Combining its strategic geographical location, a highly skilled labour force and competitive operational costs, Tunisia has long been a popular destination among international investors. Indeed, the country has positioned itself as a springboard for those looking to enter the African market, as well as an important international centre for business process outsourcing operations. In order to further these objectives, Tunisia has put in place legislation within its regulatory framework aimed at supporting the investment climate. Investment incentives were first introduced into domestic legislation in the 1970s and reformed in the 1990s.

The Tunisian investment regime is governed by the Investment Law, the latest version of which was implemented in April 2017. The newest draft of the law is intended to remove barriers to launching an array of businesses, while boosting both domestic and foreign investment levels. Furthermore, a new law – Law No. 47 of 2019 – was introduced in May of that year with the intention of improving the country’s business climate. The new legal framework provides more guarantees, greater flexibility and less restrictive administrative processes for a broad range of qualifying businesses. It also brings Tunisia in line with international standards regarding the management of disputes and litigation through the possible implementation of international arbitration. Additionally, the creation of high-value-added projects are eligible for attractive tax incentives. The investment ecosystem has been shaped by the 2018 budget law and is set to change further through the implementation of the 2019 budget law.

Tax & Investment Framework

In September 2016 the Tunisian Chamber of Representatives approved the new Investment Law, which was a repeal of the previous investment incentives code. Coming into effect on April 1, 2017, these measures aim to boost investments within the country by strengthening guarantees offered to foreign investors who wish to create a business or establish a subsidiary in Tunisia. The legislation widens the scope of qualifying sectors by limiting the list of requirements needed to open a business in Tunisia. While qualifying businesses were restrictively named under the previous regime, the new law reinforces investment freedom.

Under the law prohibited activities can still be laid down, but this can only be done by presidential decree. In addition, the new law has put a focus on accelerating administrative procedures, including those relating to repatriation of funds by foreign investors to their home countries.

This was done by tightening deadlines for the Central Bank of Tunisia (Banque Centrale de Tunisie, BCT) to process transfer requests to 15 days. Failure to meet this deadline means the request is automatically deemed to be authorised. The acquisition of properties used for operational activities has also been made easier. Foreign investors can acquire immovable properties (excluding agricultural properties) necessary to undertake their core operating activities.

Previously, only businesses operating in the tourism and industrial sectors could qualify for such a possibility. Other incentives include increasing the number of expatriates that can be recruited. Foreign investors are currently allowed to recruit employees from abroad, with the number capped at:

• 30% of the whole staff number during the first three years of business activity; and

• 10% of the whole staff number starting from the fourth year onwards. According to the previous rules, only a handful of businesses were entitled to recruit foreign employees and only under strict conditions.


The rules regarding non-discrimination between Tunisian and foreign investors have also been reinforced, implementing terms within domestic legislation. Under the previous rules, such principles were generally provided for through bilateral treaties between jurisdictions and not according to national legislation.

International Arbitration

The latest Investment Law offers the possibility to resolve any litigation with the Tunisian state before an international arbitration institution.

Significant Projects

Incentives are also offered to companies that qualify as significant projects, including financial bonuses among other things. Furthermore, tax incentives are available for developments that are considered to be of interest to the national economy. The relevant authorities are tasked with considering applications on a caseby-case basis. Financial incentives include the following:

• A 10-year period of corporate income tax breaks;

• An investment bonus up to 33% of the investment cost; and

• A state contribution for infrastructure costs.

Business Entities

The most common structures set up by foreign investors in Tunisia are société anonyme ( joint stock companies) and société à responsabilité limitée (limited liability companies), as well as branches of foreign firms that have concluded a contract in the country for a limited period.

Foreign Exchange Regulation

Under the latest Investment Law, profits realised through foreign investments, including both foreign-owned legal entities and the permanent establishments of foreign companies, may be freely repatriated to where such investments originate through the import of foreign currency.

