Legal Framework and Tax Incentives in Tunisia

Tunisia’s legal framework is highly favourable to foreign investment.

Resident and non-resident foreigners are free to invest in projects carried out under the new Investment Law No. 71-2016 of 30/09/2016.

Any foreign investor is free to invest in most business sectors and may hold up to 100% of the project’s capital without authorisation.

Foreign investors are also free to repatriate profits and proceeds from the disposal of capital invested in foreign currency, provided that they hold investment certificates. The Tunisian dinar has been convertible for current transactions since 1994.

Any company may recruit foreign executives up to a limit of 30% of its total executive workforce for 3 years. In all cases, up to 4 foreign executives are authorised.

Foreigners may invest in the agricultural sector through the leasing of agricultural land. Foreign participation in these operating companies, as well as in aquaculture and fishing companies operating in Tunisia’s northern waters, may reach 66%.

The use of agricultural land by foreigners may, however, be subject to a long-term lease.

Foreigners may establish international trading companies. These companies may carry out import and export transactions involving goods, as well as all types of international trading and international brokerage operations (the minimum capital must be 150,000 dinars, approximately €44,000 (to be recalculated based on the applicable exchange rate). Profits are subject to corporate income tax at a rate of 23%.

Engaging in local trade (restaurants, shops, dealerships, real estate agents, etc.) requires foreign participation not to exceed 50% of the share capital and management to be entrusted to a Tunisian, in addition to certain authorisation formalities, particularly with the Central Bank of Tunisia.

Tax and financial incentives

A general corporate income tax rate for almost all sectors of 20% (plus CSS 3%) and taxation of dividends at a rate of 10% (this taxation may be credited against tax in the country of residence under double taxation treaties).

Newly established companies in the services and industrial sectors

They benefit from a deduction of 100% of profits during the first year of activity, 75% in the second year, 50% in the third year and 25% in the fourth year.

For an effective tax rate of 23% (20% corporate income tax + 3% CSS), this is equivalent to a tax rate of 0% in the first year, 5.75% in the second year, 11.5% in the third year and 17.25% in the fourth year.

Wholly exporting companies (at least 70% of turnover from exports)

• TCL tax at a rate of 0.1% of gross turnover;
• VAT is suspended on export sales;
• Possibility of importing raw materials and equipment under VAT suspension;
• Possibility of benefiting from VAT suspension on purchases of goods and services on the local market;
• Final taxation at a rate of 20% on the salaries of foreigners, with the possibility of bringing in a personal vehicle and personal belongings free of taxes;
• Non-resident foreign exchange regime (Offshore) if 66% or more of the capital is financed by Tunisian or foreign non-residents.

Companies established in regional development zones

Tunisia grants numerous advantages to investors who invest in certain areas located away from the coast.

First group zone:

• Full exemption from corporate income tax for the first 5 years, followed by taxation at a rate of 10%;
• Investment grant of 15% of the investment (including working capital), up to a limit of TND 1,500,000;
• Exemption from the employer’s social security contribution for 5 years (17.07% of gross salaries).

Second group zone:

• Full exemption from corporate income tax for the first 10 years, followed by taxation at a rate of 10%;
• Investment grant of 30% of the investment (including working capital), up to a limit of TND 3,000,000;
• 100% exemption from the employer’s social security contribution for 10 years (17.07% of gross salaries).

Agricultural companies

• 100% exemption from corporate income tax on profits for 10 years, followed by taxation at a rate of 10%;
• Investment grants depending on the category of the project (between 15% and 30% of the investment);
• Suspension of VAT and consumption duties payable on the import of equipment for which no locally manufactured equivalent exists, and suspension of VAT on locally manufactured equipment.

Companies operating in priority sectors

• Investment grant of 15%, capped at TND 1,000,000;
• 100% exemption from the employer’s social security contribution for 3 years;
• The State covers 50% of the salaries paid to graduates recruited permanently for the first time, up to a limit of TND 250 per month and per employee.

Priority sectors include

• First-stage processing of agricultural and fishery products
• Nanotechnology industries
• Biotechnology industries
• Textiles and clothing
• Electronics industries
• Technical plastics and composite products
• Automotive, aeronautical, maritime and railway industries and components
• Pharmaceutical industries and medical devices
• Research and development centres and clinical research centres
• Industrial equipment industry
• Defence industries
• Cultural and creative industries
• Collection, recovery, processing and treatment of solid and liquid waste
• Projects for the protection and development of natural resources and biodiversity and for combating desertification
• Renewable energy production
• Information and communication technologies (ICT)
• Logistics services provided in logistics zones
• Sports and leisure centres

Companies operating in economic value chains

Financial incentives

A value-added and competitiveness improvement grant: 15% of the approved investment cost, capped at 1,000,000 dinars.

Definition

Activities based primarily on the development of useful mineral and agricultural resources and natural and cultural heritage through industrialisation and exploitation in production areas, contributing to the development of value chains through a radical transformation of the nature of the product.

List of economic value chains

• Extractive materials sector
• Geothermal cultivation sector
• Medicinal and aromatic plants sector