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Tunisia investment incentives code
The present code fixes the system governing the creation of projects and incentives for investments made in Tunisia by Tunisian or foreign promoters, whether resident or otherwise, or promoters involved in partnerships which comply with the overall development strategy aimed in particular at accelerating the rate of growth and the creation of jobs in activities in the following sectors. - Agriculture and fisheries, - Manufacturing industries, - Public works, - Tourism, - Handicrafts, - Transport, - Education and teaching, - Professional training, - Cultural production and industries, - Promotion for young people and children's education, - Health - Environmental protection, - Property promotion, - Other non-financial activities and services. The list of activities included in the above-mentioned sectors is fixed by decree. Investments in the activities envisaged in Article 1 of the present code are made freely provided they fulfil the conditions applicable to the exercise of those activities according to current legislation and regulations. Investment projects are the subject of a declaration presented to the services concerned by the activity. Those services must issue an acknowledgement that the declaration has been presented. The competent services and the content of the declaration required will be specified by the decree mentioned in Article 1 of the present code. Investments made in certain activities, as well as those made in the other activities fixed by decree, remain subject to prior authorisation by the competent services in accordance with the conditions and regulations envisaged by the specific laws governing them. Resident or non-resident foreigners are free to invest in projects realised in the framework of the present code. However, the participation of foreigners in certain activities of services/not wholly engaged in export, the list of which is fixed by decree, remains subject to approval by the Higher Investment Commission envisaged by Article 52 of the present code if that participation exceeds 50% of the company's capital. Foreigners can invest in the agricultural sector in the framework of the working of rented agricultural land. However, in no case may such investments involve the appropriation of agricultural land by foreigners. The incentives envisaged by the present code are agreed in the form of communal incentives and specific incentives. Article 5: The provisions of the present code apply to investment operations concerning the creation, extension, renewal, redevelopment or transformation of activities. Except for investments in activities wholly concerned with exports, the benefit of the incentives envisaged by the present code necessitates setting up an investment financing plan comprising a minimum rate of share capital fixed by decree.
1. Subject to the provisions of Articles 12 and 12 bis of Law n°89-114 of 30th December 1989 promulgating the code governing income tax on natural persons and companies tax, those natural persons or legal entities which subscribe to the initial capital or capital increase of companies involved in the activities listed in Article 1 of the present code will be entitled to the deduction of the income or profits they re-invest, up to the limit of 35% of the net income or profits liable to income tax on natural persons or to companies tax. Entitlement to the above-mentioned benefit is subject to: - Keeping proper accounts according to the corporate accounting system, for both companies and people exercising a commercial or non-commercial activity as defined by code governing income tax on natural persons and companies tax; - The issue of new company participations or shares; - No reductions in the capital for a period of 5 years after 1st January of they e a r following the year when the subscribed capital was paid up, except in the case of capital reduction for the re-absorption of losses; - Presentation, when the beneficiaries of the deduction make their statement of income for the purpose of income tax on natural persons or for companies’ tax, of a declaration that the subscribed capital has been paid up, or of any other equivalent document. 2. Subject to the provisions of Article 12 of Law n°89-114 of 30th December 1989 issuing the Code governing income tax on natural persons and companies tax, the deduction envisaged in the first paragraph of the present article will be enjoyed by companies which invest all or part of their profits in those same companies provided they fulfil the following conditions: - Re-invested profits must be entered in a "special investment account" on the liabilities side of the balance sheet and incorporated into the company's capital before expiry of the time limit for presenting the definitive declaration of profits for the year during which the deduction was made; - The companies tax declaration must be accompanied by the programme of the investments to be made; - The assets acquired in the framework of the investment must not be transferred for at least one year from the date they were actually put into production; - The capital must not be reduced during the five years following the incorporation of the profits and income invested, except in the case of reduction for re-absorption of losses. Companies can opt for the reducing balance depreciation system for production material and equipment which is expected to last more than seven years according to the linear depreciation method envisaged by the Code governing income tax on natural persons and companies’ tax, excluding office furniture and equipment. This provision applies to equipment acquired after the present Code is issued. The following benefits apply to the equipment necessary for realising investments, except for passenger cars: 1. A 10% reduction in customs duties and the suspension of taxes Wit11 an equivalent effect and the suspension of value added tax and consUl11ption duty due on imports, provided that the equipment concerned has no locally manufactured equivalent; 2. Suspension of value added tax and consumption duty for equipment manufactured locally; The equipment eligible for these incentives is fixed by decree.
