Taxation Effect on Depreciation: Evidence from the Algerian Tax System

Abstract

In this article, we attempt to examine the fiscal impact of an important element among the three components of self-financing, namely: Depreciation allowances. In this regard we try to study the effect of taxes on each type of depreciation through the Algerian tax code.Through this study, we conclude that taxation influences the decision of the company regarding the choice of depreciation methods. This influence is felt by the implicit tax cost of each type of depreciation. Nevertheless, the introduction of deferred amortization should allow the company, especially in deficit period, to improve its financial situation. Moreover, this depreciation will not be lost. On the contrary, it can be deferred without limitation of time, as long as the results will remain in deficit.

Keywords: Depreciation - Tax – Algeria