Tunisia Personal Income Tax

All resident individuals in Tunisia must pay income tax on all benefits or income received (worldwide income and benefits). Nonresident individuals are taxed on Tunisian-source income. They are subject to a final withholding tax of 15% (or 25% for residents of tax havens) on such income except for sala­ries, which are taxed according to the scale set forth in Rates, or at a flat tax rate of 20% if employees stay in Tunisia less than six months.

Subject to the provisions of double tax treaties, individuals are considered tax residents if they meet any of the following condi­tions:

  • They maintain their principal home in Tunisia.
  • They are present in Tunisia for at least 183 days during the year.
  • They are civil servants or state officials performing their duties or assignments in a foreign country, and they are not subject to personal tax on their global income in the foreign country.

Income subject to tax. The taxation of various types of income is described below.

Employment income. Taxable employment income includes total compensation after deducting the employee’s social contributions and personal deductions and allowances.

Self-employment and business income. Self-employed individu­als are divided into three categories for tax purposes, depending on the nature of their activities. They may be taxed on income from commercial and industrial activities, on income from pro­fessional activities or on income from agricultural and fishing activities.

Investment income. Dividends in Tunisia are subject to a final withholding tax of 5% (or 25% for individuals who are residents of tax havens). Individuals who receive an annual total dividend of less than TND10,000 can deduct the withholding tax on dividends. Interest payments are subject to a final withholding tax of 20% (or 25% for individuals who are residents of tax havens).

Revenues derived from betting games of chance and lottery. Revenues derived from betting games of chance and lottery are included in the category of other/miscellaneous revenues. Revenues derived from betting games of chance and lottery are subject to personal income tax through a withholding tax at a rate of 25% when the revenues are received in cash.

Exempt income. Certain types of income are exempt from tax, such as rental income from property that houses students, interest paid with respect to home purchase savings plans and interest on deposits and securities in foreign currency or convertible dinars.

Capital gains. Capital gains derived from shares are taxable at a rate of 10%, with an annual deduction of TND10,000. For non­resident persons, capital gains derived from the sale of shares are subject to withholding tax of 10%, which cannot exceed 2.5% of the disposal price of the shares.

Capital gains derived from the sale of buildings and land are subject to tax at a rate of 15% if the asset retention period is five years or less or 10% if the retention period is more than five years. Capital gains derived from the sale of buildings and land are subject to withholding tax of 2.5%.

Some exemptions apply to capital gains derived from the sale of shares (for example, shares listed on the stock exchange of Tunis) and to capital gains derived from the sale of buildings and land (for example, the transfer of ownership made to a spouse, ascen­dant or descendant, or the first transfer of ownership of building and land used for residential purposes, with a total area not exceeding 1,000 square meters, including all annexes, built or not built).

Taxation of employer-provided stock options. Under the common regime, options are taxed at the time of exercise on the difference between the exercise price and the fair market value of the stock. The benefit is subject to both income tax and social security contributions.

However, a specific exemption from the taxation described above is granted concerning the surplus value generated by employees as a result of the vesting of the subscription option with respect to the capital of companies whose shares are listed on the stock exchange of Tunis or companies that operate in the information technology, communication technology and modern technology sectors, subject to certain strict conditions.

Deductions

Deductible expenses. The following expenses are deductible:

  • Employees may deduct the required amounts withheld by the employer for mandatory contributions to annuities, pensions, retirement funds and social security schemes.
  • Individuals may deduct professional expenses equal to 10% of the balance of income after the deduction of mandatory contri­butions to annuities, pensions, retirement funds or social secu­rity schemes.
  • Tax residents of Tunisia benefiting from foreign-source pen­sions, annuities or retirement funds may deduct 25% of such items from taxable income if they do not repatriate the income. This rate is increased to 80% for pensions, annuities or retire­ment funds repatriated into Tunisia.

