Algeria: Strengthening the Revenue Mobilization Strategy

This Selected Issue Paper analyzes Algeria’s revenue mobilization challenges and outlines reform options to enhance non-hydrocarbon tax collection. With hydrocarbon revenues dominating public finances and exhibiting high volatility, Algeria’s non-hydrocarbon tax revenues remain low and stagnant. Using regression benchmarking, the study identifies a significant non-hydrocarbon tax gap of 2–4 percent of GDP, underscoring substantial untapped potential. Key constraints include weak value-added tax (VAT) and corporate income tax (CIT) performance, a narrow property tax base, and a large informal sector. The paper recommends tax reforms centered on base broadening, simplification of rates and exemptions, further strengthening of the tax administration, and the adoption of a Medium-Term Revenue Strategy (MTRS) to anchor efforts.