Chapter 1: System governing entities wholly engaged in export Considered as being wholly engaged in export are companies whose production is wholly intended for foreign countries or companies rendering services abroad or in Tunisia for use abroad. Also considered as being wholly engaged in export are companies working exclusively with the companies mentioned in the first paragraph of the present article, with companies established in economic free zones such as those envisaged by Law n°92-81 of 3rd August 1992, and with banking and financial entities working mainly with non-residents as envisaged by Law n°85-108 of 6th December 1985 comprising encouragement to banking and financial entities working mainly with non-residents. Companies wholly engaged in export are subject to the free zone system as defined by the Customs Code. Only the following taxes, duties, deductions and contributions are payable by companies wholly engaged in export by virtue of their activities in Tunisia: 1. Taxes and duties relating to passenger cars; 2. The single compensation tax on road transport; 3. Maintenance and sanitation taxes; 4. Taxes and duties collected by virtue of services rendered directly in compliance with current legislation; 5. Contributions and subscriptions to the legal social security system, subject to the provisions of Articles 25, 43 and 45 of the present Code. However, before they are recruited by the company, non-resident foreigners can, at the time they are recruited, opt for a non-Tunisian social security system. In that case, neither the employee nor the employer is obliged to pay subscriptions and contributions to the Tunisian social security system; 6. Income tax on natural persons after deduction of 50% of the income originating from export, subject to the provisions of Article 17 of the present Code. However, and on presentation of an application when presenting the annual income-tax declaration, income originating from exports is wholly deducted from the taxable basis for that tax for the first ten years following the first export operation and notwithstanding the provisions of Article 12 bis of Law n°89-114 of 30th December 1989 promulgating the Code governing income tax on natural persons and companies tax; 7. Companies tax after deduction of 50% of the profits originating from exports, subject to the provisions of Article 17 of the present Code. However, and on presentation of an application when the annual companies tax declaration is presented, the profits originating from export are wholly deducted from the taxable basis for the first ten years from the first export operation, notwithstanding the provisions of Article 12 of Law n°89-114 of 30th December 1989 promulgating the Code for income tax on natural persons and companies tax. 1. Subject to the provisions of Articles 12 and 12 bis of Law n° 89-114 of 30th December 1989 promulgating the Code for income tax on natural persons and companies tax, subscriptions to the initial capital of entities wholly engaged in exports or to its increase allow the deduction of the incomes or profits invested from the net incomes or profits liable to income tax on natural persons or companies tax. 2. Subject to the provisions of Article 12 of Law n°89-114 of 30th December 1989 mentioned in the present article, investments made by companies wholly engaged in export allow the deduction of the profits invested in the company itself from the net profit liable to companies’ tax. Entitlement to the benefits envisaged by the two preceding paragraphs of the present article is subject to adherence to the conditions envisaged by Article 7 of the present Code. Companies wholly engaged in export are considered to be non-resident when their capital is held by Tunisian or foreign non-residents through the import of convertible foreign currency equal to at least 66% of the capital. Companies wholly engaged in export can freely import the goods necessary for their production subject to making a customs declaration which takes the place of a customs bond note. Subject to the provisions of Article 17 of the present Code, companies wholly engaged in export can be authorised to make sales or to render services in Tunisia concerning part of their own production within the limit of proportions which will be determined by decree, depending on the activities and products concerned. In no case may those proportions exceed a maximum of 20% of their turnover. Agricultural and fisheries companies are considered as being wholly engaged in export activities if they export at least 70% of their production, and are entitled to dispose of the remainder on the local market. Sales made and services rendered on the local market by the companies covered in Article 16 of the present code are subject to the foreign trade procedures and regulations. Those sales are also subject to the payment of customs duties envisaged by Articles 10 and 11 of the agreement establishing an association between the Tunisian Republic on the one hand and the European Community and hits States members on the other hand, and the payment of other taxes on imports. When paying customs duties on the proportions marketed locally, these operations give rise to payment of an advance on the tax due on incomes or profits originating from sales made and services rendered on the local market. This advance is fixed at 2.5% of the overall turnover originating from sales on the local market. However, the provisions of the present article do not apply to agricultural and fisheries products marketed locally, in accordance with the provisions of Article 16 of the present Code. The provisions of the present article do not apply also to the wastes sales made by companies wholly engaged in export to companies authorised by the Minister in charge of environment for the exercise of retraining and valorization activities and the amount of these sales is not taken in consideration for the determination of the maximum rate covered in Article 16 of the present code. The income originating from those sales are not also liable to income tax on natural persons or companies tax. Companies wholly engaged in export can recruit foreign management and training staff up to the limit of four people for each company, after informing the Ministry in charge of professional training and employment. Beyond that limit, companies must comply with a recruitment and Tunisification programme previously approved by the Minister in charge of professional training and employment. The terms and conditions of this system are defined by decree in accordance with Article 260 of the Labour Code. Article 19:The foreign staff recruited according to the provisions of Article 18 of the present Code, and the foreign