Corporate tax in Tunisia

Summary

Corporate Income Tax Rate (%) 25 (a)
Capital Gains Tax Rate (%) 25 (a)
Branch Tax Rate (%) 25 (a)
Withholding Tax (%)
Dividends 5 (b)
Interest 20 (b)(c)(d)
Royalties 15(b)(e)
Gross Rents 5/15 (b)(f)
Management Fees 0/0.5/1.5/2.5/5/15 (b)(g)
Branch Remittance Tax 5 (b)(h)
Net Operating Losses (Years)
Carryback 0
Carryforward 5

a) This is the standard rate of corporate income tax. Oil service companies, banks, financial institutions (for example, insurance companies) and telecom­munication companies are subject to corporate income tax at a rate of 35%. Handicraft, agricultural and fishing companies are subject to corporate income tax at a rate of 10%. For companies that have completed their full exemption period or that have been established since 2014, benefits from exportations realized on or after 1 January 2014 are subject to corporate income tax at a rate of 10%.

b) Payments to beneficiaries resident in tax havens are subject to a 25% rate.

c) This tax applies to payments to residents and nonresidents.

d) The rate is 5% for interest paid on loans made by nonresident banks.

e) This tax applies to payments to nonresidents. For further details, see Section B.

f) The applicable rate depends on the nature of the beneficiary and service.

g) Management fees paid to residents are subject to withholding tax at a rate of 0% if the amount does not exceed TND1,000 and if they do not represent fees. Management fees paid to residents are subject to withholding tax at a rate of 1.5% if the amount is greater than TND1,000 and if they do not represent fees (the rate is reduced to 0.5% if the amount paid complies with the definition of indirect exportation). If management fees paid to residents are related to fees, they are subject to withholding tax at a rate of 5% (the rate is reduced to 2.5% if the amount paid complies with the definition of indirect exportation). Managements fees paid to nonresidents are subject to withholding tax at a rate of 15%, subject to the provisions in double tax treaties.

(h) See Section B.

Taxes on corporate income and gains

Corporate income tax. Companies are subject to tax on profits derived from establishments located in Tunisia and on profits that are deemed to be derived in Tunisia under double tax treaties.

Tunisian-source income that is not realized within the framework of a Tunisian establishment, such as interest and royalties, is sub­ject only to final withholding taxes (see Royalties).

Tax rates. The standard rate of corporate income tax is 25%. Oil service companies, banks, financial institutions (for example, in­surance companies) and telecommunication companies are sub­ject to corporate income tax at a rate of 35%. For companies that have completed their full exemption period or that have been es­tablished since 2014, benefits from exportations realized on or after 1 January 2014 are subject to corporate income tax at a rate of 10%.

The minimum tax payable is 0.2% of annual local turnover and 0.1% of taxable exportation turnover.

The 0.2% minimum tax paid in 2014 may be credited against the corporate income tax payable for the next five financial years, but it is not refundable. The 2015 Financial Law eliminates the pos­sibility of deducting the 0.2% minimum tax in the fifth year.

Tax benefits, such as exemptions from certain taxes and duties, may be granted to companies established in a Tunisian Free Zone and to companies engaged wholly or partly in exporting.

Capital gains. Capital gains are included in ordinary income and are taxed at the regular corporate income tax rate. For nonresident and non-established companies in Tunisia, capital gains derived from the sale of shares is subject to withholding tax at a rate of 25%, which is levied on the difference between the sales price and the acquisition price, reduced by the expenses incurred on the sale including the share premium. In all cases, the tax on capital gains may not exceed 5% of the sales price.

As an option, a tax return on capital gains may be filed. Administration. The financial year is generally the calendar year.

Tax returns must be filed by the 25th day of the third month fol-low ing the end of a company’s financial year. Consequently, for companies using the calendar year as their financial year, tax returns are due by 25 March. For companies subject to mandatory audit, this return can be considered a temporary tax return and a definitive return must be submitted by 25 June.

Starting from the second year of their activities, companies must pay tax in three installments. Each installment is equal to 30% of the corporate income tax due for the preceding financial year. The installments are payable by companies during the first 28 days of the sixth, ninth and twelfth months following the end of the financial year. The balance of tax due must be paid when a tax bill (a document that specifies the amount of tax due and when the tax must be paid) is filed.

Dividends. Effective from 2015, dividends paid to resident and non resident individuals and nonresident entities in Tunisia are subject to a 5% withholding tax.

