no real file, are no sector benchmark, and only show how the lines connect. Amounts in millions of dinars, goods production, IBS at 19 %.

Example values, rounded, with no benchmark value. Coverage is cash flow from operations divided by the annual instalment.

Three features of this table matter more than its figures.

1. Depreciation is flat and finance costs fall. The first follows the useful life of the equipment, the second follows repayment of the principal. When interest stays flat for five years, the reader concludes that nobody built a repayment schedule.
2. Year one is the weakest, and that is normal. Coverage here is barely above 1. It is the year the analyst examines, and the one a repayment grace period is designed for.
3. Net profit is not cash. Depreciation does not leave the bank account. VAT, IBS instalments and social contributions do, on specific dates. That is the job of the cash-flow plan, and the reason why a profitable firm can still fail.

4. What does an employee really cost in an Algerian forecast?

This is the line most often wrong, and the mistake is always the same: the forecast shows gross pay and stops there.

The CNAS, Algeria's social security fund for employees, publishes the standard rate: 34.5 % of the contribution base ("Employeur" page, checked on 11 October 2026). It splits into 25 % paid by the employer, 9 % paid by the employee and 0.5 % of gross payroll for staff welfare (œuvres sociales). The employee share is deducted from gross pay and costs the company nothing extra, but the other two do.

The same page adds two points that matter for a new project. The monthly salary subject to contributions can never be lower than the national minimum wage (SNMG). And contributions are paid within thirty days after each due date: quarterly for employers with fewer than ten employees, monthly from ten upwards (Article 21 of Law No. 83-14 of 2 July 1983: "plus de neuf (9) travailleurs"). This timing changes nothing in the income statement, but it changes a lot in the year-one cash-flow plan.

Reductions of the employer share, rarely costed

The CNAS also publishes reduced employer rates under the employment promotion scheme, for any new hire of twelve months or more. By exception, six months are enough in certain sectors. Read the table carefully: except for disability, the CNAS publishes the employer rate that remains payable, not the size of the reduction.

Source: CNAS, "Abattements sur taux de cotisations" page (updated 29 April 2025), checked on 15 October 2026. Check eligibility with the CNAS agency before including any reduction in a forecast.

In our experience, these reductions are almost never costed in the forecasts we take over, although they are published. The opposite habit is just as costly: they are included without checking eligibility, and the file then has to be corrected. See also hiring your first employee.

5. What is left on the "taxes and duties" line now that the TAP is gone?

This line goes out of date faster than any other. Many of the templates in circulation still carry a "TAP" line that no longer applies.

The Directorate General of Taxes (DGI) says so plainly: the local solidarity tax (TLS) was introduced "conséquemment à la suppression de la Taxe sur l'Activité Professionnelle (TAP)", following the abolition of the tax on professional activity. The TLS only applies to two activities: pipeline transport of hydrocarbons (3 %) and mining (1.5 %), and the DGI also counts quarries and sand pits as mining (page checked on 11 October 2026). In the 2026 Direct Taxes Code, the scope is set in Article 231 bis and the rates in Article 231 quinquies. The former TAP articles are marked "repealed" by Article 14 of the 2024 Finance Law.

What remains is of a different kind: first, the vocational training tax and the apprenticeship tax, which Article 169 lists among charges that are not deductible from taxable profit. Then taxes on property and vehicles, and operating fees or royalties. VAT does not appear in the income statement: it passes through. But it is never neutral for year-one cash, when VAT on equipment is paid before sales generate any.

The IBS line: three rates, a minimum, and an instalment nobody expects

Standard corporate income tax (IBS) rates are set by Article 150 of the Direct Taxes Code.

When several activities are carried on at the same time, profits are allocated according to each activity's share of revenue. A forecast that applies 19 % to a project mixing production and trading is wrong by construction.

Two mechanisms change the profile of the first years, and both are set by law.

• A minimum tax of DZD 10,000 per financial year, whatever the result (Article 356-9). A loss-making year does not show zero.
• Three instalments on 20 March, 20 June and 20 November, each equal to 30 % of the tax for the last closed year, with the balance due on 20 May (Article 356). For a newly created company, Article 356-4 sets each instalment at 30 % of the tax computed on deemed income of 5 % of the called-up share capital, that is called-up capital × 5 % × IBS rate × 30 %. The company pays IBS on the basis of its capital, before making any profit.

Two last points apply. A sole trader taxed on actual profits does not pay IBS but personal income tax (IRG) on business income, on the progressive scale, from 0 % up to DZD 240,000 of taxable income to 35 % above DZD 3,840,000 (Article 104). The legal form therefore changes the last third of the table. Exemptions, for their part, must be costed. Article 138 grants three years to activities eligible for the ANADE, CNAC and ANGEM schemes, six years in a zone to be promoted, and two more years if the promoter undertakes to hire at least three employees on permanent contracts. The start-up label opens a four-year exemption, and each one must rest on the decision that grants it, never be assumed. On charges the tax authority rejects, which inflate forecast net profit, see deductible business expenses.

6. Why does the bank look at cash flow from operations before net profit?

Because a loan is not repaid with an accounting profit: it is repaid with cash.

Cash flow from operations starts from net profit and adds back non-cash charges, depreciation first. In the example above, year one shows 2.3 million of net profit and 9.3 million of cash flow from operations. The difference is the seven million of depreciation, which stays in the company.

In the practice we observe, a forecast whose cash flow barely covers the year-one instalment is not rejected for that reason alone. It is examined more closely, and that is usually when the question of a grace period comes up. Conversely, a forecast that does not compute this coverage leaves the analyst to compute it, with their own assumptions. Those assumptions are rarely the most favourable to the promoter. This observation comes from our experience of building files and is awaiting validation. It sets no regulatory threshold, and no bank publishes a minimum ratio.

The forecast does not stand alone

The forecast income statement is one of three statements the techno-economic study ties together, with the cash-flow plan and the forecast balance sheet. The weakness we see most often is not a calculation error but the lack of any link between the three. A change in revenue must move trade receivables in the balance sheet and collections in the cash-flow plan. When it does not, the contradiction shows in two minutes and then discredits the whole file, including the parts that are right.

For the overall structure, see the official techno-economic study template. For the indicators derived from the forecast, see NPV, IRR and payback.

This article sets out the applicable regulatory framework, the conditions published by the bodies cited and a reading grid drawn from our practice. It does not constitute legal, tax or investment advice, nor any guarantee of obtaining financing or economic land. The values in the five-year table are illustrative and are no sector benchmark. The texts and bank conditions cited may change: check them in the Official Journal, with the DGI, the CNAS and your bank before filing.

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