International e-commerce entering the Algerian market

International e-commerce entering the Algerian market

International e-commerce entering the Algerian market

The transition to international e-commerce is the perfect opportunity for the foreign e-provider to grow and expand its business as well as to provide its goods and services worldwide.

However, knowing the various rules and regulations governing foreign businesses is essential. The foreign e-provider is any natural or legal person who wants to provide goods or services through an electronic platform from abroad to Algeria.

 Since the Algerian government issued the law 18-05 relating to e-commerce, its rules are applicable if one of the parties is an Algerian citizen; resident in Algeria, or if the contract is formed / executed in Algeria.

More so, the mentioned law provided for international e-commerce and investments supporting e-commerce incentives.

 Thus, what are the conditions and procedures for the foreign e-provider to supply its goods and services in Algeria?

What are the conditions for a foreign e-provider to supply its goods and services in Algeria?

According to the article 07 of the above-mentioned law, the supply of products and services by a foreign e-provider in Algeria is allowed.

On one side, the foreign e-provider looking to establish e-commerce in Algeria is subjected to registration in the trade register CNRC, plus publication of a domain hosted in Algeria.

On the other side, foreign e-provider established abroad must be clearly identified and registered according to its country’s regulation as an e-provider regardless if it was the producer or the retailer or an intermediary.

 The latter must indicate the information relating to its identity and its contact details on the website.

Therefore, foreign e-provider should be in a good standing in regard to its jurisdiction and comply with the provisions of the Algerian e-commerce law.

International e-commerce entering the Algerian market

How are the e-commerce transactions conducted?

The e-commerce transactions are regulated by the law 08-15 concerning e-commerce.

On one hand, it contains provisions of the Commercial Code, such as the necessity for the transaction to be conducted through an e-commercial offer and formalized by an e-contract. On the other hand, it provides some provisions addressing competition and consumption. 

Mainly, the detailed specifications of the goods or services, the terms and conditions of delivery, the warranty and after-sales service conditions, the conditions for terminating the e-contract, the terms and conditions of payment, the terms and conditions for returning the product and the pre-order conditions and modalities.

What about terms of payment and custom clearance?

Payment and customs tariff are vital points for any international e-commerce transaction.

On one hand, the e-provider is responsible for the delivery of its goods/services within the specified deadlines. As for the buyer its responsibility is to assure the payment of the price as agreed upon. More so, the law has allowed the e-payment as a way of executing the buyer’s duty.

The e-payment is done via secured and authentic platforms that are put under the authority of Algerian bank.

On the other hand, the customs tariff is established in compliance with the Nomenclature of the International Harmonized System provided by the Brussels Convention which sets out customer’s duties and the VAT.

It has to be noted that a postal shipment is up to 30kg. Moreover, personal postal shipments, unlike commercial ones, are not subject to custom clearance and free of tax duties provided that their value does not exceed a certain amount.

The same rule applies to free commercial samples.

At the end, Fares Group focuses on providing the best service possible and will insure the implementation of all the above mentioned procedures with efficiency.

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Clearance Authorization for renovated production lines

Clearance Authorization for renovated production lines

Clearance Authorization for renovated production lines

Now that the complementary finance law 2020 (CFL2020) is issued, the prohibition of import of used products has been lifted.

Indeed, this will allow investors to resort to this means of financing and take advantage to develop their business. 

Moreover, according to article 57 of the said law, investors are granted a derogation in order to import renovated production chains essential to the functioning of their businesses.

What are the equipment concerned by the article 57?

According to article 57 of CFL2020, that the equipment constituting a homogeneous production chain, renovated and in working order are the concerned ones. 

In fact, by production chains it is meant those consisting of the extraction, manufacture or, packaging of products.

Those production chains must have been subject to a renovation confirmed by an independent authorized inspection and control body.

Therefore, the investor should integrate these production chains into consumption for the specific needs of his activity, and within the strict deadlines necessary for his proper functioning.

Who can benefit from this disposition?

The CFL2020 has not provided an updated definition of the beneficiaries. Nevertheless, article 54 of financial law of 2010 provided that investors duly registered in the commercial register whose activity is directly linked to the production chain purpose, are eligible for this authorization.

Indeed, beneficiaries should also justify having an infrastructure suitable for operating the imported production chain. 

Thus, the ratio of this provision is to be read in the framework of the politics aimed to promote the investments and it does not cover trading transactions.

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Complementary Finance Law 2020: New measures to boost start-ups

Complementary Finance Law 2020: New measures to boost start-ups

Complementary Finance Law 2020: New measures to boost start-ups

Due to the promulgation of the complementary finance law for 2020 (CFL2020), the promotion of start-ups became one of the government’s priorities.

