
Worldwide VAT, GST and Sales Tax Guide
Tunis GMT +1
AMC Ernst & Young Boulevard de la Terre Centre Urbain Nord 1003 Tunis Tunisia
Indirect tax contacts
Faez Choyakh
Omar Rekik
Maryam G Jammouci
A. At a glance
Name of the tax
+216 (70) 749 111 faez.choyakh@tn.ey.com
+216 (70) 749 111 omar.rekik@tn.ey.com
+216 (70) 749 111 maryam.g.jammouci@tn.ey.com
Value-added tax (VAT)
Local name Taxe sur la Valeur Ajoutée (TVA)
Date introduced 2 June 1988
Trading bloc membership None
Administered by Tunisia Ministry of Finance (http://www.portail.finances.gov.tn)
VAT rates
Standard
19%
Reduced 7%, 13%
Other Exempt
VAT number format
Tax ID Number/VAT Code A, B, P, D or N/number of establishments
VAT return period Monthly
Thresholds
Registration TND100,000 (retailers)/None (other businesses)
Recovery of VAT by non-established businesses No
B. Scope of the tax
VAT is applicable mainly to the following transactions:
• Supplies of goods and services made in Tunisia
• Imports of goods and services
• Industrial activities are generally subject to VAT except for the production of agricultural and fish products (these are outside the scope of VAT)
• Other activities subject to VAT include professional services, wholesale trade (excluding foodstuffs) and retail trade (for traders with annual turnover of TND100,000 or more), excluding foods, medicine, pharmaceuticals and products subject to administrative approval tariffs
VAT suspension. VAT may also be suspended. A special authorization from the tax administration is required to obtain a VAT suspension on purchases. A VAT suspension is available to entities engaged in exporting to financial institutions working mainly with nonresidents, to entities governed by the Hydrocarbons Code, and service provision companies and international commerce companies no longer eligible to the VAT suspension regime, even if they are wholly engaged in exportations.
The 2022 Finance Act abolished certain rules applicable to the VAT suspension regime. Therefore the following companies are no longer eligible for the VAT suspension regime:
• Service companies and international trade companies whose turnover from exports or taxsuspended sales exceeds 50% of their total turnover
• Fully exporting service companies and international trade companies
• Service companies and international trade companies that carry out local import and acquisition of materials, products and services necessary for the realization of export operations
Entities subject to VAT may be entitled to VAT suspensions on their local purchases of raw materials and equipment to be used in their projects realized abroad exceeding TND3 million.
Other regimes suspend VAT as well, such as the regime for air transport companies in respect of domestic and international transport, the regime for companies responsible for the implementation of social housing, the regime for Tunisian citizens resident abroad who realize projects in Tunisia, the regime for donations as part of an international cooperation, etc.
Effective 1 January 2025, VAT is suspended on equipment, materials, products, services and real estate acquired by community companies for 10 years from the date of their incorporation.
Suspension of VAT on products and articles intended for the pharmaceutical industry imported or acquired by pharmaceutical industry companies, effective 1 January 2025.
The advantage is granted for local acquisitions based on a VAT suspension certificate issued for this purpose by the competent tax service.
Suspension of VAT for medicines with a locally manufactured similarity imported by the Central Pharmacy of Tunisia, under customs classification 30.03 and 30.04 and this, from 1 January 2025 to 31 December 2026.
Suspension of VAT due on the importation and sale by the Tunisian Trade Office and persons authorized by the Ministry responsible for trade of coffee under customs classification 09.01 and tea under customs classification 09.02.
VAT suspension may be obtained by requesting a VAT suspension certificate from the tax administration. This certificate may be issued annually or for certain transactions. Copies of the certificate and the original purchase order certified by the tax authorities are presented to the seller to ensure that the seller does not add VAT to the invoice. The tax administration approval is based on whether the company has the right to be eligible for such “incentive” regime and on whether the company’s tax return filings for the different tax heads are up to date.
