Doing business in Tunisia

UK Trade & Investment Doing business in Tunisia

Are you a member of a UK company wishing to export overseas? Interested in entering or expanding your activity in the Tunisian market? Then this guide is for you!

The main objective of this Doing Business Guide is to provide you with basic knowledge about Tunisia; an overview of its economy, business culture, potential opportunities and an introduction to other relevant issues. Novice exporters, in particular will find it a useful starting point. Further assistance is available from the UKTI team in Tunisia. Full contact details are available at the end of this guide.

Important Information - Sanctions and Embargoes Some countries maybe subject to export restrictions due to sanctions and embargoes placed on them by the UN or EU. Exporting companies are responsible for checking that their goods can be exported and that they are using the correct licences. Further information is available on the Department for Business, Innovation & Skills (BIS)

The purpose of the Doing Business guides, prepared by UK Trade & Investment (UKTI) is to provide information to help recipients form their own judgments about making business decisions as to whether to invest or operate in a particular country. The Reportâ&#x20AC;&#x2122;s contents were believed (at the time that the Report was prepared) to be reliable, but no representations or warranties, express or implied, are made or given by UKTI or its parent Departments (the Foreign and Commonwealth Office (FCO) and the Department for Business, Innovation and Skills (BIS)) as to the accuracy of the Report, its completeness or its suitability for any purpose. In particular, none of the Reportâ&#x20AC;&#x2122;s contents should be construed as advice or solicitation to purchase or sell securities, commodities or any other form of financial instrument. No liability is accepted by UKTI, the FCO or BIS for any loss or damage (whether consequential or otherwise) which may arise out of or in connection with the Report.

UK Trade & Investment Doing business in Tunisia

Content INTRODUCTION

PREPARING TO EXPORT TO TUNISIA

HOW TO DO BUSINESS IN TUNISIA

BUSINESS ETIQUETTE, LANGUAGE AND CULTURE

WHAT ARE THE CHALLENGES?

HOW TO INVEST IN TUNISIA

CONTACTS

RESOURCES/USEFUL LINKS

UK Trade & Investment Doing business in Tunisia

Introduction Background Tunisia is the smallest country in North Africa. It has a history of conservative macroeconomic management. It has made good progress in social development, such as high levels of education and gender equality, but serious regional disparities remain and more people are entering the job market than it can absorb.

Revolution The former regime suppressed political and press freedom, tolerated and encouraged widespread corruption and discriminated against areas outside its political heartland on the coast. Widespread dissatisfaction finally boiled over in December 2010 when a popular revolt started in the poor, central region. This was relayed to the world through the internet and other social networks. The unrest led to the overthrow of the former President who fled the country on 14 January 2011.

New Beginning An interim government is now in place with representatives of political parties and civil society with the task of leading Tunisia towards democracy through organising free elections this year. They have set a date of 23 October 2011 for a Constituent Assembly. This Assembly will draft a new constitution and supervise further Parliamentary, local and possibly Presidential elections over the next two years. At the same time it will elect a new government that will be empowered to take the reform process forward and the promotion of economic growth at the centre of its programme. This process is receiving strong support from the international community and if it succeeds Tunisia will provide new opportunities with its modernising economy on the edge of Europe.

British Interest The UK was the first western country to engage with post revolutionary government. The Foreign Secretary William Hague visited Tunisia on 25 January 2011 and called on the Tunisian Prime Minister. He urged the transition government â&#x20AC;&#x153;to implement rapidly the wider commitments it has made and stressed that the UK stands ready, with the EU, to support Tunisia as it moves to hold free and fair elections.â&#x20AC;?

Open for Business On 29 January 2011 the new Governor of Tunisian Central Bank encouraged international investors at the Davos Forum to renew their confidence in Tunisia. He said that Tunisia had foreign currency reserves of some US $9 billion, that Tunisia would not default on debts and that Tunisian banks were operating normally. He forecast that the downfall of the former regime had not led to instability. He said he was confident that the economy would bounce back. He indicated that the public administration, businesses and banks were all operating normally. In April the Finance Minister told Reuters that Tunisia would not reschedule any debt.

UK Trade & Investment Doing business in Tunisia

Ratings Response In February Moody’s ratings agency downgraded Tunisia’s sovereign rating by one notch from “Baa2” to “Baa3” and assigned a “negative” outlook. On 2 March 2011 ratings agency Fitch Ratings downgraded Tunisia’s ratings. The long-term foreign currency Issuer Default Rating (IDR) was dropped from “BBB” to “BBB-” and the longterm local currency IDR was lowered from “A-” to “BBB”. The outlook for both IDRs is “negative”. Fitch was clearly worried that there was a possibility that Tunisia could default and that the transition period would not lead to a stable further interim government after the elections. On 16 March ratings agency Standard & Poor’s also downgraded Tunisia’s long-term foreign currency sovereign rating to “BBB-” with a “stable” outlook. This is on the brink of “junk” status.

Strengths and weaknesses of the market

Strengths Tunisia has the most diversified economy in North Africa. It is well positioned geographically, at the crossroads of Europe, Africa and the Middle East. It is well connected to Europe with daily flights to many major cities and good maritime connections to France and Italy. Costs may be higher than in Asia but these can be outweighed with the advantages of close proximity to UK and EU markets, particularly in sectors like manufacturing and textiles. The population is young, educated and generally open to Western ideas, often by shared connections to Europe. Arabic is the official language and the language of business and most government administration is French. English is now becoming more widely spoken among the young business and political elite. Under the previous regime dealing with the administration was challenging, something which should change as decision-making becomes more decentralised. Long-term prospects are good if the transition is smooth and orderly with a business-friendly government.