 It was resolved to grant to the start-ups a dedicated investment fund to ensure their funding and to support them in the field.

In order to promote the creation of start-ups, any activity of producing goods and services, except those qualified as strategic, is open to foreign investment without the obligation of partnership with a local party.

In addition, a quasi-total tax exemption mechanism has been implemented. 

However, Algerian regulations do not define the start-up. This definition would nevertheless have made it possible to ground the eligibility of the measures of the complementary finance law

Nevertheless, the legal framework is still in fieri and we expect some further specifications in the near future.

The introduction of new funding methods

Financing start-ups in Algeria and around the world is particularly risky because of their particular business model.

In other words, traditional bank system is reluctant to finance start-ups because they cannot usually provide them with the required guarantees. 

Therefore, it is important to turn towards other financing tools more suitable for the needs of start-ups, such as:

  1. Private equity

Among the measures taken by the government to boost the investment, according to the article 46 of the CFL, a private equity company can now hold shares representing more than 49% of the capital of one company. Hence, start-ups can finally open their capitals to financial investors. 

Moreover, the equity mentioned allows the businesses to innovate, grow and develop. 

Also, it most likely helps the improvement of the transparency and governance of the start-ups and can prepare some of them to be listed on the stock exchange.

  1. The Crowdfunding

Crowdfunding calls out to the general public to contribute to the financing of projects, normally through the establishment of online platforms.

Crowdfunding allows direct interaction between young entrepreneurs and contributors. 

Thus, in accordance with article 45 of the complementary finance law, the position of participatory investment advisers is created, one of the main tasks of which is to place the funds collected in participatory investment projects, especially start-ups.

In this regard, commercial companies, intermediaries in stock exchange transactions as well as investment fund management companies may have the quality of participatory investment adviser.

  1. The Funding via ANGEM

The national micro-loan management agency (ANGEM) has two financing formulas (one of which is supported by partner public banks).

The first consists in the purchase of raw materials through micro-loans, not exceeding the 100,000 DA (250,000 DA for the wilayas of the south), made directly by ANGEM. 

The second formula concerns loans granted by the partner bank and ANGEM for the creation of an activity through the acquisition of small equipment and raw materials, helping the starting process and the payment of the costs necessary for the setup of the activity.

Tax reliefs/exemptions introduced ad hoc for start-ups

The government, under its general approach, also widened tax exemptions/reliefs in order to encourage start-ups creation in Algeria. Hence, the article 33 of the CFL2020 modifying the provisions of article 69 of the Finance Law for 2020 provides: “Start-ups are exempt from VAT, TAP, IRG and the IBS for a period of three years, from the date of the start of the activity. »

    1. The exemption from “VAT”

The finance law for 2020 reduced the rate of VAT for sales operations carried out electronically to 9%. Such measure can be seen as an attempt to adapt the Algerian tax system, in order to encourage “e-tax payers“. 

Furthermore, CFL2020 grants the start-ups with a total exemption from VAT for the acquisition of equipment for the realization of their investment projects.

    1. The exemption from “TAP” and “IFU”

Start-ups are exempted from the tax imposed on professional activity “TAP”, which is a tax in the amount of 2% on the turnover made in Algeria by companies that carry out an activity which falls under the IRG. 

On the other hand, start-ups subjected to the single flat-rate tax (IFU) are exempted from it as well. Thus, this tax exemption is intended to perpetuate these businesses and therefore encourage the creation of start-ups.

    1. IRG and IBS exemption

It is necessary to point out that Finance Law of 2020 provided only for the exemption from corporate income tax. As for CFL 2020, it extended the exemption to the global income tax, which is a direct tax that applies to the income and profits of natural and moral persons.

 It is calculated on the basis of a progressive scale.

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The e-Signature in Algeria

The e-Signature in Algeria

The e-Signature in Algeria

The business practice across the world witnessed a transformation that affected mainly the electronic transactions.

 Hence, electronic signature was adopted by many companies worldwide, since it is considered the best and safest tool to secure documents online: In fact it is widely used mainly for multinational business-to-business sales contracts, non-disclosure agreements, video conference electronic attendance sheet for general assembly et cetera. 

On that regard, Algerian legislation established procedures for the recognition of the e-Signature, where a third party called “the provider” is responsible for its identification and authenticity, but also established heavy sanctions (imprisonment up to 3 years and a fine up to 200.000 DA) for the provider in case of the absence of the required authorisation.

 More so, the subscribers are sanctions with the same sanctions in case of false statements to obtain the certificate. 

Therefore, economic operators should strictly follow procedures and refer to authorised parties to ensure the safety of their e-Signatures.

What is e-Signature according the Algerian Law ?

