close
Share with your friends

Tunisia - Income Tax

Tunisia - Income Tax

Taxation of international executives

1000

Related content

Tax returns and compliance

When are tax returns due? That is, what is the tax return due date?

5 December of the year subsequent to the year of taxation for employment income.

25 February for capital gains arising from the sale of securities, income from movable capital and Real property income.

What is the tax year-end?

31 December.

What are the compliance requirements for tax returns in Tunisia?

Residents and non-residents

Residents: Resident individuals are required to submit an annual personal income tax return by 5 December of each year

Non-residents: Non-residents are generally not required to file income tax returns if they have earned only employment income which have been taxed at source through withholding made by a Tunisian employer.

Tax rates

What are the current income tax rates for residents and non-residents in Tunisia?

Residents:  are subject to income tax at the following progressive rates:

Residents and non-residents

Income tax table for 2019

New tax rates are applicable starting from 1 January, 2019.

Income bracket (annual)
Tax rate
0 to 5,000 Dinars
0%
5,000,001 to 20,000 Dinars
26%
20,000,001 to 30,000 Dinars
28%
30,000,001 to 50,000 Dinars
32%
Above        50,000 Dinars
35%

Non-resident: non-resident individuals (people staying in Tunisia less than 6 months) are taxable at a flat tax rate of 20 percent on the gross income.

Residence rules

For the purposes of taxation, how is an individual defined as a resident of Tunisia?

An individual is considered a Tunisian tax resident if:

  • the individual has a permanent home available to them in Tunisia
  • their stay in Tunisia during a calendar year is for more than 183 days.

Is there, a de minimus number of days rule when it comes to residency start and end date? For example, a taxpayer can’t come back to the host country/territory for more than 10 days after their assignment is over and they repatriate. 

No, income tax is due effective the day one of the assignment.

What if the assignee enters the country/territory before their assignment begins?

The assignee has to comply with foreign entry requirements to enter the country/territory and they can stay for 3 months as a foreign visitor. During this period foreign national is not allowed to carry out any employment work. They will be taxable in Tunisia beginning from the official start date of their assignment in Tunisia.

Termination of residence

Are there any tax compliance requirements when leaving Tunisia?

Any individual who intends to transfer their residency outside of Tunisia, should apply before their departure for a tax clearance from the Tax authorities, then, they should apply for a change of residency attestation.

What if the assignee comes back for a trip after residency has terminated?

There is no problem with coming back to Tunisia as a foreign visitor; the period of a trip should not exceed generally 3 months. However, if the assignee comes back to carry out an employment, thery must in this case obtain a work permit.

Communication between immigration and taxation authorities

Do the immigration authorities in Tunisia provide information to the local taxation authorities regarding when a person enters or leaves Tunisia?

Yes.

Filing requirements

Will an assignee have a filing requirement in the host country/territory after they leave the country/territory and repatriate?

Generally, all income earned before the end of assignment (incurred income even if not yet paid) should be declared within the departure year tax return.

Economic employer approach

Do the taxation authorities in Tunisia adopt the economic employer approach1 to interpreting Article 15 of the Organisation for Economic Co-operation and Development (OECD) treaty? If no, are the taxation authorities in Tunisia considering the adoption of this interpretation of economic employer in the future?

Yes, the Tunisian authorities adopt the economic employer approach, especially where there is a recharge of the remuneration costs to the Tunisian entity.

De minimus number of days

Are there a de minimus number of days before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days2?

Not applicable.

Types of taxable compensation

What categories are subject to income tax in general situations?

As a general rule, the taxable income includes all the remunerations paid in cash or in kind by the employer to its employee, such as:

  • salary/bonus
  • expatriation allowance for inbound assignees
  • reimbursement of foreign and/or home country/territory taxes
  • cost-of-living allowances
  • housing allowances and housing provided by the employer
  • private use of a company car
  • employer provided domestic assistance
  • reimbursements of home leave costs
  • Employer contributions to private social security scheme
  • Phone, fuel vouchers, lodging, meal voucher..
  • The employer's contribution to private health insurance or group insurance plan when not compulsory by law

However, benefits in kind and allowances paid to employees should not constitute an additional taxable income when they are:

  • Intended to cover expenses inherent in the function.
  • Remunerated from social fund, reserves or profits that have been taxed
  • Established under a mandatory provision, under a statutory or regulatory provision

 

Intra-group statutory directors

Will a non-resident of Tunisia who, as part of their employment within a group company, is also appointed as a statutory director (i.e. member of the Board of Directors in a group company situated in Tunisia trigger a personal tax liability in Tunisia, even though no separate director's fee/remuneration is paid for their duties as a board member?

