Tunisia: Banking, Currency & Taxation
Banking and Currency
Foreign Currency Control
Foreign exchange controls in Tunisia are regulated by the Foreign Trade and Foreign Exchange Code of 1976. The government has undertaken a review of the Code and is in the process of instituting liberalization changes. The Tunisian Dinar is not fully convertible to foreign currencies, however, in recent years, Tunisia has relaxed foreign exchange control provisions regarding current account transactions. A currency account transaction law was enacted in 1993 which incorporates liberalizing provisions in this regard. Today the Tunisian Dinar is commercially convertible for all bona fide trade and investment operations. Foreign investors in Tunisian companies are entitled to repatriation capital and may receive dividends in foreign currency.
In the area of importation of goods, all import documents which involve payments must be handled through authorized banks. Foreign currency may be purchased from the Central Bank of Tunisia (CBT) or from banks which have been designated by the CBT for the payment of imports, subject to licensing restrictions and provided that the license has been obtained prior to importation. Payments for exports received in foreign currency ordinarily must be repatriated within ten days of payment.
Capital transfers are subject to the approval of the CBT. Non-residents are allowed to repatriate invested capital and net proceeds of such investment in foreign currency.
The CBT monitors the commercial, development and investment banks operating in Tunisia. The commercial banks provide short and mid-term credit. Development banks grant only long-term credit for the financing of large scale projects in tourism, agriculture and industry. Investment banks, which were recently created, are responsible for promoting investment projects and managing capital risks.
New legislation enacted in 1994 is aimed at broadening the range of banking services and products available, easing restrictions regarding loan approvals, and increasing competition in the banking industry. These new laws also created a new type of banking category which specializes in providing financial management banking services for business enterprises.
Tunisia is a signatory of the Paris Convention for the Protection of Industrial Property and the Paris Convention Regarding Trademarks, as revised in the Hague, London and Stockholm. Tunisia is a member of the World Intellectual Property Organization and is a signatory of the UNCTAD agreement on the protection of patent and trademarks. Tunisia has withdrawn from the Madrid Agreement regarding trademarks.
Patent applications are examined by the Patent Office only with regard to form and, while novelty of an invention is examined, merit is not. A patent application, together with the grant of a patent are published in the Official Gazette. Opposition to a patent application must be filed within two months of the date when the application was filed. Applications for the issue of letters patent should be made before the invention has been published, used or otherwise received sufficient publicity to allow it to be put into practice.
The protection period of a patented invention is twenty years from the date on which the patent application was filed. Working of a patent is an official requirement, and must be done for two consecutive years, starting within three years of the date on which the patent application was filed or two years from the date on which the patent was granted. Nominal working of a patent, by way of direct offer or solicitation, is sufficient to meet the standards.
Rights in a patent may be transferred or assigned to third parties, including, by the laws of succession, to heirs.
Designs and Industrial Models
Designs and industrial models may be protected through registration. There is no novelty examination conducted regarding the application for registration of a design or industrial model. Any interested party who has filed an application with regard to the same or similar design or model may file a request for cancellation of the infringing design or model before a competent tribunal.
A design or industrial model registration is granted for five, ten or fifteen years, beginning on the date the application for registration was filed. The registration of a design or industrial model, as well as its cancellation or assignment, are published in the Official Gazette and entered into the designs register. There are no provisions regarding the compulsory working or licensing of a design or industrial model.
The Tunisian Copyright Law of 1994 determined the Copyright as the right of the owner of the work to have the exclusive right to copy the work in a material form, whatever its type is, and to present his work to the public. The protected work may be it literary, scientific or artistic, whatever its value or the purpose for which it is prepared.
According to Article 18 of the Law, the copyright shall be valid during the author’s lifetime and shall continue for fifty calendar years after the author’s death. The copyright with respect to photographic works is valid, according to Article 19, for twenty-five calendar years as from the date of work completion. The copyrights assignable by sale, wholly or partially, according to Article 22.
The Law establishes the Tunisian Institution for the Protection of Copyright. The Institution has several functions, including the protection of copyright.
Any party which does not respect copyright as defined by the law, shall be obligated to pay damages to the owner of this right. The law also establishes monetary sanctions for violations or infringements. A person who violates the law may be obliged to pay fines ranging from TD 500 to 5,000.
As a result of Tunisia's withdrawal from the Madrid Agreement with regard to trademarks, in 1988, trademark applications thereafter should be filed in Tunisia by anyone interested to protect a trademark right in order to secure his interests and to be availed of the protections under the laws of Tunisia.
Registration is a necessary element to gain protection and is ordinarily issued directly upon filing an application for registration. A trademark registration is valid for fifteen years from the date on which the application for registration was filed. It may be renewed indefinitely for similar periods of time. Tunisia does not require use of a trademark as a condition for maintaining registration.
Tunisia follows the International Classification of goods and services.
The Tunisian tax system was entirely revised in 1990 and is contained in the Income Tax Act of 1989. The new tax laws include two direct tax regimes: income tax and corporate tax. The value added tax is an important indirect tax revenue regime. It should be noted that the tax laws should be considered in conjunction with the tax incentives available to investors and businesses (see, the Investment Incentives section below), in order to understand the tax system and a taxpayer's tax liability in Tunisia.
Income tax is imposed on individuals based on income, including a partner’s share of profits in partnerships and profits derived by members of a joint venture. The marginal tax rates are:
Income in TD Tax Rate
Over 50,000 35%
Individuals, like companies, are subject to Tunisian income tax only on income arising in Tunisia. The tax law deems all income of a Tunisian, regardless of where his work was performed and where the income was paid, to have arisen in Tunisia. As a result, a Tunisian resident individual is subject to the Tunisian income tax on his worldwide employment income.
Dividends paid by companies to shareholders are not taxed, and investments made in certain companies may be tax-deductible.
A non-resident is subject to the Tunisian income tax at the normal graduated rates on income received in consequence of employment by a local employer (whether a resident employer or a Tunisian permanent establishment of a non-resident employer) as well as to the various flat rate withholding taxes.
Companies are subject to a flat tax rate of 35 percent on net profits. Profits generated from exports are deductible from taxable profits. Foreigners are exempted from taxes on transfer of dividends, the proceeds from the sale of shares and capital gains. Thus, dividends distributed by a company are not subject to tax. Furthermore, investments made by a company in an entity which enjoys tax incentives are deductible from taxable income, up to 35 percent of the investing company's taxable income. Since 1994, remuneration paid by a company to its directors is taxed.
Value added tax was introduced in Tunisia in 1988 to replace the turnover tax levied on production, consumption and services. Ordinarily VAT is levied at 18 percent; certain priority goods are, however, subject to a lower rate of 10 percent, and certain luxury goods are subject to a rate of 29 percent.
Employers and their employees are subject to a social security tax. In addition, various employees must pay a flat rate professional training tax on salaries paid to employees at the rate of 1 percent in the manufacturing industry and 2 percent in all other industries.
Another indirect tax levied in Tunisia is a land registration tax. This tax is levied at a rate of 5 percent of the value of real property acquired.
Treaties for the Prevention of Double Taxation
Relief from double taxation is available through tax treaties to which Tunisia is a signatory. Tunisia has entered into tax treaties with most Arab countries, European Union countries, the United States, Canada and some East European countries such as Romania, Bulgaria and Slovakia. Also, Tunisia has entered into a treaty with the United States, according to which Tunisian students who study in the United States, full-time or for specialized training, are exempt for not longer than five years from paying U.S. income tax on some amounts such as payments from abroad made in respect of their studies, or as grants or allowances.
© 2000 Mena Report (www.menareport.com)