Taxation of international executives
Tax returns and compliance
Termination of residence
Economic employer approach
Types of taxable compensation
Salary earned from working abroad
Taxation of investment income and capital gains
Additional capital gains tax (CGT) issues and exceptions
General deductions from income
Tax reimbursement methods
Calculation of estimates/prepayments/withholding
Relief for foreign taxes
General tax credits
All income tax information is summarized by FMBZ KPMG Tunisia, the Tunisian member firm of KPMG International, based on the Tunisian Personal Income Tax and corporate Tax Code, 2016.
When are tax returns due? That is, what is the tax return due date?
5 December of the year subsequent to the year of taxation for employment income.
25 February for capital gains arising from the sale of securities, income from movable capital and Real property income.
What is the tax year-end?
What are the compliance requirements for tax returns in Tunisia?
Residents: Resident individuals are required to submit an annual personal income tax return by December 5 of each year.
Non-residents: Non-residents are generally not required to file income tax returns if they have earned only employment income which have been taxed at source through withholding made by the employer.
What are the current income tax rates for residents and non-residents in Tunisia?
Residents: are subject to income tax at the following progressive rates:
Income tax table for 2016
|Taxable income bracket||Total tax on income below bracket||Tax rate on income in bracket|
|From TND||To TND||TND||Percent|
Non-resident: Starting from the tax year 2014, non-resident individuals (people staying in Tunisia less than 6 months) are taxable at a flat tax rate of 20%.
For the purposes of taxation, how is an individual defined as a resident of Tunisia?
An individual is considered a Tunisian tax resident if:
Is there, a de minimus number of days rule when it comes to residency start and end date? For example, a taxpayer can’t come back to the host country for more than 10 days after their assignment is over and they repatriate.
No, income tax is due effective the day one of the assignment.
What if the assignee enters the country before their assignment begins?
The assignee has to comply with foreign entry requirements to enter the country and he/she can stay for three months as a foreign visitor. During this period foreign national is not allowed to carry out any employment work. He/She will be taxable in Tunisia beginning from the official start date of his/her assignmentin Tunisia.
Are there any tax compliance requirements when leaving Tunisia?
Any individual who intends to transfer his residency outside of Tunisia, should apply before his departure for a tax clearance from the Tax authorities, then, he should apply for a change of residency attestation.
What if the assignee comes back for a trip after residency has terminated?
There is no problem with coming back to Tunisia as a foreign visitor; the period of a trip should not exceed generally three months. However, if the assignee comes back to carry out an employment, he must in this case obtain a work permit.
Do the immigration authorities in Tunisia provide information to the local taxation authorities regarding when a person enters or leaves Tunisia?
Will an assignee have a filing requirement in the host country after they leave the country and repatriate?
Generally, all income earned before the end of assignment (incurred income even if not yet paid) should be declared within the departure year tax return.
Do the taxation authorities in Tunisia adopt the economic employer approach1 to interpreting Article 15 of the OECD treaty? If no, are the taxation authorities in Tunisia considering the adoption of this interpretation of economic employer in the future?
Yes, the Tunisian authorities adopt the economic employer approach, especially where there is a recharge of the remuneration costs to the Tunisian entity.
Are there a de minimus number of days before the local taxation authorities will apply the economic employer approach? If yes, what is the de minimus number of days2?
What categories are subject to income tax in general situations?
Generally, compensation and benefits received by an employee for an employment are considered as taxable income. Taxable income includes, but is not limited to the following:
Are there any areas of income that are exempt from taxation in Tunisia? If so, please provide a general definition of these areas.
Other taxes levied on the gross salary
End of services bonus gratification is exempt of tax according to the limits fixed by the labor law. Or in accordance with amounts limits fixed by employees’ redundancy payments for economic reasons and approved by the redundancy control committee or by the labor board or fixed by the restructuring and improvement committee decisions for companies with public participation.
Are there any concessions made for expatriates in Tunisia?
A fixed rate of 20 percent is granted to foreign employees hired by fully exporting companies, hydrocarbon companies and other business area.
Non-resident individuals are not required to file an annual income tax return when their employment income is subject to withholding income tax at source operated by the Tunisian employer.
Is salary earned from working abroad taxed in Tunisia? If so, how?
