Tunisia passes legislative reforms to streamline business regulations and boost investment

 

Tunisia improved eight places to rank 80th out of 190 countries in the World Bank’s “Doing Business 2019” report. While this reflects a significant improvement in the country’s business and investment climate over one year, the government is committed to improving this ranking further, securing a position among the top-50 countries worldwide as well as being one of the top three in the region. As part of a broad effort to achieve this objective, the Assembly of the People’s Representatives passed a set of legislative reforms aimed at streamlining business regulations, promoting private enterprise and boosting growth in May 2019. Of the 38 articles of the Loi Transversale (Transversal Law), 28 provisions are specifically intended to improve the business environment and attract foreign investment with clearer, standardised and more straightforward policies.

Main Measures

The legislation aims to reduce bureaucracy and accelerate procedures to resolve any constraints faced by investors when bringing capital to the country. For instance, a new committee has been tasked with granting authorisations related to investments and land acquisition. The constitutive documents of the new committee limit the deadline to handle applications for a change of the use of agricultural lands to three months. The new legislation also simplifies steps relating to setting up a new business in general, including through new electronic platforms. Special attention is given to key sectors where regulatory constraints delayed projects in the past, for example renewable energy, tourism timeshares and international trade.

Private energy producers are now legally entitled to generate a portion of renewable energy and they have the option to supply this electricity to either their subsidiaries or to the state-owned Tunisian Electricity and Gas Company. Private firms can also now lease public land in rural areas and use agricultural land for large-scale renewable energy projects. Foreign firms can trade locally produced goods without a foreign merchant licence, which they were previously required to obtain under Law No. 14 of 1961. However, this reform only applies to products manufactured locally.

Business Financing

The new legislation establishes fiscal incentives to encourage equity sharing by investment funds in firms in instances of new management following death, retirement or restructuring. It also revises the rules regulating investment funds in an attempt to streamline operations. Government subsidies amounting up to one-third of the total investment cost for roads and infrastructure work have been made available for investment projects, along with the possibility to benefit from public land leases or a symbolic payment. In addition, the government now covers up to three percentage points of the interest paid by small and medium-sized enterprises to cover financial charges relative to loans. The regulation covering public-private partnerships (PPPs) and concessions have also been revised in an attempt to generalise their use while reducing budgetary pressures on the government. Specifically, concession procedures have been facilitated and private partners now have the opportunity to operate infrastructure built under a PPP, which was prohibited under former legislation. Additionally, the reforms establishes an independent authority to run the national PPP programme, under the supervision of the Head of Government’s Office.

Lastly, measures targeted at improving the governance of private businesses were passed. The most important of these involve the regulation of the procedures of company boards and shareholder assemblies. A corporate meeting can now be called if the shares of present stakeholders amount to over 50% of the company’s capital. Furthermore, a distinction between chairman and CEO is now mandatory for all firms listed on the Tunis Stock Exchange.

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The Report: Tunisia 2019

Tax chapter from The Report: Tunisia 2019

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