investors or their representatives in charge of managing the company, are entitled to the following benefits: 1. Payment of a lump sum income tax fixed at 20% of gross earnings; 2. Exemption from customs duties and dues of a similar nature and from the taxes due on importing personal effects and one passenger car for each person. The transfer to a resident of the vehicle or personal effects imported is liable to the foreign trade formalities and payment of the duties and taxes prevailing on the transfer date, calculated on the basis of the value of the vehicle or effects on that date. Companies wholly engaged in export are subject to supervision by the competent administrative authorities aimed at checking that their activities comply with the provisions on the present code. In particular, they are permanently subject to customs control and are responsible fro paying staff and office charges relating thereto. The terms and conditions of customs control payment of the coasts relating thereto are fixed by decree. Chapter 2: System governing entities partly engaged in export The following are considered to be export operations: - Sales of goods to foreign countries; - Services rendered in foreign countries; - Services carried out in Tunisia for use by foreign countries; - Goods sold and services rendered to companies wholly engaged in export covered by the present code, to companies established in the economic free zones [3] governed by Law n°92-81 of 3rd August 1992 and to banking and financial entities working mainly with non-residents such as those envisaged by Law n°85-108 of 6th December 1985 offering encouragement to banking and financial entities working mainly with non-residents. During their activity and provided they keep proper accounts according to the provisions of the Commercial Code, companies which carry out export operations are entitled to the following benefits: 1. Suspension of value added tax and consumption duty on the goods, products and services necessary for the realisation of their export operations; 2. Deduction of all the income originating from export from the taxation basis for income tax on natural persons for the first ten years following the first export operation, notwithstanding the provisions of Article 12 bis of Law n°89-114 of 30th December 1989 promulgating the code for income tax on natural persons and companies tax and the deduction of 50% of those profits beyond that period; 3. Deduction of all the income originating from export the taxation basis for companies tax for the first ten years following the first export operation, notwithstanding the provisions of Article 12 of Law n°89-114 of 30th December 1989 promulgating the Code for income tax on natural persons and companies tax and the deduction of 50% of those profits beyond that period; 4. Reimbursement of the customs duties and taxes with an equivalent effect paid on the raw materials and semi-finished products imported or acquired on the local market by the company in order to manufacture goods and products intended for export; 5. Reimbursement of the customs duties and taxes with an equivalent effect paid on equipment imported and not manufactured locally depending on the proportion of goods and products exported. The terms and conditions governing entitlement to this benefit are fixed by decree. 6. Making the systems governing temporary admission or industrial warehousing envisaged by the Customs Code more flexible for goods and products imported for transformation and re-export. To this effect, the guarantee to back up the duties and taxes on imports envisaged in customs legislation is replaced by a lump-sum deposit, the amount of which is fixed by decree.
Section 4: Regional development incentives The investments made by companies established in the zones for the encouragement of regional development defined according to their activities by decree in the industry and tourism sectors and in certain service activities, the list of which is also fixed by decree, are entitled to the following benefits: 1. Subject to the provisions of Articles 12 and 12 bis of Law n°89-114 of 30th December promulgating the Code for income tax on natural persons and companies tax, subscription to the initial capital of those companies or to its increase gives entitlement to deduction of the incomes or profits invested from the net incomes or profits liable to income tax on natural persons or companies tax. The investments made by those companies also give entitlement to deduction of the profits invested in the company itself from the net profits liable to companies’ tax. Entitlement to these benefits is subject to adherence to the conditions envisaged in Article 7 of the present Code; 2. Deduction of the incomes or profits originating from investments from the taxable basis of income tax on natural persons or companies tax for the first ten years from the actual date production begins, notwithstanding the provisions of Articles 12 and 12 bis of Law n°89-114 of 30th December 1989 promulgating the Code of income tax on natural persons and companies tax, and the deduction of 50% of those incomes or profits for the following ten years; 3. Exemption from the contribution payable to the fund for the promotion of housing for employees for the first five years of actual activity. The companies covered by Article 23 of the present Code are entitled to the following: 1. An investment grant representing part of the cost of the project, including study costs, determined according to the activities and zones involved; 2. A grant representing participation by the State in the infrastructure expenditure necessary for the realisation of industrial projects. The amount of these grants and the terms and conditions governing their allocation are fixed by decree. The State takes responsibility for the employer's contribution to the legal social security system for the salaries paid to Tunisian employees for a period of five years from the date activity actually begins for investments made in the sectors of industry, tourism and services as defined by Article 23 of the present Code. The investments made in the zones for the encouragement by virtue of regional development for the Sahara tourism fixed by the decree envisaged at Article 23 of the present code, are entitled to this benefits for an additional period of 5 years. Public works and property development companies which carry out infrastructure and collective equipment operations, the list of which is fixed by decree depending on which encouragement and regional development zones are involved, are entitled to deduct 50% of the profits originating from those projects from the taxable basis for income tax on natural persons or companies tax.