If no fee /remuneration is paid for their employment or presence during the Board of Directors meetings, theri oppointment should not trigger personal income taxation

  1. Will the taxation be triggered irrespective of whether or not the board member is physically present at the board meetings in Tunisia?

    Director’s remuneration such as attendance fee is subject to withholding tax in Tunisia

  2. Will the answer be different if the cost directly or indirectly is charged to/allocated to the company situated in Tunisia (i.e. as a general management fee where the duties rendered as a board member is included)?

    Yes, in this case the remuneration may be subject to taxation as a Tunisian sourced income unless providing a tax treaty exception

In the case that a tax liability is triggered, how will the taxable income be determined?

Tax-exempt income

Are there any areas of income that are exempt from taxation in Tunisia? If so, please provide a general definition of these areas.

  • Expatriation allowances paid by a Tunisian company for their employee assigned abroad, subject to specific conditions.
  • Life annuities and temporary allotments granted to victims of labour accidents or to their heirs.
  • Redundancy indemnities, within certain limits fixed by the law.
  • Special allowances intended to cover expenses inherent in the function or employment of workers, evidences must be provided.
  • Interest from deposits and from certificates in foreign currencies or convertible dinars.

Other taxes levied on the gross salary

  • Social Housing Promotion Fund Tax (FOPROLOS): 1 percent of the gross salary for industry activities and 2 percent for others.
  • Vocational training tax (TFP): 2 percent of the gross salary.
  • Social Solidarity contribution 
  • Social security contributions
  • Work injury

Redundancy payments

Redundancy allowance is tax exempt according to the limits fixed by the labor law. Or in accordance with amounts limits fixed by employees’ redundancy payments for economic reasons and approved by the redundancy control committee or by the labor board or fixed by the restructuring and improvement committee decisions for companies with public participation.

Expatriate concessions

Are there any concessions made for expatriates in Tunisia?

A fixed rate of 20 percent is granted to foreign employees hired by fully exporting companies, hydrocarbon companies and other business area.

Non-resident individuals are subject to 20 percent tax rate, they are not required to file an annual income tax return when their employment income is subject to withholding income tax at source operated by the Tunisian employer.

Salary earned from working abroad

Is salary earned from working abroad taxed in Tunisia? If so, how?

Tunisian resident individuals are taxed on their worldwide income, income from Tunisian source and incomes from foreign source. However, in accordance to double taxation treaties foreign sourced income could be exempted from Tunisian income tax if:

  1. the employee stay in Tunisia is less than 183 days
  2. The remuneration is paid by a non-established employer in Tunisia
  3. The remuneration cost is not borne or recharged to a permanent establishment that the foreign employer has in Tunisia

Nevertheless, even in absence of tax treaty, the Tunisian domestic tax legislation may exempt from Tunisian tax foreign source income when those income have been already taxed in the country/territory of source.

Taxation of investment income and capital gains

Are investment income and capital gains taxed in Tunisia? If so, how?

Capital gain:

For resident and non-resident individual, capital gains derived from the disposal of immovable properties (lands and buildings) owned in Tunisia and shares in real estate civil partnerships, are subject to personal income tax according to the following rates:

  • 10 percent when the property was sold after a 5 years after the acquisition date
  • 15 percent when the property was sold before 5 years period of detention starting from the acquisition date

For non-resident individuals, capital gains derived from the disposal of shares held in the capital of Tunisian-resident companies are subject to tax in Tunisia.

For resident individuals, capital gains derived from the sale of shares held in the capital of Tunisian-resident companies are considered as securities income and are subject, as such, to income tax at the rate of 10 percent.