Profits realized in Tunisia by Tunisian establishments of foreign companies are assumed to be distributed for the benefit of the partners not resident in Tunisia and are accordingly subject to the 5% withholding tax for distributions. This withholding tax is imposed at a rate of 25% if the establishments have their head offices in tax havens.

Royalties. Subject to the provisions of double tax treaties, a 15% withholding tax is imposed on royalties paid to nonresidents. This tax applies to the following types of payments:

  • Copyright royalties
  • Payments for the use of, or the right to use, patents, trademarks, designs, models, plans, formulas, manufacturing processes and movies, including proceeds received from sales of such items
  • Payments for the use of, or the right to use, industrial, com­mercial, agricultural, harbor or scientific equipment, except for amounts paid to charter a plane or vessel for international operations
  • Payments for information concerning industrial, commercial or scientific experience
  • Payments for technical or economic studies or for technical assistance

Foreign tax relief. Tunisia does not grant any relief for foreign taxes.

Determination of trading income

General. Taxable income is based on financial statements prepared in accordance with generally accepted accounting principles, sub­ject to certain adjustments.

Business expenses are generally deductible unless specifically disallowed by the tax law. The following expenses are deductible:

  • All types of expenses relating to production or the operation of a business, such as salaries and wages, and raw materials
  • Tax depreciation (see Tax depreciation)
  • Attendance fees paid to members of the board of directors or the supervisory board, limited to the amount of expenses incur-r ed by these individuals in carrying out their duties
  • Interest paid to shareholders on loans if the amount of the loan does not exceed 50% of authorized capital, if the interest rate does not exceed 8% and if the share capital is fully paid up
  • Donations and subsidies paid to charities and organizations es tablished for the public good that are engaged in philanthropic, educational, scientific, social or cultural activities, up to a maxi­mum deduction of 0.2% of gross turnover
  • Amounts paid to social funds established for employees in ac – cordance with the law
  • Gifts and meal expenses, up to a maximum deduction of the lower of 1% of annual gross income or TND20,000

Inventories. Inventories are valued at cost.

Provisions. Doubtful debts of up to TND100 (TND500 for banks) per debtor are deductible if they were due at least one year prior to the date on which they were written off and if the company has had no further business relationship with the debtor.

The following provisions are deductible, up to a maximum deduc­tion of 50% of taxable income:

  • Reserves for doubtful debts for which recovery is being pursued in the courts
  • Provisions for finished goods
  • Provisions for depreciation of shares of listed companies

Banks may deduct bad debt provisions from their tax base with­out any limit. This deduction can result in a tax loss.

Tax depreciation. Under the Tunisian Tax Code, depreciation must be computed using the straight-line method. Depreciation is de-duc tible only if it is recorded in the accounts.

The following are some of the standard rates of depreciation allowed in Tunisia.

Asset Rate (%)
Patents and trademarks 20
Capitalized research and development costs 20
Buildings 5
Office furniture and equipment 20
Equipment and machinery 15
Cars 20
Movable equipment 10/20
Engines 15/20/33.33
Ships 6.25
Computer hardware and software 33.33

For equipment other than transportation equipment, the deprecia­tion rates may be increased by 50% if the equipment is used at least 16 hours a day and may be doubled if it is used 24 hours a day.

The costs of setting up a business may be amortized at a rate of 33% if the costs are very high. Otherwise, 100% of the costs may be deducted in the year of expenditure. Assets worth less than TND200 are fully deductible in the year of acquisition.

Relief for losses. Losses may be carried forward five years, but may not be carried back. However, losses related to depreciation may be carried forward indefinitely.

Groups of companies. Tunisian law provides for the fiscal integra­tion of related parties equivalent to a consolidated filing position if certain conditions are satisfied.

Other significant taxes

The following table summarizes other significant taxes.

 

Nature of tax Rate
Value-added tax, on all transactions
carried on in Tunisia, including imports
Normal rate 18.00%
Other rates 6%/12%
Local tax (TCL); imposed on local turnover and exportations
Local turnover 0.20%
Exportations 0.10%
Professional training tax, on salaries, allowances and fringe benefits paid
by an employer
1%/2%
Housing tax (FOPROLOS); on salaries,
allowances and fringe benefits paid
by employers
1.00%
Social security contributions, on
employee’s annual salary; paid by
Employer 16.57%
Employee 9.18%
Registration duties
Work contracts TND20 per contract
Business contracts 0.5% of the contract value
Company formation TND20 per copy of the articles of association

Foreign-exchange controls

For companies wholly or partially owned by nonresidents, the re­mittance of benefits, dividends, attendance fees and interest pay­ments to nonresidents is guaranteed. Tunisian branches of foreign companies may freely remit their after-tax profits. Remit tances must be made through a registered intermediary, which is gener­ally a bank. Tunisian banks may obtain foreign loans not exceed­ing TND10 million a year. Tunisian companies other than banks may obtain foreign loans up to TND3 million per year.