Personal deductions and allowances. The following personal deductions are granted:

  • Mandatory arrears and annuities paid free of charge
  • Premiums from certain life insurance and capitalization poli­cies
  • Interest received by the taxpayer for special savings accounts, limited to an annual amount of TND1,500
  • TND150 for heads of families, in addition to TND90 for the first child, TND75 for the second, TND60 for the third, TND45 for the fourth, TND1,200 for disabled children and TND1,000 for children pursuing their studies at a university without any scholarship, plus 5% of net income per dependent parent, up to a combined maximum of TND150
  • Principal and interest paid on university loans
  • Interest paid on loans to acquire or build social houses (houses related to a specific project implemented by the Tunisian gov­ernment to help people with low revenues to finance the con­struction or acquisition of houses; the fund financing such operations is Fonds de Promotion du Logement pour les Salariés)
  • Contributions paid to social security funds by independent self-employed individuals
  • Interest and fees paid on loans for the acquisition or construc­tion of single housing if the cost of acquisition or construction does not exceed TND200,000 (applicable to amounts due from 1 January 2016; not applicable to persons who already own a home on the date of acquisition or construction)

Rates. Income tax is levied on residents at the following rates.

Taxable income:

Exceeding Not exceeding Tax on lower amount Rate on excess
TND TND TND %
0 1500 0 0
1500 5000 0 15
5000 10000 525 20
10000 20000 1525 25
20000 50000 4025 30
50000 13025 35

Under the complementary financial law for 2015, the following were set as the income tax rates, effective from 1 January 2016 (however, see the paragraph after the table).

Taxable income:

Exceeding Not exceeding Tax on lower amount Rate on excess
TND TND TND %
0 5000 0 0
5000 10000 0 20
10000 20000 1000 25
20000 50000 3500 30
50000 12500 35

After the adoption of the financial law for 2016, the applicability of the above personal income tax rates has been postponed to a future date that has not yet been fixed.

If any employee has an annual taxable income of less than TND5,000, no tax is due.

Employees working in Tunisia for less than six continuous or non-continuous months in a calendar year can be taxed at a flat rate of 20% on their gross salaries from Tunisian sources.

Some expatriates engaged in oil and gas activities, in mining activities, or in activities with offshore banks or with companies wholly engaged in exports can benefit from flat-rate taxation of 20% on gross salaries even if their work period exceeds six months.

Until 31 December 2015, a royalty for the compensation fund was due from resident individuals whose net total annual reve­nues exceed TND20,000. The royalty equals 1% of the revenues, net of personal income tax. The compensation fund is a fund implemented by the Tunisian government to finance the gap with respect to subsidized products (for example, bread, flour and sugar).

Estate and gift taxes

Heirs or legatees must file and register a declaration of inherited property within one year following the decedent’s death.

Gifts must be recorded within 60 days after the date of the gift.

The following are the rates of tax on gifts and inheritances:

  • 5% between ascendants and descendants and between spouses
  • 5% between brothers and sisters
  • 25% between uncles or aunts, nephews and nieces, great uncles and great aunts and little nephews (sons of the brother’s [or sister’s] son or daughter) or little nieces (daughters of the brother’s [or sister’s] son or daughter) and between cousins

In addition to the registration duties mentioned above, a fee for real estate conservation is due at a rate of 1%.

In certain cases, donations of goods between ascendants and descendants and between spouses, including bare ownership and usufruct rights donations of real property, are registered at a fixed fee of TND20 per donation.

Social security

Employees pay social security contributions on their salaries at a rate of 9.18%. The total rate for contributions paid by the employer is 16.57%. No ceiling applies to the amount of wages subject to social security contributions. In addition, employers must pay a work accident contribution. The rate varies from 0.5% to 5.2%, depending on the nature of the activities.

Tax filing and payment procedures

For individuals with a habitual residence in Tunisia, income tax is due on 1 January of each year on all benefits or income realized over the previous year.

The deadline for filing the tax return is 25 February for indi viduals realizing income on shares and 5 December for employees or individuals benefiting from pensions or life annuities.

The general taxation method is the withholding of tax by employ­ers. Employers must calculate the income tax and deduct it from the monthly gross salary.

Some exceptions exist for expatriates whose salaries are paid abroad. Such employees pay tax through self-withholding and make a filing each month.

Tax withheld by employers and tax self-withheld by employees are deducted from the annual tax due.

Double tax relief and tax treaties

Tunisia has entered into double tax treaties with the following jurisdictions.