Payments abroad relating to other transactions are subject to prior authorisation by the BCT. Tunisian firms may borrow from abroad, with the total value capped at TD3m ($1m) per year. The limit is increased to TD10m ($3.5m) per annum when the borrower is a banking institution.

Corporate Income Tax

The scope of corporate income tax covers Tunisian-established companies as well as Tunisian permanent establishments of foreign companies. Non-resident companies with no Tunisian permanent establishment are liable to tax with respect to their Tunisian-sourced income. They are taxed under the withholding tax mechanism.

The standard corporate tax rate in the country is 25%. A higher rate of 35% is applied the following segments:

• Oil and gas companies;

• Banks;

• Insurance and reinsurance institutions;

• Debt collection companies;

• Telecoms operators;

• Companies undertaking production and transportation activity in the hydrocarbons sector, subject to particular conventions;

• Firms transporting hydrocarbons via pipelines; and

• Companies carrying out oil refining activities and the wholesale of hydrocarbons products. Profits derived from export sales are subject to corporate income tax at the rate of 10%. Companies operating in crafts, fishing and agriculture are subject to corporate income tax at the rate of 10%. The minimum corporate tax is calculated at:

• 0.2% on annual gross domestic turnover for companies subject to rates of 25% or 35%; and

• 0.1% on annual gross domestic turnover for companies subject to the rate of 10%. Included in the budget law for 2018 were new sectors expected to pay the 35% corporate tax rate, including franchising, hypermarkets and car dealers. The 2018 budget law also introduced a new contribution to social security by adding one percentage point to all incomes, including corporate income tax which stands at either 26% or 36%.

In addition, an exceptional contribution to the state budget was introduced for 2018 and 2019. The contribution applies to the net income of banks, financial institutions and insurance companies and is outlined as follows:

• 5% of net profit in 2018 with a minimum contribution of TD5000 ($1740); and

• 4% of net profit in 2019 with a minimum contribution of TD5000 ($1740).


The 2019 budget law created a new tax rate of 13.5% that will apply from 2021 onwards for businesses operating in the following segments:

• Electrical and mechanical industry;

• Assembly and manufacture of cars, aircraft, ships, trains and their components;

• Wiring industry;

• Manufacture of pharmaceutical products and medical equipment;

• Textile, leather and footwear industry;

• Food industry;

• Call centres;

• Logistics services (the details of which are expected to be specified by presidential decree);

• Computer technology, software development and data processing;

• Packaging; and

• Plastics industry. Under the new budget law car dealers and franchisees not achieving an integration rate of more than 30% are taxable at the corporate tax rate of 35% for profits from January 1, 2019 onwards. Meanwhile, supermarkets are set to continue to apply the corporate tax rate of 25% and will only be subject to the new rate of 35% from January 1, 2020 onwards.

Further changes were adopted under the 2019 fiscal law. Namely, the exemption from taxes on income and profits for start-ups and new firms established in 2018-19 has been extended until 2020. This exemption relates to income and profits realised during the first four years of activity, provided that the business was established no more than two years ago. This also applies for companies established in the country’s regional development zones – which were created in 2018, 2019 and 2020 – which already benefit from a tax exemption for regional development of either five or 10 years, beginning with the expiry of the four years of exemption provided for by this measure. However, companies operating the financial sector, energy – with the exception of renewable energy – mining, property development, local consumption, trade and telecoms are not eligible for this exemption.

Meanwhile, the country’s preferential export regime for business operation and reinvestment is expected to be abolished. While companies in operation as of December 31, 2018 will continue to benefit from the preferential export regime until 2020, newly created companies will not. The country’s new VAT code redefines the export regime, removing the requirement that the product sold be an input of the exported product and the condition that the subcontracting be in the same activity.

Capital Gains Tax

Capital gains made by resident companies are subject to corporate income tax at the rate applicable on the whole company’s profit. The same rules are applicable to foreign companies that are permanently established in Tunisia.