Effective use and enjoyment. To avoid instances of non-taxation or double taxation, jurisdictions can apply “use and enjoyment” rules that allow a service that is “used and enjoyed” in the jurisdiction to be taxed or prevent a service that is “used and enjoyed” outside the jurisdiction from being taxed. If a service is taxed in the jurisdiction under the “use and enjoyment” provisions, a non-established supplier of the service may be required to register for VAT in every jurisdiction where it has customers that are not taxable persons. In Tunisia, no services are subject to the “use and enjoyment” provisions.
Transfer of a going concern. Normally, the sale of the assets of a VAT-registered or VAT-registrable business will be subject to VAT at the appropriate rate. However, a transfer of a business as a
going concern (TOGC) may be outside the scope of the tax under certain conditions. A TOGC is the sale of a business or part of a business capable of separate operation including assets. Where the sale meets conditions, the supply is treated as outside the scope of VAT. In Tunisia, a TOGC is treated as outside the scope of VAT. However, the VAT law in Tunisia does not contain specific provision for the transfer of a going concern.
Transactions between related parties. In Tunisia, for a transaction between related parties, the value for VAT purposes is calculated as follows:
• When a company is placed under the dependence of a company whose head office is located outside Tunisia, the VAT is assessed as in the domestic regime. In this regard, it must be outlined that, domestically, the taxable turnover includes the price of the goods, works or services; all costs, duties and taxes included as well as the value of the objects given in payment, excluding VAT, operating subsidies and conjunctural and compensation levies. The amounts collected for the deposit and non-return of returnable packaging are not included in the tax base.
• When a selling company and a nontaxable buying company are dependent on each other, the VAT due by the first is based not on the value of the deliveries it makes to the second but on the selling price practiced by the latter. However, this provision does not apply to products delivered in large and usual quantities to third parties at the same price as that agreed between them by dependent companies. These provisions are also applicable, even in the absence of a link of dependence, when the taxable person does not provide proof that he acted in the interest of his business.
C. Who is liable
A taxable person is an individual or legal entity that is registered for VAT in Tunisia and any other entity that engages independently in taxable transactions other than import sales.
In addition, a person (individual or legal entity) that supplies goods or services for consideration as part of that person’s business activities, but who is not required to register for VAT, may opt for a VAT registration if any of the following conditions are satisfied:
• It carries out operations that are not within the scope of VAT.
• It carries out export activities that are exempt from VAT.
• It supplies products or services that are exempt from VAT to persons subject to VAT.
Exemption from registration. The VAT law in Tunisia does not contain any provision for exemption from registration.
Voluntary registration and small businesses. If a Tunisian customer is required to apply the reverse charge to VAT on cross-border payments, a non-established and nonresident supplier may opt for registering for VAT purposes if the supplier incurs input tax on the purchases that are necessary for the services rendered in Tunisia, and if the input tax generates a VAT-credit position or a VATreceivable position for that supplier. The input tax credit may be refunded upon request.
Group registration. Group VAT registration is not allowed in Tunisia.
Fixed establishment. In Tunisia, there is no legal definition of a fixed establishment for VAT purposes. However, the direct taxation rules for a permanent establishment (PE) may apply for VAT purposes. There is no definition of a PE in the Tunisian direct tax law. In practice, the Tunisian tax authorities refer to the definitions given by double taxation treaties. However, given that the majority of treaties have not defined the concept of PE for all other services, and that the tax legislation in force in Tunisia has not also addressed this concept and in recognition of the administrative doctrine and the comments of the Organisation for Economic Co-operation and Development (OECD) model of double taxation treaties, the other services are considered rendered within the framework of a PE in Tunisia when they meet the following conditions:
• They are continuous in time (their duration exceeds six months).
• They are multiple and dependent on each other.
• They form a complete business cycle.
• They require a fixed place of business such as oil well drilling operations, except in the case of drilling operations carried out in Tunisia by a company resident in the United States of America, which are considered carried out within the framework of a PE when their duration exceeds 183 days per period of 365 days.
