Tunisia – Budget Changes Tax Rates, Brackets, and Professional Costs Deduction

Tunisia – Budget Changes Tax Rates, Brackets, and Pro..

This GMS Flash Alert reports on key personal income tax measures contained in Tunisia’s recently enacted Budget Law.

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Tunisia’s Budget Law for 20171 amended the country’s personal income tax regime, such that lower-income taxpayers should see their tax burdens decrease, while higher-income taxpayers should see theirs increase.  The amendments also affected the tax rules on the deduction for professional costs.

The new measures took effect on January 1, 2017.  

WHY THIS MATTERS

The new measures would substantially impact payroll computations by Tunisian-based employers.  Furthermore, they would affect Tunisian employees or expatriates subject to Tunisian taxation by way of possibly increasing their tax burdens.  The impact of these changes on taxpayers will vary depending on each taxpayer’s particular facts and circumstances. In addition, the measures may have the effect of slightly raising employers’ tax-related costs.  

In light of the measures discussed in this newsletter, employers should make, where appropriate, the necessary payroll adjustments and update hypothetical tax calculations for tax-equalized assignees.

New Personal Income Tax Rates/Brackets

The new income brackets and tax rates for 2017 (as compared to those in 2016) are as shown below.

2017

Income bracket2 (annual)  Tax rate Effective rate to upper edge
 0 to 5,000 Dinars (TND) 0 % 0 %
5,000.01 to 20,000 Dinars 26 % 19.50 %
20,000.01 to 30,000 Dinars 28 % 22.33 %
30,000.01 to 50,000 Dinars 32 % 26.20 %
Above 50,000 Dinars 35 % -

[TND 1 = EUR 0.409 |  TND 1 = UDS 0.437 | TND 1 = GBP 0.3566]

2016

Income bracket (annual) Tax rate Effective rate to upper edge
0 to 1,500 Dinars 0 %
0 %
1,500.01 to 5,000 Dinars 15 % 10.50 %
5,000.01 to 10,000 Dinars 20 % 15.25 %
10,000.01 to 20,000 Dinars 25 % 20.12 %
20,000.01 to 50,000 Dinars 30 % 26.05 %
Above 50,000 Dinars 35 % -

Deduction for Professional Costs

Previously, when determining the taxable wage for employees, a 10-percent deduction for professional costs applied to their gross remuneration without any limitation.  Effective January 1, 2017, the professional costs deduction is capped at 2,000 Tunisian dinars, which will limit the benefit to taxpayers of this tax deduction.

KPMG NOTE

The changes to the income tax rates and brackets aim to help lower-income earners (less than 5,000 Tunisian dinars annually) who have been hit by an increase of inflation on basic commodities in the country during recent years. However, the tax burden for higher-income earners is expected to increase.

FOOTNOTES

1  See Budget Law 2017 : Law n° 2016-78 dated December 17, 2016

2  To explain the numeric expressions in the tables – for example, 5,000.01 dinars in the table means five-thousand dinars and one millime.  Tunisian currency is typically expressed as follows (using the same figure) “5.000,001,” which signifies five-thousand dinars and 1 millime.  The Tunisian dinar is sub-divided into 1,000 milim or millimes, hence the three (3) digits following the comma-decimal.   

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

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

 

© 2017 KPMG Enterprise, a Tunisian limited liability company. Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. All rights reserved.

© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. 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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