With respect to capital gains realised by non-resident corporations that are not permanently established in Tunisia and are subject to more favourable treatment under an applicable tax treaty with Tunisia, such gains are subject to tax with respect to capital gains derived from the disposal of shares held in Tunisian companies and immovable properties situated in Tunisia.

With regard to shares held in Tunisian companies – such gains will be subject to final withholding tax at a rate of 25% levied on the difference between the selling price and the acquisition cost.

However, corresponding tax should not exceed 5% of the selling price. The seller may elect to submit a tax return corresponding to such an operation and be taxed on the net gain. In such a case, the withholding tax incurred may be credited against the corporate tax due. Any excess may be refunded upon application.

With respect to immovable properties situated in Tunisia, the corresponding final withholding tax is levied at the rate of 15% on the selling price. The seller may elect to submit a tax return corresponding to the operation and be taxed on the net gain.

In this case, as with shares held in Tunisian companies, the withholding tax incurred may be credited against the corporate tax due, with any excess refunded. A new measure has been introduced to enable the revaluation of assets by industrial enterprises. Under the scheme such companies can revalue their property, plants and equipment, according to their real value. The revaluation difference is to be recorded in a special non-distributable revaluation account. The excess depreciation is to be valued over a period of at least five years. The capital gains realised on the sale of an asset concerned by the revaluation is not taxable within the limit of the revaluation difference.

Compliance Requirements

The financial year generally corresponds to the calendar year. Tunisian tax authorities may authorise taxpayers to adopt a different tax period upon application providing the main reasons behind such a request.

Corporate income tax return should be submitted by the 25th day of the third month following the date of conclusion of the company’s financial year. Therefore, the deadline for corporate income tax returns with regard to companies whose financial year corresponds to the calendar year is March 25. Such a return is considered temporary for firms subject to mandatory external audit and for those which are authorised to submit another regularising return adjusting the company’s taxable profit as disclosed under the previous temporary return.

The deadline is the 25th day of the sixth month following the closing date of the company’s financial year. Any corporate income tax liability should be settled upon submission of the corresponding tax return. However, any advance payment of tax may be credited against the tax liability. Advance payment of corporate taxes may be undertaken as follows:

• For withholding taxes incurred, the rates range between 0.5% and 20%, depending on the nature of the remuneration.

• In the case of provisional instalments, three provisional instalments should be submitted annually by companies commencing on their second year of operating activities. Advance payments under each instalment are calculated at 30% of the previous year’s corporate income tax liability. The deadlines to submit the provisional instalment are the 28th day of the sixth, ninth and 12th months following the closing date of the financial year.

• Advance payment upon the import of specific consumer products is required as set out under ministerial decree. E-filing of tax returns is mandatory for companies with turnover exceeding TD1m ($347,000).

Taxable Profit

The taxable profit is based on the net profit and/or loss as resulting from the accounting records. Such net profit and/or loss is adjusted to take into consideration non-allowable expenses and non-taxable incomes.

Under the current rules, the annual depreciation of fixed assets should be calculated, in accordance with the straight-line method on the basis of maximum depreciation rates. Any amount exceeding such rate will be disallowed for deduction. Some of the depreciation maximum rates are detailed in the chart on this page.

It must be noted that the depreciation rate on equipment and machinery may be increased by 50% when such assets are used at least 16 hours a day. It can be doubled when the use of such assets lasts 24 hours per day. No deduction is allowed on the depreciation of goodwill and lands.

The tax deduction of donations granted to charities and public-interest organisations engaged in philanthropic, educational, scientific, social and cultural activities is capped to 0.2% of the annual gross turnover. With regard to gifts and meal expenses, the tax deduction is limited to 1% of annual gross turnover, up to TD20,000 ($6950). Deductions of provisions expenses are limited to 50% of the taxable profit and are tax deductible only when they relate to the following:

• Doubtful debts where the taxpayer appealed in court to recover such debts;

• Inventory of final products, excluding semi-finished products, raw materials and spare parts; and

• Shares of listed companies. Such limits do not apply to banks concerning non-performing loans and shares of risk capital investment companies. Furthermore, a specific additional deduction is allowed for Tunisian permanent establishments of foreign companies. The additional deduction relates to overhead expenses which are attributable to a Tunisian branch. The allowable deductible amount is calculated proportionally to the turnover of the Tunisian branch compared with total turnover at the head office.

