Startup Act

What is the STARTUP LABEL ?

• The Startup Act is a legal framework specifically dedicated to Startups in Tunisia. This framework is created to facilitate the launch and development of Startups from Tunisia.
• This legal framework integrates several measures defined around a Label of merit and advantages for entrepreneurs, investors and Startups .
• Its legal framework is as follows:
  1- Law No. 2018-20 of April 17, 2018 relating to Startups;
  2- Decree No. 2018-840 of October 11, 2018 establishing the conditions, procedures and deadlines for granting and withdrawing the startup label and benefiting from encouragement and advantages for Startups and the organization, prerogatives and operating methods of the labeling committee;
  and 3- Circulars of the Central Bank of Tunisia No. 2019-01 and 2019-02.

How can we obtain THE STARTUP LABEL ?

The Startup Label is a label of merit granted to any company under Tunisian law that meets the labeling criteria. This Label is the key to access the Startup Act universe.

The company applying for the Startup Label must have the following 5 criteria :

• AGE : The company must be less than 8 years old since its legal incorporation
• SIZE : The company must have less than 100 employees and less than 15 MTD (million dinars) of total balance sheet or annual turnover
• INDEPENDENCE : The capital of the company must be more than 2/3 held by individuals, investment organizations regulated (investment funds, etc.) or foreign Startups
• INNOVATION : The company's economic model must be innovative
• SCALABILITY : The company's target market must be large and homogeneous, the solution provided must be adapted to the market (a market fit solution) and the team in charge The team in charge must be able to implement the project properly

To obtain the Startup Label, the company completes an application form via the Startup Portal.

The labeling procedure has 2 alternatives :

1. In the case of fundraising from approved investment organizations : the company is considered innovative and scalable and the labeling process boils down to checking the other points. A response is then prepared within 3 days.
2. Otherwise, the candidate goes before the College of Startups which decides on the innovative and scalable nature of the project. A response is then formulated within 30 days.

For individuals who have not yet created their companies : they can apply to have the Startup Label. If the points are validated, the candidate is awarded a Pre-Label valid for 6 months while he completes the procedures for creating his company.

ADVANTAGES FOR ENTREPRENEURS

It is a series of incentives to encourage entrepreneurs (young professionals, researchers, young graduates, etc.) to undertake and create their Startups.

The Startup Stock Exchange :

It is an allocation given to the co-founder and shareholder of a young Startup to cover expenses for one (01) year. Its amount is indexed to previous remuneration during the last 12 months for an employee and takes the form of a fixed compensation for non-employees. The maximum amount of the grant is 5 kDT net/month and the minimum amount is 1 kDT net/month.

The Patents :

The state covers the procedures and costs of registering patents for Startups at the national and international level.

The Leave for Startup Creation:

It is a leave of one (01) year renewable one (01) time granted to the co- founder of a Startup so that he can fully devote himself to the launch and development of his Startup. The employer, public or private, cannot oppose the departure of the beneficiary of the Leave. The beneficiary of this leave can terminate at any time and return to his original job upon notice.

The employment programs:

Any young graduate eligible for employment programs including the SIVP who creates his Startup and joins a Startup as an employee can keep this advantage and take advantage of it at the end of his relationship with said Startup, within a period of three (03) years.

In case of failure:

The Startup Act encourages good failure by promoting the amicable liquidation of Startups through the combination of measures such as the Startup Guarantee Fund, the exemption from Corporate Tax and the State’s assumption of wage and employer charges.

STARTUP ADVANTAGES:

The Startup Label entitles to a series of advantages and incentives:

The salary and employer charges :

Startups benefit from State coverage of wage and employer charges.

The Special Account in foreign currencies :

Any Startup has the right to open a special foreign currency account which it freely funds with contributions of capital, turnover and dividends in foreign currencies. The Startup can freely invest, and without authorization, the assets in this account to acquire tangible or intangible assets, create subsidiaries abroad and have participations abroad.

Corporate tax :

Startups are exempt from corporate tax.

Technology Card :

The ceiling of the Startup Technology Card is increased to 100,000 DT /an.

Authorized Economic Operator :

Startups are considered Authorized Economic Operators in meaning of the Customs Code.

Approval :

Startups are exempt from customs procedures technical approval and control from CERT (Center for Studies and Research in Telecommunications) upon import.

The Startup Portal :

Designed to be the Startup's point of interaction in order to apply for the Startup Label and benefit from the associated advantages. The Portal will evolve to integrate other functionalities to facilitate the administrative operations of Startups.

ADVANTAGES FOR INVESTORS :

It is a series of incentives to encourage Investors (natural or legal persons) to invest in Startups. These incentives include:

The tax relief :

Amounts invested by natural or legal persons in Startups or in regulated investment organizations dedicated to Startups are fully deductible from the tax base.

The exemption from capital gains tax :

Profits from the sale of securities relating to participations in Startups are exempt from capital gains tax.

The Startup Guarantee Fund :

It is a mechanism for guaranteeing the participation of investment funds and other regulated investment organizations in Startups. This attractive mechanism can only be activated in the event of amicable liquidation of the Startup subject to the guarantee.

The financial instruments :

Startups legally authorized to issue bonds convertible into shares are authorized to carry out several issues of bonds convertible into shares, regardless of the option deadlines for the conversion.