Section 5: Agricultural Development The incentives envisaged by the present Code, by virtue of agricultural development, are applicable to investments related to the following: - Use of the natural resources available in order to increase agricultural and fisheries production, - Modernisation of the agricultural and fisheries sector and improvement of its productivity, - The first transformation of agricultural and fisheries products and their packaging, - Services activities related to agricultural and fisheries production. The activities involved in the first transformation, product packaging and services mentioned in the present article are fixed by decree. Investments in the agricultural and fisheries sector are classified as follows: - Category "A": investment made by small farmers and fishermen, - Category "B": investment made by medium-sized investors in agriculture and fisheries, - Category "C": investment made by large investors in agriculture and fisheries, in activities involving the first transformation of agricultural and fisheries products and their packaging as well as in services related to agricultural and fisheries activities. The criteria governing the classification of these investments, whether in the from of occasional operations or integrated projects, are determined by decree, mainly on the basis of the income, the area operated, the cost of the investment and the volume of the fisheries equipment covered by the investment. Investments made by services cooperatives, agricultural and fisheries services companies and associations of operators and agricultural owners are entitled to the benefits awarded to category "B" except investment made by development group in the agricultural and fisheries sector entitled to the benefits awarded to category "A". However, investments made in the framework of the saving of irrigation water by collective interest groups envisaged in the Water Code promulgated by Law n°75-16 of 31st Mars 1975 are entitled to the benefits awarded to category "A". The terms and conditions on which these benefits are awarded are fixed by decree. The investments envisaged in Article 27 of this code give entitlement to the following tax incentives: 1. Subject to the provisions of Articles 12 and 12 bis of Law n°89-114 of 30th December 1989 promulgating the Code of income tax on natural persons and companies tax, subscription to the company's initial capital or its increase gives entitlement to deduction of the incomes or profits invested from the net incomes or profits liable to income tax on natural persons or companies tax. Notwithstanding the provisions of Articles 12 and 12 bis cited above subscription to initial capital or its increase of companies which carry out investments in regions listed in Article 34 of present code, gives entitlement to deduction of the incomes or profits invested of the net incomes or profits liable to income tax on natural persons or companies’ tax. The investments made by those companies also give entitlement to deduction of the profits invested in the company itself from the net profits liable to companies’ tax. Entitlement to these benefits is subject to adherence to the conditions envisaged in Article 7 of the present Code; 2. A 10% reduction in customs duty and suspension of value added tax and consumption tax on the import of equipment with no locally-manufactured equivalent and suspension of value added tax on equipment manufactured locally. The list of this equipment and the conditions governing entitlement to this benefit are fixed by decree; 3. Deduction of the incomes originating from these investments from the taxable basis for income tax on natural persons and companies tax for the first ten years following the date activity actually begins, notwithstanding the provisions of Articles 12 and 12 bis of Law n°89-114 of 30th December 1989 promulgating the Code of income tax on natural persons and companies tax; 4. Reimbursement of the duty on the change of ownership of agricultural land intended for the investment at the purchaser's request. This request must be presented not later than one year after declaration of the investment. Category "A" investments give entitlement to the specific grants whose conditions and terms of allocation are fixed by decree. Investments in categories “B” and “C” give entitlement to the following : 1. An investment grant; 2. A grant awarded by virtue of the State's participation in the cost of studies related to the investment. The conditions and terms of allocation of these grants are fixed by decree. Notwithstanding the provisions of Article 62 of the present Code, the agricultural investments listed below give entitlement to receive specific overall grants, to the exclusion of any other grant: - Acquisition of agricultural equipment; - Installation of irrigation systems facilitating the saving of irrigation water; - Water reconnaissance and prospecting operations; - Cereal irrigation; - Work on the conservation of land and waterways; - The multiplication and production of seed; - The creation of routes and areas intended for pasture and the planting of forage shrubs and forest trees. - Specific equipments, instruments and means necessary to the production in accordance with the biologic production mode. The list of equipments, instruments and means concerned is fixed by decree - Installation of hails preventive nets to protect the fruit trees in zones generally exposed to this phenomenon and that will be fixed by decree taken on proposition of the Minister in charge of agriculture. The rates and terms of allocation of these grants are fixed by decree. Agricultural investments made in areas with difficult climates and fisheries investments in zones whose resources are under-exploited can be entitled to an additional grant. The list of regions with difficult climates and under- exploited fisheries resources, as well as the rates and terms, on which the grants are awarded, are fixed by decree depending on the activity involved. Developers investing in activities involving the first transformation of agricultural and fisheries products eligible for the incentives envisaged for the encouragement of agricultural and regional development can opt for one of these two systems and enjoy the incentives attached there to. Investments made in developing zones intended for fish farming or corps using geothermal energy are entitled to a grant by virtue of the State's participation in responsibility for infrastructure expenditure. The amount, conditions and terms of allocation of this grant are fixed by decree. Investments in the biologic agriculture are entitled, for 5 years, to a yearly grant by virtue of the State's participation to the control and the certification of the biologic production costs appropriated on the resources of the agriculture and the fishing sectors competitiveness development fund. Land loans can be granted for the purchase of agricultural land by agricultural technicians and young farmers or to enable the developers of agricultural projects to acquire shares in joint ownerships in an agricultural operation forming a single unit. The terms and conditions governing the allocation of agricultural land loans are fixed by decree.
