Taxation in Tunisia

Year 2010 Update
Personal Income Tax (P.I.T)
Taxable Persons
Any natural person having a usual residence in Tunisia is liable to the P.I.T .Non-resident individuals are also subject to income tax in case the income originates from Tunisian source.
The categories of taxable incomes :
* Industrial and commercial profits
* profits from non-commercial professions
* farms and fisheries profits
* salaries, wages, pensions and life annuities
* securities and moveable assets incomes
* land income
* incomes from a foreign source if they have not been subject to tax in the country of origin.
Determination of the net profit for companies
The net profit is determined on the basis of a statement in accordance with generally accepted accounting standards and after the deduction of all expenses and professional charges, particularly :
* the straight line, the reducing balance and accelerated depreciation methods.
* provision for bad debts, provision for total depreciation and provision for the depreciation of shares listed on the stock exchange, and this, within the limit of 30% of taxable profits.
* gifts and grants within the limit of 2% of the turnover.
Determination of net profit for other categories of income.
Net income is determined after a flat-rate deduction of :
* 10% on salaries and wages ;
* 25% on pensions and life annuities, this rate has increased to 80% for pensions and life annuities from a foreign source and this under certain conditions ;
* 30% for land income and profits of non-commercial professions determined on a lump sum basis.
Exemptions
* remuneration of foreign diplomatic and consular agents, subject to reciprocity principle;
* compensation payments for a corporeal harm;
* dividends;
* deposit interests and securities in foreign currencies or in convertible dinars;
* interests of home saving accounts entitling depositor to cheap mortgage;
* interest from savings accounts opened with the National Saving Bank of Tunisia or any banks, as well as the bonds’ incomes under certain conditions.
Common deductions to all income categories
Are deductible under certain conditions :
* Premiums accruing to life insurances contracts ;
* abatements for dependent and family status (married taxpayer, dependent children, and dependent relative);
* 500 DT additional deductions for employees who are paid either the Minimum Industrial Guaranteed Wage or the Minimum Agriculture Guaranteed Wage.
* reinvested incomes in the company’s share subscribed capital under the conditions established by the legislation governing the tax benefits.
P.I.T Tariffs
Taxable income brackets ( in Dinar TND )
* 0 - 1,500 ……………… 0%
* 1,501 - 5,000 ……………… 15%
* 5,001 - 10,000 ……………… 20%
* 10,001 - 20,000 ……………… 25%
* 20,001 - 50,000 ……………… 30%
* Superior than 50.000 ……………… 35%
Flat-rate taxation system
There is a flat-rate taxation system applied under certain conditions to the little businesses whose annual turnover doesn’t exceed 30.000 DT.
This turnover is increased to 100.000D for individuals subject to the flat-rate system and who opt for the payment of an annual amount of 1.500D.
Corporate Income Tax (C.I.T)
Tax payable by
Subject to certain exemptions, the C.I.T. is owed in particular to :
* capital corporations and similar ones established in Tunisia
* cooperatives, profit-making public cooperations with a non-administrative nature
* Foreign companies not established in Tunisia deriving incomes from a Tunisian source
Determination of the taxable profit
The taxable profit is determined on the basis of a statement in accordance with generally accepted accounting standards and after the deduction of all expenses and professional charges as for sole proprietorships subject to what follows :
* provisions for bad debts are deductible within the limit of 100% of the taxable profit until 31 of December 2009 or in an indeterminate time period as the case may be for; banks, leasing institutions and factoring companies;
* provisions for depreciation of stocks and social shares are fully deductible from the taxable profit or up to 50% until 31 December 2009 as the case may be for the venture capital trusts;
* profits reinvested within the corporation are deductible within the limits and conditions established by the law governing tax incentives;
* losses could be deferred to the profits of the following four years;
* the deferred depreciations are postponed for an undetermined time period.
Corporate Tax Tariffs
General rate: 30%
reduced rate: 10% applicable to handicraft, agricultural and fishing industries.
Particular rate applicable to certain companies: 35% (financial, telecommunications, insurance, on the oil production scale, refining, transportation and on the wholesale distribution scale ...).
Terms of payment of P.I.T and the C.I.T
The P.I.T and C.T are levied by :
* withholding tax (fees, rents, securities, salaries, markets, amounts equal to or superior than 1000D paid by the State, local authorities and public companies or institutions or 5000D paid by legal entities and natural persons subject to the effective regime,
* 3 first instalments each equal to 30% of the amount of the previous tax year and payable during the 6th, 9th and 12th month,
* an advance levy of 10% for the import of a list of consumption products;
* and by an annual regularization, withheld tax is discharging for individuals who are not established or domiciled in Tunisia.
the Withheld tax and advance levy are deductible from first instalments and the final tax.