Sumptuary expenses, including the amortisation of highly powered passenger cars, yachts, etc., are considered non-allowable expenses. The tax deduction of expenses settled in cash is excluded when the value of such expenses exceeds TD5000 ($1740). Penalties incurred following the breach of any applicable law are not considered allowable expenses. All payments to tax havens for the purchase of goods and services cannot be deducted from the corporate tax base. Lastly, penalties incurred following the breach of any applicable law are not considered as allowable expenses.

New Measures

The 2018 finance law introduced a new measure stating that companies must apply additional depreciation of 30% to operating equipment, with the exception of passenger cars not related to the firm’s main activity.

This measure was previously authorised for companies created after January 1, 2017, but is now extended to all companies with the exception of those operating in the financial sector, energy – with the exception of renewable energy – mining, property development, local consumption, trade and telecoms. The deduction of the additional depreciation is applicable for the first year of acquisition or manufacture of the asset, or the year of first use.

Furthermore, all companies – with the exception of those outlined above – now benefit from a deduction of the tax base by 50% of the capital gains from the sale of the operating assets, realised five years after the initial acquisition. This measure is applicable for asset transfer transactions undertaken during the period between January 1, 2019 and December 31, 2021.

In addition, a tax deduction for hotels that retain their staff members while undertaking restructuring operations approved by a specialised commission has been introduced. The incentive will see taxes on income and profits that are reinvested in the share capital of the hotel reduced to a maximum rate of 25% for the period between January 1, 2019 and December 31, 2020.

Loss Carry Forward

Losses may be carried forward up to a subsequent five tax years. Losses resulting from fixed assets’ depreciations may be carried forward for an unlimited period. However, no carry-back of losses is allowed. There are currently no rules regarding controlled foreign companies.

Thin Capitalisation

Under the current rules, interest on loans granted by shareholders is deductible for corporate income tax purposes only when the following conditions are met:

• The share capital is fully paid up.

• The interest rate should not exceed 8%.

• The loan value should not exceed 50% of the total share capital.

Transfer Pricing

A number of revisions of the provisions governing transfer pricing have been introduced under the 2019 fiscal law.

The notion of control has been clarified and is now based on the holding of 50% of either the capital or voting rights, or the effective control of decision making. This definition of control does not apply in cases in which the firm transfers profits to countries or territories with preferential tax regimes; specifically ones which apply a tax rate that is 50% lower than the rate applied in Tunisia for the same economic activity i.e. a tax haven.

Companies and institutions bound by foreign subordination or control relationships are now obliged to report transfer pricing to the Tunisian authorities when their annual turnover exceeds TD20m ($6.9m). In addition, Tunisian companies and subsidiaries with an annual turnover of TD20m ($6.9m) are also obliged to communicate their transfer pricing policies when engaged in operations with foreign controlled companies.

The specific reporting requirements for Tunisian firms that meet the criteria determined by the tax authorities varies between different countries. Lastly, the 2019 fiscal law also establishes the possibility of establishing a prior agreement with the tax authorities concerning transfer pricing methods for a period of between three and five years.

Consolidated Tax Return

A consolidated tax return is only allowed for a group of companies when the share capital of the parent company is listed on the Tunis Stock Exchange.

However, other restrictive conditions apply, making the possibility of benefitting from such a consolidated tax return difficult.

Dividends & Profit Remittance

Subject to a more favourable treatment under an applicable tax treaty, dividends paid by a Tunisian company to non-resident shareholders, whether a legal entity or natural person, are subject to withholding tax at a rate of 5%, where the relating profits result from transactions carried out as of January 2014.

