Tunisia Way

T unisia has enacted several laws to encourage foreign investment in the industrial, agricultural and tourism sectors. Legislation promoting foreign investment in the service sector has been drafted and may be adopted by the Government.

Foreign investors wishing to invest in these sectors under the enabling legislation may do so through the form of a partnership (Association of Person) or as either a public or private company (Association of Capital).

In order to promote economic growth, narrow existing trade imbalances and increase exports, Tunisia offers extensive investment incentives. These incentives have been available since the 1970s. The Investment Incentives Code, which became effective in January 1994, promotes these goals. The Investment Incentives Code offers two types of incentives. The first kind of investment incentives is applied to all investment projects, except projects relating to mining, energy and finance. The second kind of investment incentives is reserved for projects engaged in specified fields or projects of a special nature.

All investment projects, except projects relating to mining, energy and finance are entitled to the following investment incentives:

1. A deduction from taxable income, of up to 35 percent of net income or profits, for income or profits reinvested in share capital or invested in capital increase;
2. A suspension of VAT and sales tax on locally produced equipment;
3. A reduction of 10 percent from customs duties and the suspension of VAT and sales taxes on imported equipment for which there is no Tunisian manufactured substitute;
4. An option to apply an installment method of depreciation for production plants and equipment, excluding offequipment, having a life expectancy of more than seven years.

The second kind of investment incentives is available to investment projects in the field of exporting (whether in whole or in part), regional development projects, or projects engaged in agriculture, environmental protection, research and development and new small enterprises. The investment incentives are substantial and vary depending on the field in which the enterprise engages and the industry concerned. A brief overview of some of the incentives available follows:


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