Tunisian resident individuals are taxed on their worldwide income, income from Tunisian source and incomes from foreign source. However, in accordance to double taxation treaties foreign sourced income could be exempted from Tunisian income tax if:
Nevertheless, even in absence of tax treaty, the Tunisian domestic tax legislation may exempt from Tunisian tax foreign source income when those income have been already taxed in the country of source.
Are investment income and capital gains taxed in Tunisia? If so, how?
For resident and non-resident individual, capital gains derived from the disposal of immovable properties (lands and buildings) owned in Tunisia and shares in real estate civil partnerships, are subject to personal income tax according to the following rates:
For non-resident individuals, capital gains derived from the disposal of shares held in the capital of Tunisian-resident companies are subject to tax in Tunisia.
For resident individuals, capital gains derived from the sale of shares held in the capital of Tunisian-resident companies are considered as securities income and are subject, as such, to income tax at the rate of 10%.
The taxable basis is calculated as the difference between the sale price and the purchase price reduced by TND 10,000.
Dividends paid by a Tunisian entity to Tunisian resident individuals are subject to 5% withholding tax.
Dividends paid to non-residents individuals are taxable at 5% tax rate unless the tax treaty provides a favorable tax rate.
Dividends received from non-Tunisian resident companies are subject to taxation in Tunisia under “other income category”
Interests and investment income from foreign source received by a Tunisian resident individual are taxable in Tunisia under “other income” subject to same tax treatment as employment income, unless, these income were already taxed in the country of source.
Interests and investment income from Tunisian source received by a non-Tunisian resident are subject to 20% tax rate, unless, the domestic tax legislations provides an exemption or when tax treaties provide favorable tax rate.
According to double tax treaties, Income derived by a resident of Tunisia from real property situated in another country may be taxed in that other country.
According to the Tunisian local tax legislation, income derived by a resident individual in Tunisia from real property situated abroad should be taxed in Tunisia under “other income”, unless the income has been taxed in the country of source.
Capital gain received at the exercise of stock option by employees holding shares in a Tunisian companies in the following business industries and under specific conditions are exempt from tax:
Otherwise, as a general rule, capital gain deriving from the option exercise should be subject to tax.
If the exchange gains and losses are realized, that is a payment or receipt of funds occurred, they will be part of the tax base of calculation.
Use of losses
Information not available
Capital losses could be deducted offset capital gains realized the same year.
As a general rule, gifts are not subject to tax unless provided by the employer.
Are there additional capital gains tax (CGT) issues in Tunisia? If so, please discuss?
Information is not available.
Are there capital gains tax exceptions in Tunisia? If so, please discuss?
Capital gain received at the exercise of stock option by employees working for Tunisian companies in the following business area and under specific conditions are exempt from tax.:
What are the general deductions from income allowed in Tunisia?
Employee contribution to social security scheme
10 percent fixed rate for professional cost
Common deductions are as follows:
Contributions made to life insurance within certain limits.
What are the tax reimbursement methods generally used by employers in Tunisia?
The process could be administratively very heavy. It is recommended to deduct tax credit offset the subsequent year due tax.
How are estimates/prepayments/withholding of tax handled in Tunisia? For example, Pay-As-You-Earn (PAYE), Pay-As-You-Go (PAYG), and so on.
Withholding on salaries is made on monthly basis by the employer then paid to the tax authorities.
When are estimates/prepayments/withholding of tax due in Tunisia? For example: monthly, annually, both, and so on.
Actual withholding are paid by the employer on monthly basis.
Is there any Relief for Foreign Taxes in Tunisia? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on?
The relief for foreign taxes depends on the double tax treaty provisions signed by Tunisia.
What are the general tax credits that may be claimed in Tunisia? Please list below.
Information is not available.
1Certain tax authorities adopt an "economic employer" approach to interpreting Article 15 of the OECD model treaty which deals with the Dependent Services Article. In summary, this means that if an employee is assigned to work for an entity in the host country for a period of less than 183 days in the fiscal year (or, a calendar year of a 12-month period), the employee remains employed by the home country employer but the employee’s salary and costs are recharged to the host entity, then the host country tax authority will treat the host entity as being the "economic employer" and therefore the employer for the purposes of interpreting Article 15. In this case, Article 15 relief would be denied and the employee would be subject to tax in the host country.
2For example, an employee can be physically present in the country for up to 60 days before the tax authorities will apply the ‘economic employer’ approach.
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