On the other hand, the products and services supplied and purchased by the PE remain subject to VAT in accordance with the Tunisian tax legislation in force.
Non-established businesses. Nonresident companies that do not have a PE in Tunisia but carry out taxable transactions are subject to VAT. Accordingly Tunisian customers must withhold the entire VAT charge on payments for services supplied by nonresident entities. The nonresident must add Tunisian VAT to its invoice. The customer withholds the VAT amount, remits it to the Tunisian tax administration and pays the amount due for the services, exclusive of VAT, to the foreign provider.
The customer should also obtain a “discharge certificate” in support of the VAT remittance and provide it to the bank transferring the amount due. Failing to be provided with such discharge, the bank performing the transfer could incur penalties of up to 20% of the amount of taxable revenues. However, Tunisian customers that are nonresident, from an exchange regulation standpoint, are exempt from the requirement to obtain such a discharge certificate.
Non-established companies may register for VAT with the Tunisian tax administration. In such case, the VAT withholding procedure is not required.
Tax representatives. Tax representatives are not required in Tunisia. Nevertheless, where nonestablished businesses that are not VAT-registered in Tunisia provide supplies to a Tunisian customer, the latter shall fully withhold the VAT due in Tunisia. Alternatively, those businesses may opt to report the VAT withheld directly and deduct the VAT paid on the purchases of goods and services necessary to perform the transactions subject to VAT. To do so, they must:
• Submit a declaration of tax existence by filing a prescribed form with the relevant tax office
• File a VAT return
Reverse charge. The reverse charge applies when services or goods are used/consumed in Tunisia and supplied by nonresident entities. The VAT that has been declared as output tax under the reverse charge may be refundable as if it qualifies as input tax.
Domestic reverse charge. The reverse charge is in general not applicable on domestic transactions. According to Tunisian tax rules, it applies only on payments to nonresident and non-established suppliers when the payment corresponds to a taxable operation in Tunisia, other than an importation of goods. VAT is collected on domestic payments by the supplier who remains liable for the VAT due.
However, the reverse charge is partially applicable on local payments when payment is processed by State Services, local authorities, public companies and establishments. When payments are processed by these bodies, a withholding tax on the VAT amount should be processed at the rate of 25%.
Digital economy. There are no VAT rules specifically applicable to the digital economy.
Nonresident providers of electronically supplied services for business-to-business (B2B) or business-to-consumer (B2C) supplies are not required to register or account for VAT due on supplies in Tunisia. For B2B supplies, the customer is required to self-account for the VAT due by way of the reverse-charge mechanism (see the Reverse charge subsection above). For B2C sup-
The term “exempt supplies” refers to supplies of goods and services that are not liable to VAT and that do not qualify for input tax deduction.
• Banking interest
Examples of exempt supplies
• Maritime air transport (except import or output VAT, on motors intended to be incorporated into boats and fishing vessels)
• Food products (e.g., milk and flour)
• Commission on electronic payments via terminal, internet or mobile phone from VAT
• Margin made by distributors of electronic top-up phones and airtime recharge cards
• Interest on loans intended for financing projects through “crowdfunding” platforms.
Option to tax for exempt supplies. According to the tax legislation in force, there is a possibility to opt for the VAT regime regarding services, goods and activities exempt for VAT or positioned out of the scope of VAT.
E. Time of supply
The time when the taxable event is considered to have taken place and VAT becomes due is called the “time of supply” or “tax point.”
The time of supply for the sale of goods is when the goods are delivered to the customer.
The time of supply for services is when the service is rendered or when the payment is made (fully or partially) if the settlement is made before the completion of the service.
Deposits and prepayments. For the importation of goods: the VAT is due (paid to customs) by the customs clearance.
For the domestic supply of goods: the tax is due when the goods are supplied. The taxable event is not linked to deposits and advanced payments. The VAT is generally due by the delivery of goods.