 

Treaty withholding tax rates

Dividends (t) Interest Royalties
% % %
Algeria 20/30 15 15
Austria 20 (a) 10 10/15 (j)
Belgium 15 15 5/15/20 (b)(k)
Cameroon 12 15 15
Canada 15 15 15/20 (b)(l)
China 8 10 5/10 (aa)
Czech Republic 10/15 (bb) 12 5/15 (cc)
Denmark 15 12 15
Egypt 10 15
Ethiopia 5 10 5
France 12 0/5/15/20 (b)(m)
Germany 15 (a) 10 10/15 (n)
Indonesia 12 12 15
Iran 10 10 8
Italy 15 12 5/12/16 (o)
Jordan – (c) – (x) – (y)
Korea (South) 12 15
Kuwait 10 2.5/10 (u) 5
Lebanon 5 5 5
Luxembourg 10 10 12
Mali 0/5 (dd) 5 10
Malta 10 12 12

 

Mauritius   0 2.5 2.5
Morocco   – (c) – (i) 15
Netherlands   20 (v) 10 7.5/11
Norway   20 12 5/15/20 (b)(p)
Pakistan   10 13 10
Poland   5/10 (ee) 12 12
Portugal   15 15 10
Qatar   0 – (x) 5
Romania   12 10 12
Saudi Arabia   5 5 5
Senegal   – (c) 15  
    Serbia 10 10 10
South Africa   10 5/12 (z) 10/12
Spain   15 (d) 10 10
Sudan   0/5 (dd) 10 5
Syria   0 10 18
Sweden   20 (e) 12 5/15 (q)
Switzerland   10 10 10
Turkey   15 (f) 10 10
United Arab        
Emirates   0 2.5/10 (u) 7.5
United Kingdom   20 (g) 10/12 (s) 15
United States   20 (h) 15 10/15 (r)
Yemen   0 10 7.5
Non-treaty countries   5 20 (u) 15 (w)(ff)

a) The rate is 10% if the recipient is a company that holds at least 25% of the capital of the payer.

b) Tunisia applies a 15% rate instead of the highest rate.

c) Dividends are taxed at the domestic rate of the country from which the dividends originate.

d) The rate is 5% if the beneficial owner of the dividends is a company that holds directly at least 50% of the capital of the payer.

e) The rate is 15% if the recipient is a company that owns at least 25% of the capital of the payer.

f) The rate is 12% if the recipient is a company that owns at least 25% of the capital of the payer.

g) The rate is 12% if the beneficial owner is a company that controls directly at least 25% of the voting power of the payer.

h) The rate is 14% if the recipient is a company that owns at least 25% of the capital of the payer.

i) Taxed at the domestic rate of the country of domicile of the recipient.

j) The 10% rate applies to royalties paid for the use of or right to use copyrights of literary, scientific or artistic works, but not including cinematographic and television films. The 15% rate applies to royalties paid for the use of or right to use the following:

  • Technical and economic studies
  • Cinematographic and television films
  • Patents, trademarks, designs and models, plans, and secret formulas and processes
  • Industrial, commercial and scientific equipment
  • Information concerning agricultural, industrial, commercial or scientific experience

k) The 5% rate applies to royalties paid for the use of or right to use copyrights of literary, scientific or artistic works. The 15% rate applies to royalties or other amounts paid for the use of or right to use the following:

  • Patents, designs and models, plans, and secret formulas and processes
  • Information relating to industrial, commercial or scientific experience
  • Technical and economic studies
  • Technical assistance relating to the use of the items mentioned above

The 20% rate applies to royalties or other amounts paid for the use of or right to use trademarks, cinematographic and television films, and agricultural, industrial, harbor, commercial or scientific equipment.

l) The 20% rate applies to royalties paid for the use of or right to use trade­marks, cinematographic and television films or videotapes for television, and industrial, harbor, commercial or scientific equipment. The 15% rate applies to other royalties.

m) The 0% rate applies to amounts paid to a public body of the other contracting state for the use of cinematographic films or radio and television broadcasts. The 5% rate applies to royalties paid for the use of or right to use copyrights of literary, scientific or artistic works, but not including cinematographic and television films. The 15% rate applies to royalties or other amounts paid for the use of the following:

