Giambrone Report on the Financial advantages of investing in Tunisia

Although not usually regarded as a prime investment country, Tunisia offers a number of benefits that make the country a very appealing destination for foreign investors. Over recent years, Tunisia has undergone a series of significant changes that have encouraged foreign investors to set up or relocate businesses in the country.

Following decades of heavy state participation in the country’s economy, Tunisia is currently implementing strong economic reforms and liberalisation measures. A process of prudent economic and fiscal planning yielded moderate but sustained growth for over a decade.

FDI (Foreign Direct Investment)  currently accounts for 10% of productive investments in Tunisia. Furthermore, FDI amounts to 15% of the total number of jobs and 30% of total exports. In recent years, despite the strong decline due to the global recession and the socio-political revolution in Tunisia, FDI strongly recovered. 

Why invest in Tunisia?

Tunisia provides a credit-worthiness that guarantees access to international capital markets. Tunisian economy is also undergoing a strong diversification process to reinforce its resistance to possible economic downturns.

The country’s strategic location on the Mediterranean is an aspect investors should not overlook or underestimate. Tunis, the country’s administrative and economic capital, can be easily reached from major European capitals.

Tunisia offers a very well developed social system and a very ambitious education program. This guarantees the reduction of the social cost of adjustment and boosts the modernisation of the country. The country’s workforce is qualified, productive and grants competitive salary levels.

As a measure to encourage FDI growth, Tunisia has introduced, over recent years, several forms of aid for the foreign investor. Should investors set up or relocate a business in Tunisia, they would be granted relief on income tax (or profit reinvested) up to 35%, along with the exemption from Customs duty on capital goods, in the case nothing similar is manufactured in the country. VAT would moreover be limited to 10% for capital goods importation.

Should investors decide to set up or relocate a business in Tunisian interior regions, Tunisia provides  ten-year tax exemption and 8-25% investment subsidy are among these incentives.

Sectors for Best ROI in Tunisia

Traditionally, Textile-Clothing has been the key sector of the Tunisian economy.  However, mining, energy, tourism, and manufacturing sectors play a crucial role in the country’s economy. The agricultural sector (which employs half of the Tunisian population), accounts nonetheless for less than 15% of the GDP.

Electronic component production is, however, a very promising sector and in increasingly attracting foreign investments. Petroleum extraction sector has increased, due to recent oil discoveries. Finally, tourism represents one of the important economic activities.

Offshore Investments in Tunisia

Setting up an offshore company in Tunisia is a rather seamless process. As a matter of fact, several countries entertain special relations with Tunisia, and have signed agreements to avoid double taxation. Moreover, profits from an offshore company in Tunisia can be transferred to another country with advantageous tax rates and cannot be taxed again.

This is the list of country that has signed a treaty with Tunisia to avoid double taxation.

• Europe: France, Belgium, Germany, Austria, Norway, Italy, Denmark, Sweden, Spain, UK, Poland, Switzerland, Netherlands, Malta
• Arab countries: Morocco, Libya, Algeria, UMA, Egypt, UAE, Jordan, Iraq, Kuwait
• Other: Canada, Senegal, USA, Korea, South Africa, Iran, Mali

Many more advantages must be taken into account when deciding whether to set an offshore company in Tunisia. During the first ten years of actual activity, income and profits derived from export are fully deductible, notwithstanding the minimum tax.  VAT is not requested for payments received from abroad. Only one person is required in order to incorporate the company.

Only 500 euros are needed to incorporate an offshore company. Finally, dividends can be fully transferred and no tax on that income will be paid to the country of origin, as provided by the Agreement of Double Taxation.

Bureaucracy and red-tape are often regarded as the most significant hindrances for FDI in Tunisia. It is important to be fully aware of Tunisian bureaucratic procedures and the requirements that must be met by foreign investors in order to be allowed to invest in the country. Not resorting to the advice of an expert solicitor in the Tunisian market, could result in problems and in an increase of hindrances for those who intend to invest in the country.

Corporate and commercial lawyers at Giambrone have assisted international companies on a full range of corporate, securities, financing matters and international business transactions for over a decade. Our lawyers can also bring a wealth of expertise in commercial litigation and arbitration matters.

Giambrone offers its services to companies of all types and sizes and have been particularly active in a number of business sectors.

Giambrone provides advice and assistance on an ongoing basis at all stages of the business lifecycle, from start-up, development and consolidation to restructuring and internationalisation.

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