Employers in Tunisia have several tax responsibilities. One of these is the withholding of income tax, known as Impôt sur le Revenu des Personnes Physiques (IRPP), from employee salaries. Tunisia uses a progressive income tax system with rates ranging from 0% to 35%. IRPP applies to all employment income, including salaries, wages, bonuses, and benefits. Withheld IRPP must be paid to the Tunisian tax authorities by the 28th of each month.

Pay-As-You-Earn (PAYE) Withholding

• Responsibility: Withhold income tax (IRPP) from employee salaries.
• Rates: Progressive income tax system with rates from 0% to 35%.
• Categories: Applies to all employment income.
• Payment Deadlines: Pay withheld IRPP to the tax authorities by the 28th of each month.

Employers also need to register with the social security system, Caisse Nationale de Sécurité Sociale (CNSS), and make contributions on behalf of their employees. The combined employer and employee social security contribution rate is 25.75%, with the employer's share being 16.57%. These contributions cover various benefits, including retirement, healthcare, and disability. Social security contributions are due quarterly to the CNSS.

Social Security Contributions

• Responsibility: Register with the CNSS and make contributions.
• Rates: Combined contribution rate is 25.75%, employer's share is 16.57%.
• Categories: Contributions cover retirement, healthcare, and disability benefits.
• Payment Deadlines: Contributions are due quarterly.

There are also other potential employer taxes. These include the Professional Training Tax (TFP), which is a 2% tax on gross salaries to fund vocational training programs. Employers also pay a Social Solidarity Contribution (SSC), which is determined by a percentage of taxable income. Lastly, employers contribute 1% of gross salaries towards a housing fund.

Other Potential Employer Taxes

• Professional Training Tax (TFP): 2% tax on gross salaries for vocational training programs.
• Social Solidarity Contribution (SSC): Contribution determined by a percentage of taxable income.
• Housing Levy: 1% contribution of gross salaries towards a housing fund.

In Tunisia, employees are primarily subject to two main types of tax deductions: Pay-As-You-Earn (PAYE) Withholding and Social Security Contributions.

Pay-As-You-Earn (PAYE) Withholding

This is an Income Tax, known locally as Impôt sur le Revenu des Personnes Physiques or IRPP. All employees with taxable income are eligible for this tax. The calculation methods for this tax are:

• Progressive Rates: Income is taxed at graduated rates according to a tax bracket system.
• Deductions: A standard deduction of 10% (capped at TND 2,000 annually) is applied for professional expenses. Additional deductions may be available based on individual circumstances.

Social Security Contributions

This is a mandatory contribution to the social security system, known as Caisse Nationale de Sécurité Sociale or CNSS. All employees in Tunisia must participate in the CNSS. The employee contribution rate is 9.18% of gross salary. These contributions fund various social benefits like retirement, healthcare, and disability.

In Tunisia, the Value-Added Tax (VAT) system, known as Taxe sur la Valeur Ajoutée (TVA), has significant implications for the supply of goods and services. This system particularly impacts services in various ways.

Standard VAT Rates

There are three standard VAT rates in Tunisia:

• A 19% rate applies to the majority of goods and services.
• A 13% reduced rate is applicable for certain goods and services.
• A 7% reduced rate is designated for specific goods and services.

Exemptions for Services

Tunisia's VAT system exempts some services. These key exemptions include:

• Most financial services, as defined by the Tunisian VAT Code.
• Educational services that meet specific criteria.
• Medical and healthcare services that fall under certain categories.

For a comprehensive list of VAT-exempt services, you can refer to the Tunisian VAT Code.

Filing Procedures

The filing procedures for VAT in Tunisia are as follows:

• Businesses supplying taxable services with an annual turnover exceeding TND 100,000 must register for VAT with the tax authorities.
• VAT returns are generally filed on a monthly basis.
• VAT payments are typically due by the 28th of the month following the taxable period.

Tunisia offers a range of tax incentives to stimulate investment, particularly in designated sectors and regions. These incentives are designed to attract businesses and foster economic growth.

Types of Tax Incentives

Eligible businesses in Tunisia may benefit from several types of tax incentives:

• Reduced Corporate Income Tax (CIT) Rates: A reduced CIT rate of 10% may be available for a certain period.
• Investment Allowances: Businesses investing in specific sectors or regions may qualify for investment allowances, which are deductions from taxable income.
• Exemptions on Reinvested Profits: Profits reinvested in eligible projects may be exempt from taxation under certain conditions.
• Customs Duty Exemptions: Imports of equipment and raw materials for approved investments may be exempt from customs duties.

Qualification Criteria

The eligibility for tax incentives often depends on several factors:

• Sector: Priority sectors include manufacturing, export activities, technology, tourism, and agriculture.
• Region: Investments in underdeveloped regional development zones may receive special incentives.
• Project Size and Job Creation: Certain incentives are linked to the scale of the investment and its potential to create employment.
• Export Orientation: Incentives are often available for businesses focused on exports.

Application Process

The process to apply for these tax incentives involves several steps:

1. Prepare Investment Proposal: Businesses should prepare a comprehensive investment proposal demonstrating economic benefits and alignment with Tunisian economic development goals.
2. Submission to API: The proposal should be submitted to the Tunisian Foreign Investment Promotion Agency (Agence de Promotion de l’Investissement Extérieur – FIPA Tunisia) or relevant ministries.
3. Review and Approval: Proposals are evaluated, and eligible businesses are granted an approval certificate that outlines specific incentives.