Algeria, a country known for its vibrant tech community, recently introduced the auto-entrepreneur card, an initiative aimed at integrating freelancers into the formal economy. While the card promises a range of benefits, including social security coverage and simplified proof of income, skepticism looms large among tech solos. This report delves into the intricacies of the auto-entrepreneur card, exploring its purpose, benefits, and the concerns raised by Algerian freelancers. By shedding light on the current status and addressing the grey areas, we aim to provide a comprehensive understanding of this government project.
Understanding the Auto-Entrepreneur Card and Supporting Law
The auto-entrepreneur card is a government initiative that recognizes freelancers working in various domains, from online services to personal coaching. By obtaining this card, freelancers can operate within the official economy and gain access to a host of benefits.
The card allows freelancers to engage in seven main types of work: consulting and education, digital services and related activities, domestic services, personal services, leisure and recreational activities, business services, and cultural, communication, and audiovisual services. However, specific examples within each category are not specified.
The details regarding taxes are still unknown and are expected to be determined in future financial laws, potentially in the loi de finance (2024) or complementary loi de finance (between June and October 2023). Initially, a flat 5% tax rate was proposed, but later there were mentions of an average 5% rate.
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Furthermore, there is no information available about the ability to freely withdraw USD/EUR in cash for those exporting online services. It is likely that withdrawals will be in DZD (Algerian dinar) or limited to USD/EUR for business-related trips and expenses only, but confirmation is still required.
How the Auto-Entrepreneur Card Works and Its Benefits in Real Life
Process of Obtaining the Auto-Entrepreneur Card
To obtain the Auto-Entrepreneur Card, individuals must meet the eligibility criteria, which include engaging in a lucrative activity listed as eligible by regulations and maintaining an annual turnover not exceeding 5 million DA. Excluded from this status are liberal professions, regulated activities, and craftspeople. The process involves registering in the National Register of Auto-Entrepreneurs, declaring existence with tax services to obtain a Tax Identification Number (NIF), and registering with the National Social Security Fund for Non-Employees (CASNOS).
The auto-entrepreneur card system in Algeria is regulated by an agency, located in Algiers and under the Ministry of Startups.
Benefits for Freelancers
The auto-entrepreneur card offers several advantages for freelancers, aiming to provide financial security and simplify their professional activities.
Social Security Benefits through CASNOS
One of the significant benefits of the auto-entrepreneur card is access to social security benefits through CASNOS. Freelancers holding the card can enjoy health insurance coverage and contribute to their pension, ensuring a safety net for the future.
Ability to Open a Current Bank Account
Freelancers with the auto-entrepreneur card are eligible to open a current bank account. This provides them with a secure and official channel for managing their finances, improving transparency and control over their monetary transactions.
Proof of Income Simplification
The auto-entrepreneur card serves as simplified proof of income for freelancers, eliminating the need to navigate complex registration processes solely for income verification purposes. This streamlines administrative procedures and reduces costs for freelancers.
Benefits for Employers
The auto-entrepreneur card also brings benefits for employers, encouraging them to embrace freelancers and leverage their skills.
Reduced Taxes and Social Security Contributions
Employers stand to benefit from reduced taxes and social security contributions when hiring freelancers with the auto-entrepreneur card. This incentivizes businesses to utilize the services of freelancers, potentially leading to cost savings and increased flexibility in workforce management.
Flexibility in Hiring Skilled Talent
By embracing the auto-entrepreneur card system, employers gain the flexibility to hire skilled freelancers for specific projects or tasks. The simplified administrative process allows for a more agile workforce, providing businesses with access to a diverse talent pool without the constraints of traditional employment contracts.
Mitigation of Indemnity Risks
Employers often face the risk of indemnity payments when terminating employment contracts. However, by hiring freelancers with the auto-entrepreneur card, businesses can mitigate these risks, as the card operates within a different legal framework. This offers employers greater flexibility in project-based or short-term collaborations.
Current Status of the Auto-Entrepreneur Card for Algerian Freelancers
Recently, three executive decrees were issued (SEE HERE), providing further details and regulations related to the auto-entrepreneur card. These decrees aim to streamline the implementation process and address specific aspects of the project for freelancers and employers.
