Tunisia Business Incentives
Entered into force in January 1994, the Investment Incentives Code is the law that governs both national and foreign investment. It confirms the freedom to invest in most fields and reinforces the Tunisian economy openness to the global world.
Businesses governed by the Investment Code
The Investment Incentives Code covers all businesses except mining, energy, local trade and finance, which are governed by specific texts.
For given businesses, investment is achieved upon simple declaration, while others require prior authorization.
Simple declaration
Manufacturing industries
Agriculture
Food industry
Some fully-exporting services and industry-related services
Public works
Subject to authorization
Fishing
Tourism
Transport and communication
Health
Real-estate development
Film production
Vocational training
Education and teaching
Waste and refuse recycling and processing
Businesses governed by specific laws
There are two types of businesses not covered by the Investment Incentives Code:
- Businesses open to foreign investment but subject to authorization when it comes to operating conditions, no matter the status and nationality of the investor: banking business and investment companies.
- Businesses subject to authorization when foreign equity rate is equal to or exceeds 50%: inurance, brokerage, transport and merchant service business.
Foreign investment system
Foreign investment is free when it comes to a fully exporting business. Foreigners can own up to 100% of the project' equity without prior authorization.
- Some services fields other than fully exporting ones are subject to the Investment Higher Board authorization when foreign investment equity exceeds 50%.
- Agricultural land cultivation through leasing is possible by public limited companies which equity is at least 34% Tunisian-held. Foreign share can reach 66% for companies involved in land cultivation, fish farming and fishing.
Foreign portfolio investment
Non-resident foreigners can also freely purchase up to a maximum of 50% and without restriction the shares listed or unlisted Tunisian companies. Any purchase above this ceiling is subject to the approval of the Investment Higher Board.
The Administration has put in place a favourable environment for the stock exchange in regards to taxation. Interest, dividends and capital gains made by foreign investors in the Tunis stock market are not taxable and their repatriation meet no restriction.
Purchase of Tunisian securities
Foreign equity share With voting right or corporate shares <50% Free
> 50% Investment Higher Board
Without voting right (excluding debt securities) Free
Capital ownership
Capital ownership
Businesses free from authorization 100%
Manufacturing industries
Tourism
Fully-exporting services
Industry-related services
Businesses subject to authorization
< 50%
Some local market-oriented services
with foreign equity share exceeding 50%
Agriculture 66%
Fishing 66%
Fish farming
Fishing
Share purchases 50%
Tunisian operating companies
Capital transfer free
Foreign investors are free to repatriate
profits and invested capital asset disposal
deriving from income, in hard currency
Investment incentives
Common incentive
- Tax relief on reinvested profits and income up to 35% of the income or profits subject to tax.
- Customs duties exemption for capital goods that have no locally-made counterparts.
- VAT limited to 10% on capital goods imports (1999 Finance Act provisions).
- Possibility to choose the reducing balance method of depreciation for production material and equipment which useful life exceeds 7 years.
Specific incentives
Advantages to fully-exporting companies
- Full tax exemption on exports-derived profits for the first 10 years and a 50% exemption from the 11th year for an unlimited period.
- Full exemption on reinvested profits and income.
- Duty free profits for capital goods including merchandise transport vehicles, raw materials, semi-finished products and services needed by the business.
- Possibility to sell 20% of the production on the local market.
Incentives and prioty zones
- Investment bonus of 15% of the investment value in incentives zones.
- Investment bonus of 25% of the investment value in priority zones.
Regional development
The Code grants advantages for investments carried-out in the encouragement zones' and in priority zones.
- Full tax exemption on profits for 10 years and a 50% tax base reduction for a new period of ten years.
- Full tax exemption on reinvested profits and income.
- Assumption by the State of the employer' contribution to the social security legal scheme, thus 16% of the payroll, during the first 5 years.
- Possibility that the State takes part to infrastructure expenses.
Promotion of agriculture
- Full tax exemption on reinvested profits and income.
- Full tax exemption for the 10 first years of operation.
- VAT suspended on imported capital goods that have no locally made similar counterparts.
- The State may take part to infrastructure expenses to develop areas meant for fish farming and for cultivations using geothermal water.
- 7% bonus on investment value.
- 8% additional bonus on investment value, that can be granted for agricultural investments achieved in hard-climate regions.
- 25% additional bonus on investment value for fishing projects in the north coastline ports.
Environment protection
The Code grants the following advantages to investments achieved by companies for environment protection and waste processing projects:
- 50% tax relief on reinvested profits and income.
- Profits and income charged at the reduced rate of 10%.
- 20% bonus on investment value.
- Suspended VAT on most capital goods.
Research and Development and Technology promotion
The Code introduces incentives for investments that control and develop technology through a local integration effort.
- 5-year full assumption by the State for social security contributions to recruit Tunisian university graduates.
- 5-year 50% social security contributions assumption by the State for companies to use a 2nd or a 3rd shift and that do not usually work around the clock.
Support investment
Education, training, cultural production, health and transport industries benefit from:
- The deduction of reinvested profits up to 50% of net profits subject to corporate tax.
- Reduced rate of 10% on income and profits.
- VAT suspension for imported capital goods having no similar locally-made counterparts.