Austria                            Jordan                          Senegal

Belgium                           Korea (South)              Serbia

Burkina Faso                   Kuwait                         South Africa

Cameroon                        Lebanon                       Spain

Canada                            Luxembourg                Sudan

China                               Mali                             Sweden

Czech Republic               Malta                            Switzerland

Denmark                         Mauritius                     Syria

Egypt                               Netherlands                  Turkey

Ethiopia                           Norway                        Union of the

France                             Oman                           Arab Maghreb

Germany                         Pakistan                       United Arab

Greece                             Poland                          Emirates

Hungary                          Portugal                       United Kingdom

Indonesia                         Qatar                            United States

Iran                                  Romania                       Vietnam

Italy                                 Saudi Arabia                Yemen

These treaties generally stipulate that wages and compensation are taxed in the state where the activity is performed. Dividends and interest are taxed differently, depending on whether the source is Tunisian or foreign.

Entry visas

Tunisia issues the following documents to foreign nationals:

  • Entry visas for stays of less than three months
  • Work permits
  • Residence permits, which often require applicants to first possess work permits

The requirements for entering, working and residing in the country depend on the nationality of the foreign national. Nationals of European Union (EU) countries, Canada and the United States are not required to obtain entry visas to visit Tunisia. Nationals of France and the Union of the Arab Maghreb (Union du Maghreb Arabe, or UMA) may enjoy certain special work and residence privileges.

Foreign nationals must obtain entry visas from Tunisian embassies or consulates for stays of less than three months.

Residence permits

Foreign nationals intending to stay in Tunisia for longer than three months must apply to the Ministry of the Interior for residence permits (cartes de séjour). Residence permits are usually granted to foreign nationals who obtain work permits (see Section H). A residence permit is valid for one year and may be renewed after an employee secures a renewed work permit.

Work permits and self-employment

Foreign nationals wishing to work in Tunisia must obtain work permits before beginning employment. The Ministry of Training and Employment requires specific documentation before permit­ting a foreign national to work in Tunisia. The ministry ensures that all employment opportunities are made available to Tunisian citizens before offering employment to foreign workers.

A foreign national wishing to practice a salaried professional activ­ity in Tunisia must apply for work permit through his or her local employer. The employee must also provide a résumé and any diplomas and transcripts certifying his or her qualifications. The ministry requires a certificate attesting that a local Tunisian with similar qualifications was not available.

Work permits issued by the ministry have specific expiration dates. The work permit period may not exceed two years. To renew the work permit, the employer must again seek approval from the ministry by justifying the need to hire a foreign worker.

Tunisian employers are prohibited from recruiting foreign em­ployees whose employment was not authorized by the Ministry of Training and Employment and have not obtained residence permits. An employer is also prohibited from recruiting a for­eign worker whose employment contract with a prior employer has not yet expired. Employers must notify the ministry of the departure of every foreign worker from their company.

Exemptions. The following foreign nationals are exempt from obtaining a work permit, subject to reciprocal treatment:

  • Nationals of the UMA
  • Foreign workers born and living permanently in Tunisia.

Simplified procedure. Employees of the following employers ben­efit from a simplified procedure for their work permits:

  • Offshore banks and financial companies working with nonresi­dents. These companies may recruit foreign managers and staff and must notify the Central Bank of Tunisia of such recruit­ment.
  • Petroleum companies specializing in research and production of hydrocarbons. These companies are allowed to recruit for­eign managerial staff for exploration work.
  • Companies wholly engaged in exports. These companies may recruit up to four managers and executives of foreign national­ity for each activity after advising the Ministry of Training and Employment. Beyond this limit, projects must comply with a “nationalization” program, which specifies deadlines for the replacement of foreign personnel by Tunisian nationals.

For the cases described in this section, employers must report recruitment of foreign nationals to the Ministry of Training and Employment. The ministry delivers an exemption certificate for each notification.

French citizens. French citizens who have resided in Tunisia for at least three years following the date of the Tunisia/France Resi­dence and Work Treaty (17 March 1988) may automatically obtain residence and work permits valid for 10 years. The work permits allow French citizens to perform any kind of salaried work in Tunisia. French citizens who have been married to Tunisian citi­zens for one year are also eligible for residence permits and work permits valid for 10 years. French spouses and minor children of holders of 10-year residence and work permits may benefit from the same advantages.

Family and personal considerations

Family members. The spouse and dependent children of a foreign national may accompany the worker to Tunisia. However, they are generally not permitted to work in Tunisia unless they qualify independently for work permits (see Section H for exceptions).

Driver’s permits. A foreign national may drive legally in Tunisia with a home country driver’s license for three months.

Tunisia does not have driver’s license reciprocity with other countries.