Section 6: Anti-pollution measures and environmental protection Investments made by companies with the aim of counter acting the pollution resulting from their activities or by companies specialising in the collection, transformation and processing of waste and manure give entitlement to the following incentives: 1. Exemption from customs duties and taxes with a similar effect, suspension of value added tax and consumption duty for imported equipment with no locally manufactured equivalent which is necessary for the realisation of those investments, as well as suspension of value added tax on equipment manufactured locally. Entitlement to these benefits is subject to prior authorisation of the investment programme and the list of goods and equipment by the National Environmental Protection Agency, according to the conditions fixed by decree; 2. A specific grant, the amount of which is fixed by decree, in the framework of the organisation and operation of the de-pollution fund set up by Law n°92-122 of 29th December 1992 comprising the Finance Law for the 1993 financial year. Investments made by companies specialising in the collection, transformation or processing of manure and household waste or manure and waste produced by economic activity give entitlement to the following tax incentives: 1. Subject to the provisions of Articles 12 and 12 bis of Law n°89-114 of 30th December 1989 promulgating the Code for income tax on natural persons and companies tax, subscription to the company's initial capital or its increase gives entitlement to deduction of the incomes or profits invested up to the limit of 50% of the net incomes or profits liable to income tax on natural persons or companies tax. Investments made by those companies also give entitlement to deduction of the profits invested in the company itself up to the limit of 50% of the net profits liable to company’s tax. Enjoyment of these benefits is subject to adherence to the conditions envisaged by Article 7 of the present Code. 2. Deduction of the incomes or profits originating from those activities from the taxable basis of income tax on natural persons or companies tax, subject to the provisions of Articles 12 and 12 bis of Law n°89-114 of 30th December 1989 promulgating the Code for income tax on natural persons and companies tax. This benefit is granted to companies in existence before the present Code was promulgated and as from 1st January 1994.
Section 7: Promoting technology, research and development As well as the assistance envisaged by Law n°90-111 of 31st December 1990 comprising the Finance Law for the 1991 financial year and creating the fund for the promotion and control of industrial technology, the investments made by industrial, agricultural and fisheries companies which, by working towards local integration, facilitate the control or development of technology or improved productivity, give entitlement to total or partial payment by the State of the costs of training staff for that purpose. The terms and conditions on which this benefit is granted are fixed by decree. Investments made by companies in energy savings as stipulated by Law n°90-62 of 24th July 1990 concerning energy control give entitlement to a specific grant the amount and terms of allocation of which are fixed by decree. Investments aimed at energy saving and at developing research into renewable energy and geothermal power, its production and marketing, give entitlement to a 10% reduction in customs duties, the suspension of value added tax for imported materials and equipment with no locally manufactured equivalent and the suspension of value added tax for materials and equipment acquired locally. The conditions governing entitlement to this benefit are fixed by decree. Investments made in the sphere of research and development by companies operating in the industrial, agricultural and fisheries sectors give entitlement to the following: 1. Exemption from customs duties and taxes with a similar effect, suspension of value added tax and consumption duty for imported equipment with no locally manufactured equivalent which is necessary for the realisation of those investments, as well as suspension of value added tax on equipment manufactured locally. The conditions governing entitlement to this benefit are fixed by decree. 