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Tunisia: a favourable legal and tax framework for foreign investments

In its international relations, Tunisia has always adopted a policy of openness and moderation. It attaches a particular importance to the development and strengthening of fruitful cooperation and works towards the establishment of a favorable framework for the development of foreign investment in Tunisia.

In order to meet these objectives, Tunisia has set a framework for the establishment of totally exporting services companies notably through the consecration of freedom of investment for foreign citizens (whether resident or non-resident), the choice to establish as a non-resident structures, the employment of foreigners, an advantageous tax incentive regime and fast and simplified procedures for company incorporation.

Tunisia: a favourable legal and tax framework for foreign investments

Available options for establishing a totally exporting service company in Tunisia

Under Tunisian law, a totally exporting service company is a company which is providing services abroad or in Tunisia for foreign use (Article 10 of the Investment Incentives Code “IIC“).

It should be noted that “totally exporting companies” can be either resident or non-resident companies. Indeed, the non-residence may be an option for totally exporting companies when their capital is held by non-residents (Tunisian or foreign), and by importing currencies representing at least 66% of the capital of the company.

Article 14 of the Investment Incentives Code provides in this sense that “totally exporting companies are considered as non-resident when their capital is held by Tunisian or foreign non-residents by importing convertible currency at least equal to 66% of the capital “(free translation).

It is important to note that if the proportion of capital coming from the import of currency is less than 66% or if the capital is made in Dinars, the company will be considered as a resident.

The advantages and disadvantages of a resident and non-resident company

It is important to note that totally exporting companies benefit from tax, foreign exchange and financial advantages.

Being a resident or a non-resident has a significant impact on foreign exchange regulations. Indeed, the non-resident companies enjoy total freedom in foreign exchange. The non-resident company is not submitted to foreign exchange regulations and to the Tunisian foreign trade. It may therefore receive funds and pay foreign beneficiaries without any limitations other than the common restrictions dealing with public policy (money laundering, weapons commerce and so forth).

By contrast, resident companies must comply with the rules of the Tunisian Exchange Regulations including conditions relating to foreign investment. The circular of the Tunisian Central Bank, which applies in this area, allows companies with foreign exchange earnings to support their export activities by investing abroad. However, these investments are subject to certain conditions. Indeed, companies can only transfer funds abroad if they already have a professional foreign currency account which has been credited through international commerce transactions, which is almost impossible for a new company that has not started working yet[1]. 

It is true that the regulation provides a possibility of transfer without going through the professional foreign currency account, but it is still necessary for the company to have already worked and achieved a turnover of foreign exchange under the previous year. Indeed, the amounts that exporting resident companies can transfer, to support their exports, are determined by taking into account their turnover in foreign currencies (as reported to the tax authorities and in accordance with a table prepared by the Central Bank). It follows that if the choice was to focus on a resident totally exporting company, we have to take consideration of the fact that the company cannot, upon its creation, invest and have assets outside the Tunisian territory.

With regards to the question of repatriation of dividends or liquidation, the resident company is obligated to repatriate the entire amount derived as remuneration for services rendered and in general of all income realized abroad.

The non-resident company, meanwhile, is not obligated to repatriate the proceeds of their export activities. However, it must comply with all regulations such as the payment for goods and services in Tunisia, duties and taxes and dividends distributed to resident partners, through foreign currency accounts or convertible dinars.

It is appropriate to note that totally exporting companies can freely import the goods necessary for the exercise of their activities, simply by depositing a customs declaration. However, such importation does not seem crucial for a service company, as it is the case with totally exporting companies.

Finally, concerning the choice of the legal form of the company, it should be noted that the exercise of the activity of providing service may be in the form of a limited liability company (SARL) or a joint stock company (SA) as regulated by the Tunisian Commercial Companies Code.

Regime applicable to foreign employees

It is important to note that Tunisian law and more specifically the Investment Incentives Code authorizes totally exporting companies to hire agents, directors and supervisors of foreign nationality within a limit of four (04) persons for each company. Such contracts, shall only be declared to the Ministry of employment and do not need to be authorized.

Beyond this limit, companies must comply with a “program of recruitment and tunisification” previously approved by the Ministry of Vocational Training and Employment (as defined by Decree No. 94-79 of January 17, 1994 laying down the procedures for the recruitment of directors, supervisors and agents of foreign nationality by totally exporting companies (hereinafter the “Decree“).

For this purpose, the company is required to submit a file containing:

  • The overall size of the company and its distribution by professional categories;
  • The description of the functions occupied by the four (04) agents, directors and supervisors of foreign nationality whose recruitment is not subject to the approval of the Ministry;
  • The number and description of the job vacancies, agents, directors and supervisors of foreign nationality during the recruitment is required, as well as the professional skills of these agents;
  • The assistants of these foreign agents, directors and supervisors must be Tunisian citizens;
  • The duration, the internship and the proposed compensation for the Tunisian assistants are required;
  • The target date for the replacement of the foreign agents, directors and supervisors by Tunisian citizens.

