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Home > News > Tunisia_Draft Finance Law 2021_The main things to remember

Dear All,

As part of the tax survey, please to find below the main contributions of the Draft Finance Law for the management of the 2021 financial year:

  

        I.            State budget

- 2020 : Forecast correction

  • Growth projected at the end of 2020 : -8% (instead of +3% expected in the Finance Law 2020)
  • Updated budget deficit : 14% (instead 3% initianlly expected)

- 2021 : Main assumptions

  • Budget : TND 52 billion or +11% compared to the 2020 budget
  • Expected growth rate: + 4%
  • Budget deficit: 7%
  • Price per barrel: 45 USD
  • Debt resources budgetted for TND 19 billion including 16.6 billion from external debt

  

      II.            Tax provisions

 

           A. Continuation of tax reform and modernization of the administration

 

1-      Revision of the various CIT rates and their unification to 18%

 

-          Abolition of the corporate tax rates (CIT) of 25%, 20% and 13.5% and their replacement by a single rate of 18% applicable on profits made from the 2021 financial year (to be declared in 2022).

-          The CIT rates of 10% (agriculture sector, development area, etc.) and 35% (banks, insurance companies, telecom companies, oil companies, etc.) are maintained.

 

2-      Establishment of a special tax regime for small businesses

 

-          Current situation :

  • 400,000 taxpayers are registered in the flat-rate scheme, of which 335,000 or 84% are located in municipal areas,
  • 90% of these taxpayers file and pay the minimum tax (TND 200 in the communal areas and TND 100 outside these areas),
  • Revenue from the flat-rate scheme does not exceed 0.2% of total State tax revenue (TND 42 Million in 2016, TND 51 Million in 2017 and TND 42 Million in 2018),
  • 40% of flat-rate people (~ 160,000) do not file their annual declarations,

-          Contribution of the Draft Finance Law 2021 :

  • Definitely eliminate the flat-rate regime and replace it with a special tax regime,
  • This new tax regime is based on the imposition of a deemed profit ranging from 6% to 17% of the filed turnover depending on the nature of the activity,
  • Without the tax paid being less than a minimum which varies between TND 100 and TND 2000 depending on the nature of the activity and the area of establishment,
  • This regime is applicable to individual companies achieving an annual turnover of less than or equal to TND 100,000.

 

3-      Adding more flexibility to Transfer Pricing legislation

 

-          Limitation of the possibility of tax adjustment, following the increase or decrease in Transfer Prices, to only transactions between resident and non-resident companies that are not at arm's length,

-          Limitation of obligations relating to the TP disclosure form and TP documentation report to :

  • Companies recording a turnover excluding tax of TND 400 Million (instead of 20 Million initially planned),
  • In respect of transactions carried out only with (dependent) companies resident abroad (transactions carried out between resident dependant companies are no longer affected by the Transfer Price documentation), and
  • The amount of each documented transaction is greater than or equal to TND 100,000 excluding tax per year.

 

4-      Introduction of a new category of tax audit called 'limited audit'

-          This new category of tax audit can fully or partially cover the taxpayer's tax situation, over a period that may not exceed a non-prescribed year,

-          The purpose of this new category of verification is to bring more efficiency to the interventions of the tax administration in terms of coverage rate and responsiveness in the resolution of requests for refund of corporate tax and VAT.

         

5-      Encouragement of natural persons to acquire premises for residential use during the 2021 financial year

 

-          People who acquire in 2021 premises for residential use, financed by bank credit, benefit from a reduction in their income tax up to TND 100 per month,

-          Acquisition and credit contracts, eligible for this advantage, must be signed in 2021,

-          The tax reduction cannot exceed the tax due for the year 2021,

-          The advantage is granted from the month of satisfaction of the conditions (signature of the acquisition contract and the credit contract),

-          Impossibility to combine this advantage with the advantage relating to the deduction of interest due for the acquisition of premises for residential use having a value of less than 200 kTD.

 

6-      Revision of the minimum tax due in the event of eligibility for tax incentives

 

-          Unification of the minimum tax up to 50% of the tax due before application of the tax relief (total or partial) for all sectors except sectors subject to corporate tax at the rate of 35%.

-          Setting of the minimum tax at 30% for sectors subject to corporate tax at the rate of 35%.

-          Payment of the minimum tax in all cases of reinvestments benefiting from tax advantages.

 

         B. Fight against tax evasion and rationalization of cash payments

 

1-      Reduction from 6 months to 90 days of the response delay by the tax administration to written objections by taxpayers to the results of tax adjustments.

 

2-      Better rationalization of cash payments: lowering of the ceiling for cash transactions from TND 5,000 to TND 3,000.

 

3-      The payment of the road tax (vignettes) cannot be settled without the regularization of the tax situation: taxpayers, subject to the obligation to obtain an existence declaration, must present the last annual tax return to pay road tax (vignettes).

 

4-      Obligation to attach to the monthly tax return a detailed list of purchase invoices and fee notes on magnetic media

 

-          Companies governed by the Big Companies Revenue Authority (DGE) and the Medium Sized Companies Revenue Authority (DME) are required to attach to their monthly declarations a detailed list of purchase invoices and fees.

-          This list mainly includes the identity of the suppliers, their ID, the prices excluding VAT and the corresponding VAT.

 

 

We remain of course at your disposal for any further information,

Best regards


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