  • Patents, designs and models, plans, and secret formulas and processes
  • Information relating to industrial, commercial or scientific experience
  • Technical and economic studies

The 20% rate applies to royalties or other amounts paid for the use of or right to use trademarks, cinematographic and television films, and agricultural, industrial, harbor, commercial or scientific equipment.

n) The 10% rate applies to royalties or other amounts paid for the use of or right to use the following:

  • Copyrights of literary, scientific or artistic works, but not including cine­matographic and television films
  • Information concerning agricultural, industrial, commercial or scientific experience
  • Economic and technical studies

The 15% rate applies to royalties paid to use patents, trademarks, designs and models, plans, secret formulas and processes, and cinematographic and tele­vision films.

o) The 5% rate applies to royalties relating to literary, scientific or artistic works. The 16% rate applies to royalties relating to trademarks, cinematographic and television films, or industrial, commercial or scientific equipment. The 12% rate applies to other royalties.

p) The 5% rate applies to royalties paid for the use of or right to use copyrights of literary, scientific or artistic works, but not including cinematographic and television films. The 15% rate applies to royalties or other amounts paid for the use of patents, designs and models, plans, and secret formulas and pro­cesses; information relating to industrial, commercial or scientific exper­ience; or technical or economic studies. The 20% rate applies to royalties or other amounts paid for the use of or the right to use trademarks; cinemato­graphic and television films; and agricultural, industrial, harbor, commercial or scientific equipment.

q) The 5% rate applies to royalties paid for the use of or right to use copyrights of literary, scientific or artistic works, not including motion picture and tele vision films. The 15% rate applies to other royalties.

r) The 10% rate applies to royalties paid for the use of or the right to use indus­trial, commercial or scientific equipment, or to remuneration for the perfor­mance of accessory technical assistance for the use of property or rights described above, to the extent such technical assistance is performed in the contracting state where the payment for the property or right has its source. The 15% rate applies to royalties or other amounts paid for the use of or right to use copyrights of literary, artistic and scientific works, including cinematographic and television films and videotapes used in television broadcasts; patents, trademarks, designs and models, plans, and secret formulas and processes; and information relating to industrial, commercial or scientific experience.

s) The 10% rate applies if the beneficial owner of the interest is a bank or other financial institution. The 12% rate applies to other interest.

t) Under Tunisian domestic law, dividends are not subject to tax. Conse quently, withholding tax is not imposed on dividends paid from Tunisia to other countries.

u) A 5% rate applies to interest paid to banks.

v) The rate is 0% if the beneficiary of the dividends owns at least 10% of the payer.

w) For further details, see Section B.

x) Interest is taxed at the domestic rate of the country from which the interest originates.

y) Royalties are taxed at the domestic rate of the country from which the royal­ties originate.

z) The 5% rate applies to interest paid to banks.

(aa) The 5% rate applies to payments for technical and economic studies as well as for technical assistance.

(bb) The 10% rate applies if the beneficial owner of the dividends is a company that holds directly at least 25% of the capital of the payer.

(cc) The 5% rate applies to royalties paid for the use of, or the right to use, copyrights of literary, scientific or artistic works including cinematographic and television films. The 15% rate applies to royalties or other amounts paid for the following:

  • The use of patents, designs and models, plans, and secret formulas and processes
  • Information relating to industrial, commercial or scientific experience
  • Technical or economic studies
  • Technical assistance
  • The use of, or the right to use, trademarks and industrial, commercial or scientific equipment

(dd) Dividends are exempt from tax if the beneficial owner of the dividends is a company that holds at least 25% of the capital of the payer.

(ee) The 5% rate applies if the beneficial owner of the dividends is a company that holds directly at least 25% of the capital of the payer.

(ff) This rate is 25% if the beneficiary is resident in a jurisdiction listed as a tax-haven country in a decree. The tax-haven list includes the following jurisdictions.

Anguilla                       Dominica                St. Kitts and Nevis

Antigua and Barbuda       Gibraltar                 St. Lucia

Aruba                           Grenada                  St. Martin

Barbados                       Guernsey                 St. Vincent and the

Belize                           Jersey                     Grenadines

Bermuda                       Liberia                    Samoa

British Virgin Islands      Marshall Islands       Sint Maarten

Cayman Islands              Montserrat               Samoa

Curaçao                        Nauru                     Turks and Caicos Islands

Cook Islands                 Niue                       Uruguay

Costa Rica                    Panama                   Vanuatu

Delaware (United         Philippines
States)