For the provision of services: deposits and advanced payments are considered as the time of supply if the settlement is made before the completion of the service. The VAT is generally due by the completion production of the service or by the collection of the price or the advances if they occur before the provision of the service.
Continuous supplies of services. There are no special time of supply rules in Tunisia for supplies of continuous supplies of services. As such, the general time of supply rules apply (as outlined above).
Goods sent on approval for sale or return. The tax law does not explicitly refer to goods delivered for approval; the delivery is when the supply is made. In practice, the VAT is due when the goods are received. If the goods are returned, they should be subject to a credit note on which the amount of the returned goods is mentioned with VAT.
Reverse-charge services. The reverse charge is due when the payment is processed. In fact, the VAT must be withheld by taxable persons registered in Tunisia for tax purposes in one of the following circumstances:
• When the taxable person is the State or local authorities, or businesses and public institutions, 25% of the due VAT should be withheld when the payment is processed.
• When the VAT is due on cross-border payments, 100% of the due VAT should be withheld when the payment is processed.
The common regime, under which the VAT credit is fully refundable, applies in the following circumstances:
• The VAT credit will be refundable without a tax audit if the credit is due to:
– Exports (refund in 7 days)
– Withholding tax on VAT
– Sales with the suspension of the VAT
– Operations (90 days)
– Direct investment programs, as defined in Article 3 of Investment Law, performed by companies other than those operating in financial industry energy, mining, real estate development, consumption on premises, trading and telecom operators (refund in 21 days)
– Investment plans related to upgrade programs approved by the steering committee of the upgrading program (21 days); this is effective from 1 January 2023 for input tax credit refund applications submitted after this date, or VAT credit confirmed by tax authority
If the VAT credit is due to:
• The normal course of business (for example, the VAT on purchases exceeds the VAT on sales), then the VAT credit is refundable, if it persists on six consecutive tax returns, as part of one of two processes:
– For businesses that have the legal obligation to designate a legal auditor, if the financial statements are certified with an audit report that requires no modification that has an impact on the tax basis, an advance of 50% of the VAT credit is provided before a tax audit, and the remaining amount is refundable after a tax audit (refund in 60 days).
– For other cases, an advance of 15% of the VAT credit is provided before a tax audit, and the remaining amount is refundable after a tax audit (refund in 120 days).
• For companies under the control of the Directorate of Large Business (DGE), the VAT credit is fully refundable before a tax audit, in seven days, under the following conditions:
– The report of the legal auditor does not contain an amendment affecting the tax basis.
– The legal auditor certifies in a separate audit report that the VAT credit to be refunded is accurate.
If, after a tax audit, the tax authorities confirm the validity of a VAT credit, it is fully refundable notwithstanding the appeals procedures that may follow.
Pre-registration costs. Input tax incurred on pre-registration costs in Tunisia is not recoverable. The input tax on pre-registration costs appearing on invoices prior to the tax registration cannot be recovered by a future taxable person before having the status (under incorporation) since the deductibility of input tax needs the issuing of an invoice that includes mandatory mentions pertaining to the payer and that cannot be provided during the incorporation stage (such as tax ID).
Bad debts. Output tax accounted for on supplies that do not get paid by the recipient (i.e., bad debts) cannot be recovered in Tunisia.
Noneconomic activities. Input tax incurred on purchases that are used for noneconomic activities is not recoverable in Tunisia.
G. Recovery of VAT by non-established businesses
Input tax incurred by non-established businesses that are not registered for VAT in Tunisia is not recoverable.
H. Invoicing
VAT invoices. Tunisian taxable persons must provide VAT invoices for all taxable supplies and services, including exports, made to other taxable persons. Recipients of supplies must retain copies of invoices.
Periodic payments. Payments must be paid by the 28th day of the following month for legal entities or the 20th day of the following month for those taxable persons required to make payments electronic (see below). For individuals, the payment deadline is by the 15th day of the following month for individuals.