The taxable basis is calculated as the difference between the sale price and the purchase price reduced by TND10,000.

Dividends, interest, and rental income

Dividends

Dividends paid by a Tunisian entity to Tunisian resident individuals are subject to 10 percent withholding tax starting from January 2018.

Dividends paid to non-residents individuals are taxable at 10 percent tax rate unless the tax treaty provides a favorable tax rate.

Dividends received from non-Tunisian resident companies are subject to taxation in Tunisia under “other income category”

Interest

Interests and investment income from foreign source received by a Tunisian resident individual are taxable in Tunisia under “other income”, unless, these income were already taxed in the country/territory of source.

Interests and investment income from Tunisian source received by a non-Tunisian resident are subject to 20 percent tax rate, unless, the domestic tax legislations provides an exemption or when tax treaties provide favorable tax rate.

Rental income

According to double tax treaties, Income derived by a resident of Tunisia from real property situated in another country/territory may be taxed in that other country/territory.

According to the Tunisian local tax legislation, income derived by a resident individual in Tunisia from real property situated abroad should be taxed in Tunisia under “other income”, unless the income has been taxed in the country/territory of source.

Gains from stock option exercises

As a general rule, capital gain deriving from the option exercise should be subject to tax.

Foreign exchange gains and losses

If the exchange gains and losses are realized, that is a payment or receipt of funds occurred, they will be part of the tax base of calculation.

Principal residence gains and losses

Use of losses

Information not available

Assessment of profits

Capital losses

Capital losses could be deducted offset capital gains realized the same year.

Gifts

As a general rule, gifts are not subject to tax unless provided by the employer.

 

Additional capital gains tax (CGT) issues and exceptions

Are there additional capital gains tax (CGT) issues in Tunisia? If so, please discuss?

  • Information is not available.

Are there capital gains tax exceptions in Tunisia? If so, please discuss?

  • Information is not available.

General deductions from income

What are the general deductions from income allowed in Tunisia?

Employee contribution to social security scheme

10 percent fixed rate for professional costs capped to TND2,000.

Common deductions are as follows:

  • family head: TND300
  • first child: TND100
  • second child: TND100
  • third child: TND100
  • fourth child: TND100

Contributions made to life insurance within certain limits.

Tax reimbursement methods

What are the tax reimbursement methods generally used by employers in Tunisia?

The process could be administratively very heavy. It is recommended to deduct tax credit offset the subsequent year due tax.

Calculation of estimates/prepayments/withholding

How are estimates/prepayments/withholding of tax handled in Tunisia? For example, Pay-As-You-Earn (PAYE), Pay-As-You-Go (PAYG), and so on.

Pay-as-you-go (PAYG) withholding

Not applicable.

PAYG installments

Not applicable.

When are estimates/prepayments/withholding of tax due in Tunisia? For example: monthly, annually, both, and so on.

Actual withholding are paid by the employer on monthly basis.

Relief for foreign taxes

Is there any Relief for Foreign Taxes in Tunisia? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on?

The relief for foreign taxes depends on the double tax treaty provisions signed by Tunisia.

General tax credits

What are the general tax credits that may be claimed in Tunisia? Please list below.

Information is not available.

Footnotes

1Certain tax authorities adopt an "economic employer" approach to interpreting Article 15 of the OECD model treaty which deals with the Dependent Services Article. In summary, this means that if an employee is assigned to work for an entity in the host country/territory for a period of less than 183 days in the fiscal year (or, a calendar year of a 12-month period), the employee remains employed by the home country/territory employer but the employee’s salary and costs are recharged to the host entity, then the host country/territory tax authority will treat the host entity as being the "economic employer" and therefore the employer for the purposes of interpreting Article 15. In this case, Article 15 relief would be denied and the employee would be subject to tax in the host country/territory.

2For example, an employee can be physically present in the country/territory for up to 60 days before the tax authorities will apply the ‘economic employer’ approach.

© 2019 FMBZ KPMG Tunisie, a Tunisia joint stock company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Connect with us

 

Want to do business with KPMG?

 

loading image Request for proposal