It should be noted that under Article 3 of the Decree, the decision of approval or refusal is notified to the company within a maximum of fifteen (15) days from the date of submission to Ministry of Training and Employment.

Any hiring of a foreign employee, made by the company under the approved program, must be subject to a contract of employment in accordance with the laws and regulations.

It is appropriate to specify that the non compliance by the company of the provisions of the “tunisification”program may lead to the rejection of any new application that the company could present for the establishment or renewal of a labor contract for a foreign employee.

This exception to the general labour law could be advantageous, especially as the foreign managers, recruited by a company in accordance with the conditions set out above, benefit from a presumptive taxation on their income at a favourable rate of 20% on the gross salary. The foreign employee also benefits from exemption from custom duties and charges having equivalent effect and taxes due to the importation of personal effects and a passenger vehicle for each person (Article 19 of the Incentive Investment Code).

The duration of the work permit of foreign employees

Regarding the duration of the work permit for foreign employees in Tunisia, a distinction must be drawn between the four (04) employees who may be freely recruited and the other foreign personnel:

  • There is no limitation for the first category;
  • Whereas foreign employees governed by the common regime are generally authorized to work in Tunisia for a one year period which can be renewed, provided that their situation complies with the aforesaid restrictive rules.

Regarding health insurance / other similar contributions

As a general rule, totally exporting companies have to pay the employer’s contribution to the social security system. However, foreign employees, with the status of non-resident prior to their employment by the company, may opt for a social security system other than the Tunisian regime. In this case, the employee and the employer are not required to pay contributions in Tunisia[2].  In other words, as far as foreign employees are covered abroad prior to their recruitment in Tunisia by a foreign regime of social security, they are allowed to continue under the same system.

The costs and duration of the incorporation of the company

In Tunisia, totally exporting companies are exempted from registration fees for their bylaws and accessory acts.

Small fees are however due for administrative formalities in connection with the formation of the company.

It should be also noted that the Tunisian law does not impose a minimum capital for the establishment of the company in the form of a limited liability company. However, the minimum capital of the limited company may not be less than 5000 dinars.

Finally, the incorporation of the company shall not exceed, in principle, two (02) weeks for a Limited Liability Company and three (03) weeks for a Limited Company.

The tax treatment of totally exporting non-resident companies

Totally exporting companies enjoy exemption from duties and taxes which are normally due by companies conducting their activities within the domestic market. This exemption covers:

  • the exemption of customs duties, VAT and consumption tax due for the importation of equipment, raw materials, semi-products and products necessary for their business (except for passenger vehicles);
  • the suspension of VAT and possibly consumption duty payable on services, equipment, raw materials, semi-products and products purchased locally and necessary for its activity;
  • the exemption of other taxes and duties (registration fees and stamp duty etc..) not excluded by Article 12 of the Investment Incentives Code which provides that totally exporting companies are submitted, under their activities in Tunisia, to the payment of taxes, duties, taxes, levies and contributions following:
  •  Duties and taxes related to passenger vehicles;
  • The single tax compensation on road transportation;
  • Contributions to the statutory social security system for the staff (of Tunisian nationality) and subject to the specific rules provided by law for foreign employees (as specified above).

It is important to emphasise that the law n °2013-54 of 30 December 2013 on the finance law for 2014, brought major changes to the taxation of non-residents and submits the totally exporting companies to:

  • Taxation, under the corporate income tax, at a reduced rate of 10% on profits.
  • The submission of turnover coming from export tax for the benefit of local authorities at a rate of 0.1%.
  • A 5% taxation on not reinvested incomes.

Other key considerations

It should be noted that the exercise of the activity of the company under the totally exporting regime is subject to certain conditions including the filing of a declaration of investment to the relevant departments of the Agency for the Promotion of Industry (API).

In view of this declaration, API delivers to the company a certificate of deposit declaration containing all the information related to the investment project. The beneficiaries of this regime are required to start the investment project within a period of one year as of the date of the certificate of deposit of the declaration of investment.

It is important to specify that the exercise of the activity of the company, under the totally exporting regime, is subject to inspection by the competent administrative services for checking compliance of the activity with the declarations. They are also subject to permanent customs supervision.

Tunisia: a favourable legal and tax framework for foreign investments
Youssef Knani is a lawyer at the Tunisian bar and Law Professor at Faculté des Sciences Juridiques, Politiques et Sociales de Tunis.

Boussayene Knani Houerbi works in close collaboration with leading business law firms in Europe and the Middle East. It is also the Tunisian member of the African law firms’network LEX Africa.


[1] Unless the company is fuelling its professional foreign currency account with a foreign currency loan contracted in accordance with the foreign exchange regulations in force.

[2] Article 12.5 of IIC


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