The payments must be paid in TND and, it should be processed electronically (via specific payment platform) for taxable persons of which the annual turnover is equal or exceeds TND100,000. There is a system of online tax declaration that allows taxable persons to liquidate and pay their taxes online (www.impots.finances.gov.tn).
The online tax declaration allows to liquidate and pay monthly tax returns and annual tax returns (monthly tax returns, filing of corporate tax returns, declaration of the advance due by partnerships and similar companies, declaration of personal income tax, declaration of the installment). This process is mandatory for persons whose turnover is equal or more than TND100,000.
Electronic filing. Electronic filing is mandatory in Tunisia for certain taxable persons. The electronic filing of a monthly VAT return is mandatory for entities whose annual revenue exceeds TND100,000. Below this threshold, electronic filing is optional.
Payments on account. Payments on account are not required in Tunisia.
Special schemes. VAT suspension regime. For sales and purchases under the VAT suspension regime, the purchaser and the supplier must each make an electronic declaration, before the 28th day of the month that follows the quarter of the calendar year. The VAT suspension regime may be granted to special taxable persons, e.g., those that wholly export, supply hydrocarbon and those in the mining sectors.
Annual returns. Annual returns are not required in Tunisia.
Supplementary filings. Quarterly reporting on purchases with the suspension of VAT. A detailed list of invoices is required to be submitted to the tax authority. These are for invoices issued in suspension of VAT according to a model established by the administration including in particular the invoice number object of the benefit, its date, the customer’s first and last name or business name, address, tax identification card number, the price excluding tax, the rate and the amount of value added tax having is the subject of suspension and the number and the date of the certificate of purchase in suspension of VAT relating to the sale transaction in suspension of tax. The filings must be submitted to the competent tax control office during the 28 days that follow each calendar quarter.
Correcting errors in previous returns. Omissions, errors and concealments found in the base, rates or liquidation of the declared VAT returns can be corrected as follows:
• Until the end of the fourth year following the year in which the profit, income, turnover, receipt or disbursement of sums or other transactions giving rise to the liability for tax. However, for companies subject to tax under the actual regime and for which the balance sheet closing date does not coincide with the end of the calendar year, the claw back/tax recovery right for a given fiscal year is extended until the end of the fourth calendar year following the year in which the balance sheet is closed
• Within four years from the registration date of the act or statement, regarding registration rights
However, when an act or judgment with a higher value of buildings in the scope of a declaration of succession occurs within two years from the date of death, the limitation period begins to run from the date of registration of the act or judgment.
A taxable person should consequently correct errors or omissions from prior periodic declarations within the period via a rectifying declaration, which may be made online or in person.
Digital tax administration. There are no transactional reporting requirements in Tunisia.
J. Penalties
Penalties for late registration. A fine that varies between TND1,000 and TND50,000 is applicable for late registration of VAT. However, this fine does not apply if the taxable person regularizes the situation prior to a tax audit.
Penalties for late payment and filings. For the late filing of VAT returns or underpayments of VAT, penalties are imposed as follows:
• In the case of a spontaneous late filing (prior to a tax audit):
– A delay penalty of 1.25% per month or fraction of a month
– A base penalty of 3%, and where the delay exceeds 60 days a penalty of 5%
• In the case of a tax audit:
– A delay penalty of 2.25% per month or fraction of a month
– A base penalty of 10%, which can be increased to 20% in the following cases:
a) A claim for collected turnover taxes and unremitted withholding taxes
b) A decrease that is equal or more than 30% in reported turnover
c) Tax fraud
–
The above penalties can be reduced as per the following:
a) A delay penalty of 1.25% per month or fraction of a month
b) A base penalty of relief of 50% on the due penalty
– The following conditions must be met to receive the benefit of the above penalty relief:
a) Signature of an acknowledgment of debt before notification of the automatic tax order
b) Undivided payment within 30 days of acknowledgment of debt
The total amount of the above penalties is capped in all cases to the amount of the tax base.
