Thinking beyond borders
An individual’s liability to Tunisian personal income tax is determined by residence status and the source of income derived by the individual. Income tax is levied at progressive rates on an individual’s taxable income for the year.
Extended business travelers may be subject to Tunisian taxation on their salary earned for their work carried out in Tunisia.
Residents are taxed on worldwide income. Non-residents are taxed only on income from Tunisian source. Income tax is calculated by applying a progressive tax rate schedule to taxable net income. The top income tax rate is 35 percent.
An individual is considered a Tunisian tax resident if:
An individual is considered a Tunisian tax non-resident when his stay in Tunisia during a calendar year is less than 6 months.
Most likely extended business travelers will be considered non-residents for Tunisian tax purposes and subject to tax only on their Tunisian-sourced income, when they remain residents in their home country (their family still resident of the home country and their stay in Tunisia does not exceed 6 months). The salary earned for Tunisian workdays will usually be considered as Tunisian-sourced income, subject to income tax in Tunisia, unless, possible exemption under the provisions of a double tax treaty.
There is no threshold/minimum number of days that exempts the employee from the requirements to report and pay income taxes in Tunisia. However, the provisions of an international tax treaty may provide for an exemption from tax in Tunisia on salary income.
As non-residents, extended business travelers will generally be subject to income taxation in Tunisia earned for employment carried out in Tunisia. Taxable income includes any benefits in kind as well as any other Tunisian sourced income.
Resident employees are taxed at the following progressive tax rates
|Income bracket (annual)||Tax rate||Effective rate to upper edge|
|0 to 5,000 Dinars||0%||0%|
|5,000.01 to 20,000 Dinars||26 %||19.50 %|
|20,000.01 to 30,000 Dinars||28%||22.33%|
|30,000.01 to 50,000 Dinars||32%||26.20%|
|Above 50,000 Dinars||35%|
Tunisian non-resident employees are subject to a flat tax rate of 20% on their gross income.
Tunisian employers are required to register any hired employee to the Tunisian social security regime (CNSS). The employer should withhold each month the social contributions (employer and employee) then, report and pay them to the CNSS on a quarterly basis.
Employee contribution: 9,18% of the gross income
Employer contribution: 16,57% of the gross income
Tunisian resident employees are required to submit an annual tax return before December 5 of the year following the year of taxation.
Non-resident (individual with a stay not exceeding 6 months during a calendar year) are not required to submit an annual tax return.
As a general rule, Tunisian employers are required to withhold income tax on employment income and remit them to the Tunisian tax authorities on a monthly basis. They are as well required to withhold each month the social contributions (employee and employer) and remit them to the social security authorities on a quarterly basis.
An employer annual return in connection to withholding tax on income must be submitted to the tax authorities the following year.
As a general rule, any foreigner intending to carry out an employment in Tunisia must obtain a work contract concluded with a Tunisian employer and hold a residence card stating the following: ’allowed to carry out a remunerated activity in Tunisia’. The work contract should be approved by the Labor Ministry.
Tunisia has entered into a number of double taxation treaties with other countries to avoid double taxation and allow cooperation between Tunisia and overseas tax authorities in enforcing their respective tax laws. As a general principle, the provisions of double tax treaties will override domestic rules.
There is the potential that a permanent establishment could be created as a result of extended business travel, but this would be dependent on the type of services performed and the level of authority the employee has.
Tunisia has value-added tax (VAT).
A transfer pricing implication could arise to the extent that the employee is being paid by an entity in one jurisdiction but performing services for the benefit of the entity in another jurisdiction, in other words, a cross-border benefit is being provided. This would also be dependent on the nature and complexity of the services performed.
Tunisia has data privacy laws.
Tunisia has a very restrictive exchange regulation. However, foreign nationals resident in Tunisia are entitled to transfer cash saved from their Tunisian wages.
Non-deductible costs for assignees include contributions to non-mandatory social security regimes and to foreign pension plans.