2. A grant the amount and terms of allocation of which are fixed by decree. Article 42 bis: Investments aimed at water saving in different sectors, except for the agricultural sector, and at developing no traditional water resources research, their production and exploitation according to current legislation and regulations and water audit activities give entitlement to receive specific overall grant whose conditions and terms of allocation are fixed by decree. In order to improve the management of companies and to ensure better use of their production capacities, for a period of 5 years the State can take responsibility for 50% of the employer's contribution to the legal social security system for salaries paid to the following: - Newly created teams of workers who have been added to the first team for industrial companies not operating continuously, - Tunisian officers who hold a diploma in higher education issued on completion of a period of education lasting at least four years after the Baccalaureate year or an equivalent diploma, and recruited by companies operating in the industry, agriculture and fisheries sectors, as well as in the services the list of which is fixed by decree, as from the date the officer was recruited for the first time. The terms governing the allocation of the benefits envisaged by the present article are fixed by decree. Article 43 (bis): Notwithstanding the provisions of Articles 43 paragraph 2 of the present Code and in order to improve the promotion and to encourage the employment of those who hold diplomas in higher education, private companies involved in the activities listed in Article 1 of the present Code can be entitled, during a period of 5 years, to the State responsibility for payment of the employer's contribution to the legal social security system for the salaries paid for new recruitments of Tunisian officers who hold a diploma in higher education issued on completion of a period of education lasting at least tow years after the Baccalaureate year or an equivalent diploma, as from the date the officer was recruited for the first time. The conditions and terms governing the entitlement to this benefit, and the period lasting which recruitments must be achieved to give entitlement to profit of the provisions of present article are fixed by decree;
Section 8: Encouragement of new promoters, and small companies and small trades Natural persons of Tunisian nationality, whether or not they are grouped together in companies, are considered as being new promoters if they fulfil the following conditions: - Have the required experience and qualifications, - Are personally responsible full time for managing the project, - Do not have sufficient fixed or moveable property of their own, - Are undertaking their first investment project. The activities, types of investment and regions which give entitlement to the incentives envisaged are fixed by decree. Also considered as being new promoters in the sphere of agriculture and fisheries are: - Children of farmers of fishermen who are aged under 40 and whose main activity is in the sphere of agriculture or fishing, - Young people aged under 40 whose main activity in the sphere of agriculture or fishing or who have acquired experience in one of those spheres, - Technicians who hold diplomas from agricultural or fisheries educational or training establishments. New promoters are entitled to the following incentives: 1. An investment grant; 2. A grant for State participation in responsibility for their project's study costs; The rates and conditions governing the award of these grants are fixed by decree; 2 bis. A grant for State participation in responsibility for technical support costs and the acquisition of developed buildings or land necessary for the realisation of industrial and services projects costs. The conditions and terms of allocation of these grants are fixed by decree. 3. State responsibility for payment of the employer's contribution to the legal social security system for the salaries paid to Tunisian officers for the first year of actual activity. New promoters who make investments in the spheres of industry, services, agriculture and fisheries are entitled to refundable allowances or to a participation in equity. Profits originating from participation in equity are assigned to new promoters. The amounts, conditions and terms governing the award of allowances or participation in equity are fixed by decree. Article 46 (bis): Promoters who carry out small and medium companies projects in the spheres of industry, services, agriculture and fisheries are entitled to a participation in equity and to grant representing participation by the State to study and technical support costs The list of activities and companies and the terms and conditions governing this grants and participation allocation are fixed by decree. The promoters of small companies and small trades in industry, handicrafts and services are entitled to the following: 1. Refundable allowances; 2. An investment grant. The definition of small companies and their sphere of activity, rates, conditions and the terms governing the award of these incentives are fixed by decree. Investments made in handicrafts give entitlement to exemption from customs duties and taxes with an equivalent effect, suspension of value added tax on imported equipment with no locally-manufactured equivalent and suspension of value added tax on locally manufactured equipment. The list of equipment and the conditions governing entitlement to this benefit are fixed by decree.