Pending Information and Implementation
Despite the issuance of executive decrees, there is still pending information and clarification on certain critical aspects of the auto-entrepreneur card. Areas that require further development include taxation regulations and foreign currency withdrawals. The government needs to provide comprehensive guidelines to address these concerns and ensure a smooth implementation process.
Concerns Raised by Algerian Digital Nomads about the Auto-Entrepreneur Card
Skepticism Regarding the Algerian Banking System
Many Algerian digital nomads express skepticism toward the country’s banking system, citing concerns about reliability and transparency. This skepticism extends to the auto-entrepreneur card, with doubts arising about the ability to freely withdraw foreign currencies and the overall efficiency of banking services.
“If they don’t get their act together and fix the banking system, I’m not even gonna bother with it. Moving abroad seems like the only way out for me, you know?” one Algerian tech freelancer says.
Lack of Trust in the Government’s Intentions
Given the history of mistrust toward the government, some Algerian digital nomads remain skeptical about the true intentions behind the auto-entrepreneur card. Freelancers and the broader community seek assurances that this initiative is not merely a means to impose additional taxes and control over their income.
“Everyone I know feels the same way,’’ says another Algerian tech freelancer. “ This card thing? Had no clue it even existed until now. But let me tell you, as soon as I heard this, I thought to myself, “Oh great, just another lame attempt to squeeze more taxes out of us freelancers.” Can you believe it?”
Uncertainty about Foreign Currency Withdrawals
Freelancers who earn income in foreign currencies, such as USD or EUR, seem to be more concerned about their ability to freely withdraw these funds than the auto-entrepreneur card.
“I completely agree…” one freelancer captures this. “I’m referring specifically to individuals who work online and receive payment in foreign currencies like USD. Many of them have already turned to the unofficial market in search of better exchange rates, completely disregarding the use of the dinar.”
“In an ideal world,” he adds, “these auto-entrepreneurs would be allowed to withdraw their earnings in the same currency they earned them. For instance, if they earned EUR, they would have the freedom to withdraw their earnings in EUR. However, let’s be realistic here, we all know that such a solution is highly unlikely to materialize.”
Resolving the Grey Areas
Pending Clarifications on Tax Regulations
One significant grey area surrounding the auto-entrepreneur card is the absence of specific tax regulations. Freelancers and employers eagerly await detailed guidelines to understand their tax obligations and how it will impact their income and overall business operations. The government should prioritize providing clear and comprehensive tax regulations to instill confidence and enable freelancers to plan their financial affairs effectively.
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Lack of Specifics on Foreign Currency Withdrawal Options
The lack of specific information on foreign currency withdrawals raises concerns among freelancers who earn income in foreign currencies. Clarity on this aspect is crucial to alleviate doubts and ensure that freelancers can efficiently manage their earnings, especially those engaged in global markets.
Concluding:
While the auto-entrepreneur card holds significant potential for freelancers and employers in Algeria, its success depends on how well the government addresses concerns and implements the project. Continued development, adjustments, and improvements are necessary to create an enabling environment for freelancers, boost the gig economy, and promote economic growth. By actively engaging with stakeholders and providing comprehensive guidelines, the auto-entrepreneur card can empower freelancers, drive innovation, and contribute to Algeria’s economic development.
“It’s worth noting that the current situation requires more time to mature and unfold. We’ll need to wait several years, at best, to gauge its progress and determine its efficacy,” comments an Algerian freelancer.
“Considering the details shared about this card, it appears to primarily benefit the government, aligning with the pattern observed in various aspects of our country. It’s a lamentable reality, to say the least,” adds another freelancer. “Essentially, it seems like freelancers are being asked to pay taxes without receiving any substantial favors or rights in return. It’s a rather disheartening prospect, isn’t it?”
auto-entrepreneur card Algeria auto-entrepreneur card Algeria
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer, who has several years of experience working in Africa’s burgeoning tech startup industry. He has closed multi-million dollar deals bordering on venture capital, private equity, intellectual property (trademark, patent or design, etc.), mergers and acquisitions, in countries such as in the Delaware, New York, UK, Singapore, British Virgin Islands, South Africa, Nigeria etc. He’s also a corporate governance and cross-border data privacy and tax expert.
As an award-winning writer and researcher, he is passionate about telling the African startup story, and is one of the continent’s pioneers in this regard