The principal forms of business enterprises in Tunisia are :

  • Limited company – private or public
  • Branch of foreign company
  • Sole proprietorship
  • Joint venture
  • Co-operative society

Limited companies

The provisions concerning limited companies are contained in the Tunisian Business Code Act of 1959.

Limited companies may be public or private. A private company is prohibited from inviting the general public to subscribe for its shares, the number of its partners is not limited. There is no requirement for the financial statements of these companies to be audited.

A public company, as its name suggests, may offer its shares to the general public. It cannot have less than seven members. There is no maximum number of members and its shares are freely transferable. The financial statements of the public limited companies are submitted to be audited by a chartered accountant.

Partnerships

The law relating to partnerships is contained in the business code Act of 1959. The number of partners is not restricted. Each member is jointly and severally liable for all debts incurred. Partnerships are not required by law to appoint auditors nor do partnerships financial statements have to be published. The death, resignation or retirement of any individual partner does not dissolve a partnership unless the partnership agreement provides otherwise.

Branches of foreign companies

A company incorporated outside Tunisia may carry on business in Tunisia through a branch. In order to establish a branch the following documents must be submitted to the registrar of companies:

  • A certified copy of the company s Memorandum and Articles of Association or equivalent constitution documents.
  • The address of the company s registered or principal office.

Joint Ventures

Joint ventures with Government owned agencies are encouraged. These may be conducted as a partnership or as limited companies in which all the parties are shareholders.

TAXATION

The income tax law is contained in the Income Tax Act 1989, under which companies and individuals are taxed. Taxation changes/amendments to the Act are normally announced by the Minister of Finance in his Budget speech delivered in December each year.

Corporate Taxes

Tunisian income tax is payable at the rate of 35% by companies. Many foreign investments and businesses gain special tax advantages. For a description of such benefits, please see the relevant section on Incentives.

Individual Taxes

Individuals, like companies, are liable to Tunisian income tax only on income arising in Tunisia. However, in the case of income from employment received by a resident individual, the whole of that income is deemed to arise in Tunisia, whether the duties of employment are performed in Tunisia or abroad and wherever the income is paid. In effect therefore, a resident individual is liable for Tunisian income tax on his worldwide employment income.

A non-resident is liable for Tunisian income tax at the normal graduate rates on income from employment with a resident employer, or a Tunisian permanent establishment of a non-resident employer.

A non-resident is liable for the various flat rate withholding taxes.

Companies and individuals should find out about any double taxation agreements that may be in force between Tunisia and their respective governments.

VAT

VAT %
Regular Rate 17
Certain Luxury Goods 29
Priority Goods 6

Consumption Tax

Varies greatly according to the item

Professional Training Tax

Manufacturing Industries – 1% on all salaries paid to employees

Others – 2% on all salaries paid to employees

Social Security Charges

%
By Employers 19.00
By Employees 7.25

INCENTIVES

A new investment code, covering all economic sectors with the exception of mining, energy, domestic trade and the financial sector, came into effect at the beginning of January 1994. The new investment code reinforces the freedom to invest. It provides common incentives to all sectors :

  • Tax exemption of 35% on income earned and reinvested in Tunisia.
  • Suspension of VAT on capital goods.
  • Reduction of custom duties up to 10%, on imported equipment having no similar equipment manufactured in Tunisia.
  • Possibility of choosing an accelerated depreciation system for capital goods with an accounting life exceeding seven years.

It also provides additional incentives for investment according to the following priorities :

  • Export
  • Regional development
  • Agricultural development
  • Environmental protection
  • Technology transfers

The most important additional incentives concern :

  • Export: Exporting companies enjoy the possibility of importing all necessary capital goods and production inputs custom duty free. They are also fully exempt from income tax for the first ten years of activity with 50% reduction in income tax thereafter.
  • Regional development: Projects in industry, tourism and certain industry related services which are set up in regional development areas, receive an investment grant of 7% of the project cost, a State participation in the infrastructural expenses and five years full payment of the employer s contribution to social security schemes. They are also fully exempt from income tax for the first ten years of activity and benefit from a 50% reduction on income tax for an additional ten years.
  • Agricultural and fishing companies receive an investment grant of 7% for large scale projects and are fully exempt from income tax for the first ten years of activity.
  • Environment: Projects in the protection of the environment receive an investment grant of 20% of the project cost and can import duty free all necessary equipment that is not manufactured in Tunisia.
  • Foreign investments and partnerships are strongly encouraged in Tunisia as a complement to local investment efforts.
  • Foreign investors benefit from the incentives laid out in the investment code and can hold up to 100% of the project capital without prior authorisation, except for non-wholly exporting service industries which are subject to authorisation in the foreign participation exceeding 50% of the capital.
  • Ownership of agricultural land which can be leased by foreign investors for up to 40 years.
  • Foreign investors also benefit from the off-shore status of wholly exporting companies.
  • Companies in the form of off-shore factories which can be set up anywhere in Tunisia.
  • Within a free trade zone. Two free zones are now being set up in Tunisia, one in Bizerte in the north of the country, and the other in Zarzis in the south of the country.
  • Besides these incentives, foreign investors in Tunisia benefit from a set of a multilateral, and bilateral guarantees such as Tunisia s adhesion to MIGA (Multilateral Investment Guarantee Agency) and to the New York convention with respect to arbitration sentences, and from a number of investment protection and non- double taxation agreements.

EXCHANGE CONTROL

With the introduction in 1993 of the convertibility of the Tunisian Dinar for current transactions, the transfer of the capital invested by the non-residents by means of foreign currency, and the revenue it bears, is guaranteed.

VISA REQUIREMENTS

Residence and Work Permits

Foreign employees must obtain work permits and residence permits.

Work Permits

These are obtained from the Ministry of Social Affairs. The employee must provide a resumé, diplomas and transcripts certifying his or her qualifications, and a passport. The work permit comes in the form of a stamp in the employee s passport and is valid for one year. In order to renew the permit, a separate form must be filled out at the Ministry of Social Affairs.

Residence Permits

Once the work permit has been obtained, the employee must apply for a residence permit from the Interior Ministry. It is also valid for one year and is renewed after the employee has secured the new work permit.