For sales and purchases under the VAT suspension regime, fines and penalties, which would be incurred by the purchaser and the supplier if they do not comply with some formalities, are as follows:
• The purchaser: In the case of undeclared purchase orders, the taxable person must pay a fine that amounts to TND2,000 per undeclared purchase order for the first five purchase orders and TND5,000 each starting from the sixth purchase order. Additionally, if the seller makes sales without obtaining an original of the certified purchase order, the customer would be subject to a fine of 50% of the VAT that would have been invoiced by the supplier if the sales had been made out of the exceptional VAT suspension regime.
• The seller: If the seller makes sales without obtaining an original of a certified purchase order, it would be subject to a fine that amounts to 50% of the VAT that would have been invoiced if the sales had been made out of the exceptional VAT suspension regime.
VAT credits unduly refunded under the full refund without a prior tax audit framework are subject to an administrative tax penalty equal to 100% of the VAT credit:
• Refund of the VAT derived from exportations of goods or services used or consumed out of Tunisia
• Refund of the VAT for the profit of the enterprises under the control of the DGE
Penalties for errors. The same penalties for late payment and filings are applicable for the case of errors. There are no specific penalties for errors.
There are no specific penalties associated with the late notification or failure to notify the tax authorities of changes to a taxable person’s VAT registration details. However, the tax authorities may consider the taxable person as noncompliant, which can lead to blocking issues with respect to the Tunisian administrations. For further details, see the subsection Changes to VAT registration details above.
Penalties for fraud. A penalty of imprisonment of 16 days to three years and a fine of TND1,000 to TND50,000 for any person who keeps double accounts or uses falsified accounting docu-
ments, registers or directories, with the aim of totally or partially to the payment of tax or to benefit from tax advantages or tax refunds.
The above is imposed, in addition to the withdrawal of the license to practice, business agents, tax advisors, experts and all other persons having an independent profession of keeping or helping to keep accounts and who have knowingly established or helped in making false accounts or false accounting documents to minimize the tax base or the tax itself. These people are also jointly liable with their customers for the payment of the principal tax and the related penalties evaded by their actions.
Personal liability for company officers. The legal representatives of the company can be held personally liable for errors and omissions in VAT declarations and reporting and may therefore be subject to the penalties outlined above under the subsection Penalties for fraud. This means that business agents, tax consultants, experts and all other persons who make an independent profession of keeping or assisting in the keeping of accounts and who have knowingly established or helped to establish false accounts or false accounting documents with the aim of reducing the tax base or the tax itself can be punished by imprisonment from 16 days to three years and assessed a fine of TND1,000 to TND50,000, in addition to the withdrawal of the license to practice.
These people are, moreover, jointly and severally liable with their clients for payment of the principal of the tax and the related penalties evaded by their actions.
The same penalty is applicable to the persons responsible for carrying out or setting up the computer systems or applications relating to the keeping of accounts or the preparation of tax returns if they fulfill the facts outlined above.
However, it should be noted that Article 101 of the Tunisian Tax Rights and Procedures Code provides that any increase in the VAT credit or decrease in turnover to evade payment of the said tax or to benefit from the refund of the said tax entails a sanction that is applied when the reduction or increase is equal to or greater than 30% of the declared turnover or tax credit. As for the sanction, it is a fine from TND1,000 to TND50,000 and imprisonment from 16 days to three years. As for the transaction fee, it is 50% of the amount of the tax principal evaded without the amount of the fine due being less than TND500 or more than TND50,000.
Statute of limitations. The statute of limitations in Tunisia is 4, 6 or 10 years. For underpayment of VAT due, omissions, errors and concealments found in the tax base, the rates or the liquidation of declared taxes can be corrected until the end of the fourth year following the year in which the profit, income, turnover, receipt or disbursement of sums or other transactions giving rise to the liability for tax. For noncompliance of filing obligations (i.e., not filing a VAT return), the statute of limitations is 10 years. For filing nil returns or including insufficient reported taxes, the statute of limitations six years.