Section 9: Encouragement of supporting investments Investments made by institutions for the training of children, education, teaching, scientific research and professional training and establishments for cultural production and the co-ordination of young people, and by health and hospital entities, give entitlement to the following tax incentives: 1. Exemption from customs duties and taxes with a similar effect, suspension of value added tax and consumption duty for imported equipment with no locally manufactured equivalent which is necessary for the realisation of those investments, as well as suspension of value added tax on equipment manufactured locally. The conditions governing entitlement to this benefit are fixed by decree. 2. Subject to the provisions of Articles 12 and 12 bis of Law n° 89-114 of 30th December 1989 promulgating the Code for income tax on natural persons and companies tax, subscription to the company's initial capital or its increase gives entitlement to deduction of the incomes or profits invested up to the limit of 50% of the net incomes or profits liable to income tax on natural persons or companies tax. Investments made by those companies also give entitlement to deduction of the profits invested in the company itself up to the limit of 50% of the net profits liable to companies’ tax. Entitlement to these benefits is subject to adherence to the conditions envisaged by Article 7 of the present Code. 3. Deduction of the incomes or profits originating from those activities from the taxable basis of income tax on natural persons or companies tax, subject to the provisions of Articles 12 and 12 bis of Law n° 89-114 of 30th December 1989 promulgating the Code for income tax on natural persons and companies tax. This benefit is granted to companies in existence before the present Code was promulgated and as from 1st January 1994. Investments made in the sector of the international carriage of goods by road, and the transport of goods by sea and air, give entitlement to exemption from customs duties and taxes with a similar effect, suspension of value added tax for imported equipment with no locally manufactured equivalent which is necessary for those investments and which have no locally- manufactured equivalent, as well as suspension of value added tax on equipment manufactured locally. Investments made in transporting people by road also give entitlement to a 10% reduction in customs duties, suspension of value added tax and consumption duty on imported equipment with no locally-manufactured equivalent necessary for the realisation of those investments and suspension of value added tax on equipment manufactured locally, except for passenger cars other than those intended for touring the Sahara and tourists hunting game in mountainous regions. The list of this equipment and the conditions governing entitlement to this benefit are fixed by decree. Projects carried out by property developers concerning the social habitat, the development of zones for agricultural, tourist and industrial activities, and the construction of buildings intended for industrial activities, give entitlement to the deduction of 50% of the incomes or profits originating from those projects from the taxable basis for income tax or companies tax.
Section 10: Miscellaneous provisions Notwithstanding the provisions of Articles 1, 2 and 3 of the present Code, additional benefits can be granted concerning the following: - Exemption from income tax or companies’ tax for a period not exceeding 5 years; - State participation in infrastructure expenditure; - Investment grants up to the limit of 5% of the value of the investment; - The investment grant may be increased up to the limit of 20% of the cost of the investment and this by virtue of investments in the promising activities having a high integration rate. This grant cover investment operations declared until December 31, 2004. - Suspension of current duties and taxes for the equipments which are necessary for the realisation of this investment. These encouragements are granted by decree after notification from the Higher Investment Commission when the investments are of particular value to the national economy or to frontier zones. The organisation and terms and conditions governing the operation of this Commission are fixed by decree. Article 52 (bis): It is put, at the profit of investors, necessary lands to the implantation of important projects in term of investment volume and employment creation, at the symbolic dinar. The above-mentioned benefit is granted, after notification by the Higher Investment Commission, by decree fixing allocation and follow-up conditions and recovery terms. Article 52 (ter): As well as the incentives envisaged in this code, the following additional incentives and benefits may be granted by virtue of investments made in the sectors of education and higher education including the university lodging, professional training, and investment related to preparatory years : - An investment grant which doesn’t exceed 25% of the cost of the project, - State responsibility for payment of a part of the salaries paid for Tunisian teachers and trainers permanently recruited without overtaking 25% and for a period that not passing ten years. - State responsibility for payment of the employer's contribution to the legal social security system for the salaries paid to Tunisian teachers and trainers permanently recruited for five years with the possibility of renewal only one time for one same period - Putting at the disposition of investors, lands in the setting of a concession contract according to current legislation. These incentives and encouragements are granted by decree after notification by the Higher Investment Commission. Industrial and fisheries companies whose activities have been terminated and which have been started up again by promoters other than their former directors and managers can enjoy the tax or financial benefits envisaged by the present Code. These encouragements are granted by decree after notification by the Higher Investment Commission. Industrial, agricultural, fisheries, and services companies in activity and that meet some economic difficulties and are the object of an acquirement by investors other than their former directors and managers to reinforce activities of these enterprises, can enjoy the tax or financial benefits envisaged by articles 7, 8 and 9 of the present Code. These incentives are granted by decree after notification by the Higher Investment Commission. For raw materials, products and articles intended for the manufacture of equipment with no locally-manufactured equivalent, industrial companies can enjoy the same taxation system as is applied to similar equipment imported in the finished state and enjoying an exemption or reduction in customs duties or a suspension of value added tax and consumption duty. The list of equipment eligible for the taxation system envisaged