Withholding tax is discharging for individuals non-established or resident in Tunisia.
THE VALUE ADDED TAX
Goods and services subject to VAT :
* Good imports,
* industrial and handicraft production,
* services,
* wholesale trade, other than food products, medicines and pharmaceuticals products,
* retail trade where the total annual turnover is equal to or superior than 100.000D with the exception of food products, medicines and pharmaceutical products and products subject to an administrative approval of prices,
* professions.
Exemptions
Certain goods and services are exempted from VAT such as: books, newspapers, periodicals, milk, bread, couscous, vegetable oil, international air transport, maritime transport, debit interests on banks...
Taxable base
* at imports :
* value of all fees at customs, duties and taxes included with the exception of the VAT, for liable persons.
* values determined above plus a 25% of the sum for non-liable persons and importers of products set by Decree No. 2003-477 of 3 March 2003.
* In the internal system: in general it is the price of goods, works or services, all fees, duties and taxes included with the exception of the VAT .
The VAT rate
* 6% for fertilizers, handicrafts, medical services, canned foods, compound feed for livestock ...
* 12% for computers, computer services, hotel sector, catering, equipments not manufactured locally, 4 horsepower cars.
* 18% general rate applicable to products and services not subject to a different rate.
VAT refund
generally the VAT paid on inputs is deductible from the VAT levied on the monthly turnover.
The potential credit is entirely refundable under the following conditions :
monthly for :
* Export operations, upgrade investments, withheld tax, sales in suspension.
* creation investments of VAT credits that appear on submitted returns as of 3 consecutive months.
* Investments to upgrade the VAT credits that appear on submitted returns of 6 consecutive months.
* On a quarterly basis for the VAT credit originating from other operations, which appear on submitted returns of the 6 consecutive months with an advance payment of 15% of the total amount of credit without prior verification. The rate of the advance is increased to 35% for companies whose accounts are legally reviewed by an independent auditor.
Consumption tax
Consumption tax
consumption tax is applicable to the following goods in particular;
* Wines, beers, alcohol and alcoholic beverages,
* tobacco,
* Fuel ,
* Private cars.
Rates
There are two types of rates that could be applicable to consumption tax;
* ad valorem rates ranging from 10% to 683%
* Fixed rates (fuel, alcohol and wine).
REGISTRATION DUTIES
Certain documents are subject to registration duties
* sales of real estate’s ;
* sales of businesses ;
* gifts and inheritances ;
* company’s acts ;
* Judgments and rulings.
Fees § 5% of the sale’s value of the real estate
* 2.5% of the sale’s value of businesses,
* 2.5% for estates in the direct line and between spouses,
* 5% between brothers and sisters,
* 25% and 35% for distant relations,
* Fixed fee of 15D/act for gifts in direct line and between spouses
* Fixed fee of 100D/act for the transfer of companies’ assets and securities under certain conditions in particular, the continuation of the activity for three years.
* 100D/ companies’ act (setting up of a company, increase and decrease of the company’s capital,
* 5% of the condemnation amount for judgments and rulings.
OTHER TAXES
* 1- Taxes on wages paid by the company
* a- vocational training tax at a rate of 1% of gross wage bill for the manufacturing industries and at a rate of 2% for other industries.
* b- The contribution to the employees’ housing promotion fund for employees at a rate of 1% of the gross wage bill, and to be levied from all public or private employers
* 2- Taxes on insurance contracts
* at a rate of 5% of the premium’s amount issued on contracts for transportation by sea and by air and at a rate of 10% for other contracts.
Taxes for the benefit of local authorities
* a- The tax on institutions holding an industrial, commercial or professional nature (TLA) at a rate of 0.2% of the local gross turnover with a peak of 100.000D and a minimum equal to the tax on constructed buildings.
* b- Tax on hotel businesses at a rate of 2% of the turnover.
* c- Tax on constructed buildings calculated at a rate of 2% of the reference price for a constructed square meter for each building category x the covered surface at rates ranging from 8% to 14%.
* d- The tax on idle land calculated based on the market value of the land at a rate of 0.3%.
In the absence of market value, tax is estimated per square meter according to a progressive fee taking into account the density of urban areas defined by the urban development plan.

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