The 2018 budget law raised this rate from 5% to 10% for all distributed profits starting from January 1, 2018. Furthermore, profits remitted abroad by Tunisian permanent entities of foreign companies are subject to a 10% withholding tax, up from 5%, as of January 1, 2018. Meanwhile, the withholding tax increases to 25% when the recipient is based in a tax haven jurisdiction.


Interest arising in Tunisia and paid to non-residents is subject to withholding tax at a rate of 20% on the gross amount of interest, unless a more favourable treatment is available under an applicable tax treaty. Where the beneficiary recipient of the interest is a non-resident bank, the applicable withholding tax rate is 10%.


Royalties arising in Tunisia and paid to non-residents are subject to withholding tax at a rate of 15%, unless a more favourable treatment is available under an applicable tax treaty.

Tunisia has a vast network of tax treaties in operation, with more than 50 treaties already being implemented, including those with a number of OECD countries. New measures include the extension of an obligatory withholding tax at a rate of 25% for payments made to companies in countries or territories with preferential tax regimes (tax havens) to also apply to permanent establishments located in Tunisia.


Value-added tax (VAT) is levied on the supply of goods and services in Tunisia as well as on the import of goods and services to the country. For purposes of applying VAT, territory rules are described as follows:

• The supply of goods is deemed to have taken place in Tunisia when such goods are delivered in Tunisia.

• The supply of services is deemed to have taken place in Tunisia when such services are consumed or used in Tunisia, even if rendered abroad. The standard VAT rate is 19%. Reduced rates of 7% and 13% are applicable for specific transactions, goods and services.

These are restrictively enumerated under the list appended to the VAT code. The list of transactions, goods and services that are VAT-exempt is also appended to the VAT code. Export sales are eligible for a zero rate.

Input VAT

Under current regulations, input VAT may be credited against output VAT. Any excess may be credited during the subsequent months or refunded under specific conditions. VAT is refundable within three years following the date from which the VAT in question became claimable.

Export-oriented businesses qualify for VAT suspension with respect to their purchase of goods and services required for operating activities.

VAT Returns

Companies are currently required to submit VAT returns and make payments on a monthly basis.

The deadline for submittal is the 28th day of the month following the month of reference in the case of legal entities, and the 15th day of the month following the one of reference for individuals carrying out business activities.

E-filing VAT returns is required for taxpayers with an annual turnover that exceeds TD1m ($347,000).

VAT Withholding

Different regulations apply in cases involving foreign firms.

When a foreign service supplier with no Tunisian permanent establishment provides services falling under the scope of Tunisian VAT, the Tunisian debtor is required to withhold the full amount of VAT and remit it to the tax authorities.

The foreign supplier is allowed, however, to register for VAT purposes on a temporary basis in order to qualify for the deduction of input VAT incurred on purchases of goods and services required for operating activities.

Local Tax

The local municipality tax, more commonly known as the TCL, is a tax on turnover levied at the following rates:

• 0.1% on export sales and on sectors with margins less than 6%; and

• 0.2% on domestic sales.

Registration Duties

Various rates of registration duties are applicable to formal documents in Tunisia. Those rates are as follows:

• Business contracts are subject to registration duties at a 0.5% rate on the contract’s gross value.

• Documents relating to setting up, winding up, capital increase/decrease, merger or de-merger of companies are subject to a fixed rate of TD150 ($52.10) per document.

Payroll Taxes

Deductions from a company’s payroll include the vocational training tax, calculated at 2% and levied on gross wages. The rate can be reduced to 1% for firms operating in manufacturing industries. Meanwhile, contributions to the government-run Le Fonds de Promotion des Logements Sociaux social housing programme are calculated at the rate of 1%, levied on total annual gross wages.

Financial Incentives

The Investment Law offers financial incentives including bonuses for specific companies that qualify. Furthermore, tax incentives are available for projects presenting an interest for the national economy. The relevant authorities will consider, on a case-by-case basis, applications for incentives, which can reach a period of up to 10 years for corporate income tax breaks.

