MAIN PROVISIONS OF THE 2021 FINANCE LAW

Below are the main provisions :

Revision and reduction of the common corporate tax (IS) rate to 15% (including fully exporting companies) : The 15% rate replaces :

- The 25% and 20% rates ;

- The 13.5% rate.

Remarks :

-This revision follows the IMF and EU guidelines regarding the alignment of tax rates for both local and export regimes and aims to bring parallel trade into the declared circuit.

 -The new corporate tax rate is applicable for profits generated from 01/01/2021 and to be declared in 2022.

- The 10% corporate tax rate for Agriculture, Fishing, Crafts, Pollution Control, Regional Development Zones activities has not been modified.

- The 35% corporate tax rate for activities such as Banks, Insurance and financial institutions, Investment companies, Telecom operators, Local market hydrocarbons services (15% IS for export), Hydrocarbon production and transport, Franchise activities, Car dealerships, and Large commercial stores also remains unchanged.

Reduction of withholding tax rates following the revision of corporate tax rates :

- Reduction of the withholding tax rate on fees, commissions, brokerage, rents, non-commercial activities compensation, and performance remuneration from 15% to 10% ;

- Reduction of the withholding tax rate on fees from 5% to 3% ;

- Reduction of the withholding tax rate on amounts (invoices or payments) exceeding 1,000 DT from 1.5% to 1% for payments to companies subject to the 15% corporate tax rate ;

- Elimination of the 5% withholding tax on brokerage commissions for international trading companies ;

- Reduction of the advance tax rate for individuals as stipulated by Article 4 of the Income and Corporate Tax Code (IRPP and IS) from 25% to 15% ;

- Reduction of the final withholding tax rate on the sale of real estate and rights from 15% to 10% ;

- Reduction of the withholding tax rate on the sale of securities (stocks for SAs and shares for SARLs) from 25% to 15% ;

- Reduction of the minimum corporate tax rate from 15% to 10% for companies with total or partial corporate tax exemptions ;

- Cancellation of the 35% withholding tax rate on income from movable capital (bank deposits and similar) instituted in June 2020, and application of a single, final rate of 20%. In effect, the 35% withholding tax rate, introduced in June 2020, has been canceled and replaced by the previous 20% rate.

Note : The new rates apply to amounts due from 01/01/2021..

Circulation tax :

The payment of the vehicle circulation tax is subject to the regularization of the tax situation (submission of the latest corporate tax or personal income tax declaration) for both individuals and legal entities with a tax identification number. 

Increase of the threshold and easing of transfer Pricing legislation :

- The threshold for transfer pricing tax declaration obligations has been raised from 20 million DT to 200 million DT ;

- The transfer pricing obligation applies only to companies located in Tunisia with dependency or control links to companies established abroad ;

- The information to be provided in the transfer pricing declaration is limited to transactions that exceed an annual amount of 100,000 DT.

Tax benefits for Stock Savings Accounts (CEA) and life insurance :

- Amounts deposited in a stock savings account (CEA) opened with an authorized intermediary are now deductible from personal income tax (IRPP) up to a limit of 100,000 DT, instead of 50,000 DT ;

- Amounts subscribed to a life insurance contract are now deductible from personal income tax (IRPP) up to a limit of 100,000 DT, instead of 10,000 DT.

VAT exemption for pharmaceutical products :

Retail and wholesale sales of medicines and pharmaceutical products are now exempt from VAT. This provision reverses the previous Finance Law, which had imposed VAT on these products at the wholesale and retail stages.