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Tunisia – New Investment Law Eases Conditions on Hiring Foreign Workers

Tunisia – New Investment Law Eases Conditions

This GMS Flash Alert reports on a new Tunisian Investment Law containing provisions that make it easier for qualifying investors and businesses to hire foreign workers from 1 January 2017.

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Flash Alert 2016-128

The Tunisian Chamber of Representatives approved, on 17 September 2016, a new Investment Law aimed at attracting foreign investment and stimulating the economy.1  The law features provisions that make it easier for qualifying investors and businesses to hire foreign workers.  The Investment Law will take effect from 1 January 2017.  

WHY THIS MATTERS

Under the current Labour Code there are restrictions on the hiring of or bringing in of foreign workers in Tunisia.  However, the new rules for qualifying foreign investors and businesses will reduce some of the red tape involved with hiring foreign workers in Tunisia or bringing them to Tunisia. They will also help expand the opportunities, in Tunisia, for hiring more foreign workers or assigning more foreign workers to the country.  The new law is expected to enhance business expansion and market opportunities for businesses in Tunisia.

Key Changes

Previous treatment

(until 1/1/2017)

New treatment

(from 1/1/2017)

1.  The Investment Incentive Code caps the recruitment of foreigners to four managing1. The Investment Incentive Code caps the recruitment of foreigners to four managing staff employees. The incentive is only available to wholly exporting companies. 

Investors will be allowed to recruit foreign managing staff up to: 

  • 30% of the entire managing staff size during the business’ first 3 years of activity; 
  • 10% of the whole managing staff size starting from the 4th year onwards.

2.  Beyond the cap, the hiring of foreigners is subject to restrictive conditions, under the Labour Law, including: 

  • limiting the employment contract to 1 year renewable once (unless authorized by relevant authorities);
  • making it possible to hire foreign workers only when there is no similar professional competence available among Tunisian nationals.
Beyond the cap, the hiring of foreigners remains subject to the prior approval of the Labour Ministry. 

KPMG NOTE

There are still some important aspects of the Investment Law that remain unclear, and these need to be addressed in the implementing regulations, the applicable income tax rate for foreign workers being just one example.

It should be noted that foreign workers hired under the previous Investment Code (that continues to apply until 1 January 2017) have been subject to an advantageous income tax rate of 20 percent on their gross remuneration; however, this advantageous tax rate has not been confirmed under the new law.

FOOTNOTE

1  See the Investment Law 2016: Law n° 71-2016 dated 30th September 2016.

CONTACTS

For additional information or assistance, please contact your local GMS or People Services professional* or one of the following professionals with the KPMG International member firm in Tunisia:

 

Dhia Bouzayen

Partner

Tel. + 216 71 194 344

dbouzayen@kpmg.com

 

Narjes Laouiti

Manager

Tel. + 216 71 194 344

nlaouiti@kpmg.com

 

*  Please note that KPMG LLP (U.S.) does not offer labor law or immigration services.

The information contained in this newsletter was submitted by the KPMG International member firm in Tunisia.

© 2017 FMBZ KPMG Tunisie, a Tunisia joint stock company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

Flash Alert is an Global Mobility Services publication of KPMG LLPs Washington National Tax practice. The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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