The new investment legislation offers additional financial incentives including the following:

• Investment bonus up to 33% of the investment cost, excluding costs related to internal infrastructure; and

• A state contribution for infrastructure costs. In addition, incentives are offered for companies operating in areas such as agriculture, export activities and those located in developing areas.

The tax incentive system to investment, revised in February 2017 and applied as of April 1, 2017 is only applicable to priority sectors such as agriculture, regional development, export, high-productivity services, and technological and innovative investment.

Tax Framework for Individuals

An individual is qualified as a tax resident in Tunisia if any of the following criteria are met:

• He/she has a permanent residency in Tunisia.

• He/she is present in Tunisia for more than 183 days during the calendar year. Resident individuals are taxed on their worldwide income regardless of the country, territory or company from which the income is derived. They are subject to income tax in Tunisia according to a progressive tax rate with an upper band of 35%. Details are presented in the table on this page.

The budget law for 2018 introduced a new contribution to social security by adding one percentage point to each rate applied to personal income brackets. Non-residents are subject to Tunisian tax on income from local sources. Tunisian-sourced income is defined as all remunerations paid for a job and/or activity carried out in Tunisia.

Non-resident individuals – namely, people staying in Tunisia for less than 183 days – are taxable at a flat tax rate of 20%. This tax rate is subject to specific conditions and mostly covers expatriates working for Tunisian hydrocarbons companies.

Other tax rates will also apply depending on the nature of the revenue, unless covered by tax exemptions or relief, such as capital gains on the transfer of shares. Income tax returns should be submitted annually by resident individuals. Deadlines depend on the nature of income gained.

Residents with only employment income or pensions, must submit their tax return by December 5 of the year following the year of taxation. Non-resident individuals – namely, people staying in Tunisia for less than 183 days – are exempt from the annual return submission requirement.

It is the employee’s responsibility to withhold and remit the tax to the tax authority when their employer is not based in Tunisia.

Social Security Contributions

As a common rule, social security contributions in Tunisia are calculated according to the following rate system:

• 16.57% on gross wages for the employer contribution to social security;

• 0.5-4%, (depending on the nature of the economic activity) on gross wages for the employer contribution for workplace injuries; and

• 9.18% on gross wages for the employee contribution to social security. Several social security agreements are signed with other countries to determine the social security system to which the employee should be affiliated, offering the possibility of a relief payment in Tunisia. The Social Solidarity Contribution on all incomes has been introduced by the 2018 budget law to help reduce the social security deficit.

For personal income tax, one percentage point is added to the rate applied to every income bracket. For corporate tax, one percentage point is added to the appropriate corporate tax rate. The minimum payment levels of these different corporate tax rate levels are as follows:

• TD300 ($104) for those paying a corporate tax rate of 35%;

• TD200 ($69.47) for those paying a corporate tax rate between 20% and 25%;

• TD100 ($34.73) for those paying a corporate tax rate of 10%; and

• TD200 ($69.47) for those not paying the corporate tax due to exemptions or deductions.

Residence Visa Requirements

With the exception of certain specific citizenships – such as citizens of EU member states – a visa must be applied for before the individual plans to enter Tunisia. The category of visa required will depend on the purpose of the individual’s stay in Tunisia. The visa requirements are as follows:

• Work permit – Foreign nationals employed in Tunisia are required to obtain work permits in order to start working in Tunisia, as stipulated by the country’s labour laws.

• Residence visa – In situations in which a foreign national stays in the country for three months or more on a continuous basis, a residence permit must be obtained from the Ministry of the Interior for one renewable year. In addition, foreign nationals who are resident in Tunisia are entitled to transfer cash saved from their Tunisian wages, under certain specific conditions.

Income bracket (TD) Income tax rates (%) Income tax for resident individuals Less than 5000 Between 5001 and 20,000 Between 20,001 and 30,000 Between 30,001 and 50,000 Over 50,000 0 26 28 32 35