Handwritten signature can only be useful and safe to a certain extent nowadays. 

Article 323 ter of the Algerian civil code provides that the e-Signature is legally bidding in an equivalent way as handwritten one. 

In fact, the e-Signature is a collection of data in an electronic form joined or logically linked to other electronic data, for the purpose of authentication of documents online. 

It can take many forms, including digital signature, biometric signature, and electronic pen signature. 

The article mentioned above set specific conditions and requirements that must be met in e-Signature, for example its strict association with the platform, the fact that the owner of the signature has complete control over it, and this signature cannot be modified nor changed.

Under these conditions, the e-Signature is accepted as evidence in the same way as a traditional one.

How is the certification of the e-Signature done according to the law 15-04 ?

The law 15-04 concerning the electronic signature and certification established a set of procedures to ensure the authenticity of the e-Signature.

 The e-Signature of digital or paper documents requires a third party whose main function is to create a secure electronic transaction platform, and play the role of a trusted broker between the owners of the signatures, confirming the identity of the parties and determining their eligibility to sign.

In addition, it ensures the integrity of the data circulating, and this process is defined as electronic certification. 

The provider of such platform is required to obtain an authorisation to do so from the Economic Authority for Electronic Certification established under the Post and Telecommunications Regulatory Authority, any provider lacking such authorisation can be sanctioned pursuant to the aforementioned law.

This Authority has the duty to publish a list containing the authorised providers.

The provider is required to release to the subscriber a certificate attesting the digital signature.

Therefore, the economic operators should strictly deal with providers approved by the concerned authority and present in the mentioned list but; also, they should obtain and store the certificate proving the authenticity of the document.

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The impact of COVID-19 on the obligations of the tenants

The impact of COVID-19 on the obligations of the tenants

Both the spreading of COVID-19 and the measures taken by the government in order to prevent its spreading deeply impacted the economy and that lead the tenants struggling to pay their rents. 

Furthermore, the tenants may not be able to fully and freely enjoy the leased premises.

Since the government did not take any action so far in this concern, courts must assess the parties’ liabilities.

Thus, are the tenants entitled to suspend the payment of the rents or renegotiate the lease contract during these exceptional circumstances? 

Are the tenants entitled to claim for an event of force majeure?

An event of force majeure may excuse one party to a contract from performing its contractual obligations, suspending the performance.

Under the Algerian practice, even in the absence of a clear definition in the law, force majeure is defined, in compliance with the international standards, as an unforeseeable and unavoidable event, which makes the execution of the obligation impossible.

According to the article 467 of the Algerian Civil Code, the obligation of the tenant is to pay the rent. Indeed, money is a fungible good and can be replaced, so performing a payment is theoretically never impossible.

In other words, even if the tenant is severely affected by the impact of the crisis, legally its obligation to pay rent does not become impossible.

Therefore, in the event of non-payment, the tenant’s contractual liability can be raised.

Is there a possibility for the tenant to suspend the lease contract ?

The main obligation of the lessor consists in providing the full enjoyment of the leased premises to the tenant. Meanwhile, the obligation of the tenant is to pay the rent.

If the non-performance of the obligation of the lessor is not excused by an event of force majeure, then the obligation of the tenant to pay rent could be suspended.

On one hand, some measures such as the total closure of certain stores could be considered force majeure events.

On the other hand, some other measures such as the reduction in staff or the curfew hours do not impede the right of enjoyment of the property, but it only alters it.

In this case the right to enjoy the leased premises is not impossible but only partially altered.

Thus, it is unlikely that the lessor can invoke force majeure, which means that the lessor’s obligation is being partially executed.

Therefore, the tenant might be in theory entitled to suspend its own obligation, as provided by the principle of art.

123 of the Civil Code (inadimplenti non est adimplendum).

Consequently, the tenant could suspend the payment of its rent if the lessor does not notify force majeure or, alternatively, its right of enjoyment is impacted.

In absence of an agreement between the parties, the Court will be called to assess the circumstances and provide a solution.

Could the tenant have the right to renegotiate the lease contract?

Under the Algerian Civil Code, the tenant could be entitled, under special circumstances, to renegotiate the terms of the leased contract, including its price.

Indeed, article 107 of the Civil Code provides that the obligations must be executed in good faith.

Yet, with the impact of COVID-19 as exceptional circumstance, the parties are obliged to renegotiate in good faith, in particular, the terms and deadlines for payment.

Also, under the same article, when the performance of an obligation is not impossible yet it becomes extremely burdensome, it is possible to ask the judge to renegotiate the price of the contract.

In any case, to safeguard its rights, the tenant must notify the lessor of the times of the damage suffered.

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