in the preceding sub-paragraph is fixed by decree. The incentives concerning suspension or reduction of or exemption from customs duties and taxes envisaged in Articles 9,30,37,41,42,48,49 and 50 are applied to equipment imported or acquired locally according to the lists and conditions fixed in the provisions envisaged by those articles, notwithstanding the provisions of Article 1 of the present Code. Investments made in the tourist sector give entitlement to a 10% reduction in customs duties, the suspension of value added tax and consumption duty due on the import of equipment with no locally-manufactured equivalent and the suspension of value added tax on locally manufactured equipment. The list of this equipment and the conditions governing entitlement to the benefit are fixed by decree. The incentives concerning the suspension or reduction of or exemption from customs duties and taxes envisaged in Articles 9,30,37,41,42,48,49 and 50 and applied to equipment imported or acquired locally can be replaced by the allocation of investment grants for certain sectors and activities. The operation of the replacement, the amount of the grants and the conditions governing entitlement to the benefit are fixed by decree. Contracts concerning the acquisition from property developers of buildings or land developed for the exercise of economic activities or of land intended for the construction of buildings for housing are registered at the fixed rate provided they have not been previously operated or sold by those developers. Documents recording the change of ownership for a consideration between non-residents concerning tourist accommodation are exempted from registration and stamp duties if made in the framework of a tourist project and acquired in convertible foreign currency by non-residents as defined by Articles 5 of the Foreign Exchange and Trade Code. Moveable objects and effects intended for equipping tourist accommodation belonging to non-residents are admitted free of import duties and taxes in accordance with Article 170 of the Customs Code. The terms and conditions governing the grant of this exemption are fixed by decree. At the time when they start operating the project to their benefit, management companies which operate a project realised in the framework of the present Code are entitled for the remainder of the period to the benefits awarded by virtue of income tax on natural persons and companies tax or by virtue of the State's assuming responsibility for the employer's contribution to the legal social security system. If an investment made in the framework of the present Code gives entitlement to several investment grants, the total of those grants may not exceed 25% of the cost of the investment, not including the State's participation in responsibility for the infrastructure works and the financial aids granted in virtue of intangible investment the setting of companies Stand-by and appropriated on the resources of the industrial competitiveness development fund and of the agriculture and the fishing sectors competitiveness development fund. This rate can be carried to 30%, and that, for the new promoters whose projects are implanted in priority zones of encouragement by virtue of regional development and for promoters of fishing projects in the north zone spreading of Bizerte to Tabarka and in high seas. The list of those zones and the conditions governing entitlement to the benefit envisaged by this paragraph are fixed by decree Companies are authorised to move from an encouragement system to another system, provided they present a declaration in application of the provisions of Article 2 of the present Code, to proceed with the formalities necessary for that purpose, and to settle difference of the total value of the benefits granted according to those two systems. Moreover, those companies which move from an encouragement system to another system before expiry of two complete years from the date they actually started activity under the initial system, must pay the delay penalties for the losses suffered by the State because of their change from one system to another. These penalties are calculated on the basis of the taxes and duties due at the rates envisaged in articles 81 et 82 of the Code on fiscal rights and procedures under reserve of the minimum amount of delay penalty foreseen by the article 86 of this code”[4], and the investment grants, as from the exemption date or the date when those grants were obtained. During the period when their investment programme is being realised, companies enjoying the incentives envisaged by the present Code will be the subject of a follow-up and control by the relevant administrative services in charge of supervising adherence to the conditions governing entitlement to the benefits granted. The beneficiaries of the benefits envisaged by the present Code will lose their entitlement to them if they do not respect its provisions or do not begin to execute the investment project within one year from the date of declaring the investment. Moreover, if the project is not realised or in the case of the illegal alteration of the initial object of the investment, the promoters will be obliged to repay the grants and benefits allocated plus the delay penalties as envisaged by Article 63 of the present code. Benefits are withdrawn and grants repaid through a justified decision by the Minister of Finance after notification, or on the proposal of the services concerned after those services have heard the case of the beneficiaries. As well as the sanctions envisaged by other laws, any infringement of the provisions of Articles 2, 3 and 16 of the present code is liable to a fine of between 1,000 and 10,000D, the announcement and collection of which are made according to the above-mentioned laws, on top of forfeiture of the right to the benefits of the present Code, announced after the defaulting party has been heard. The courts of law of Tunisia are competent to investigate any dispute between foreign investors and the Tunisian State unless otherwise agreed by an arbitration clause or a clause permitting one of the parties to appeal to arbitration according to the ad-hoc arbitration or conciliation procedures envisaged by one of the following agreements: - Bi-lateral agreements for the protection of investments signed between the Tunisian State and the state of which the investor is a national, - The International Convention for the settlement of disputes concerning investments between States and the nationals of other states ratified by Law n°66-33 of 3dr May 1966, - The Convention concerning the creation of the Arab organisation for the guarantee of investments approved by Decree Law n°72-4 of 17th October 1972 and ratified by Law n°72-71 of 11th November 1972, - Or any other international convention concluded by the government of the Republic of Tunisia and legally approved.
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