Weaknesses Institutions and companies controlled by the former Presidential clan require investigation and work to change them into transparent and profitable enterprises. Under the previous regime, enterprises sometimes had no choice but to accept local partners who were connected to the ruling family. Today companies face different demands. For example, on 3 May 2011 it was announced that UK energy company Petrofac would be providing assistance of 1.5 million Tunisian dinars (about £680,000) in annual local development assistance where its operation is based, in addition hiring 20 young people, including 8 graduates, from the area and providing the local hospital with equipment worth 600,000 dinars (about £271,000). The financial sector remains fragile and requires more reform. For banks this means reducing non-performing loans (NPLs) and adapting to increasingly strict and globalised banking regulatory standards. The Tunisian Central Bank disclosed that Tunisian banks lent 2.5 billion dinars (about £1.1 billion) to businesses connected to the former ruling family. This was some 6% of all private sector credit. These loans made the Tunisian bank loan books more risky and threatened to reverse the progress made on driving down the rate of NPLs.

UK Trade & Investment Doing business in Tunisia

Unemployment remains a major problem. It was one of the main causes of the revolution. There is also significant underemployment. Concern over joblessness dominates the national agenda. This translates into approaches to the workplace that British companies will find awkward. For example, Tunisia has been criticised in successive World Bank/International Finance Corporation Doing Business reports for having overly strong labour laws (e.g. making dismissal difficult). For example, in the 2010 Doing Business report the overall ease of doing business was an impressive 69 (out of 183 countries) but worker protection was a much lower ranking at 108 of 183. According to the Doing Business reports the Tunisian Difficulty of Firing index is almost triple the regional average. But laws providing protection for employees are likely to remain in place as the interim government faces strong pressure from unions and demonstrations to protect and create jobs. Strikes and other industrial unrest were not permitted under the previous regime. These are now widespread and likely to continue in a way that is similar to some European countries.

Growth Before the revolution Tunisia was rebounding from the global financial crisis. GDP growth in 2010 was 3.7%. The double impact of the Tunisian revolution and the conflict in Libya, an important market for Tunisia, has hit the economy hard. The 2011 GDP growth projections range from -2.5% to 2%. On 2 March 2011 Fitch Ratings said 2011 growth would be 1-2%. In April 2011 the Tunisian official growth rates for 2011 were estimated at 0-1%. On 29 April the Central Bank Governor said that 2011 growth would be 1-2%. In April the International Monetary Fund predicted 2011 growth of 1.3% and 2012 growth of 5.6%. On 28 March 2011 the African Development Bank (AfDB) gave a much wider range of growth figures based on the three scenarios for the Tunisian economy in 2011-12. In the 2011 scenario real GDP growth will be -2.5%, 1.1% or 3.6%. By 2012 real GDP growth will return to all positive scenarios of 2.4%, 3.3% or 4.2% growth. The most pessimistic AfDB 2011 growth scenario is echoed by the International Institute of Finance (IIF). On 2 May 2011 the IFF said that Tunisia could fall into recession with the economy contracting by 1.5% in 2011. However the IFF also forecast that Tunisia could bounce back in 2012 with strong growth of 5.2%. Inflation Inflation is likely to increase from 2010 levels of between 4.4 and 4.5%. Under the three AfDB scenarios, 2011 inflation will range from 6.4% to 4.7% and 4.2%. The AfDB predicts that inflation will then stabilise in 2012 at 4.6%, 4.4% or 4.2% in each of the three short-term scenarios for Tunisia. Strong EU Links A weak economic recovery in the EU will continue to have a negative impact on Tunisian growth. The EU is Tunisia’s first economic and commercial partner and accounts for:

•

76% of Tunisia exports,

•

84% of tourism receipts,

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88% of remittances, and

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73% of all foreign direct investments.

UK Trade & Investment Doing business in Tunisia

Exports in manufacturing sectors such as aerospace, automotive, electrical and mechanical, and textiles have slightly increased in 2010 following some recovery in the EU. In 2008 Tunisia and the EU achieved full trade liberalisation for industrial goods. In 2010 negotiations started with the EU on liberalisation of services and food trade. The EU Delegation in Tunis coordinates EU effort for market access improvement for EU exports through regular dialogue with the Tunisian administration. The EU announced end of January 2011 its plans to increase the initial â&#x201A;Ź240 million aid for 201113 as part of its medium term global support plan. Funds should benefit not only industry and agriculture but also the legal system and good governance.

Moving Upmarket and to New Markets In January 2010 the World Bank concluded that Tunisia must move from a low value-added and low cost economy to a more sophisticated, higher value-added and knowledge-based economy. Tunisia has started to diversify its export destinations and it is improving quality of its products. New exports markets include neighbouring countries, the rest of Africa, the Arab world and Asia. There is potential for the export of services, in particular IT, engineering, public works and construction, energy and water treatment. The quality of human resources comes from considerable investment in public education and health over past fifty years. In 2008, Tunisia invested 7.2% of its GDP in education. This has helped to achieve the highest literacy rate in North Africa (74%). Also, 99% of girls go to school. Women account for more than half of university students. In a population of 10.4 million, 29.5% of the population is under 18. However, unemployment rate remains high, around 19% in 2011 compared to the optimistic official figures of 14 to 15% in previous years.

Aid Multilateral aid agencies, including the World Bank and African Development Bank (AfDB) and European Investment Bank (EIB), have made substantial contributions to Tunisian economic prosperity and social welfare for many years.

World Bank In December 2010 the World Bank announced a US $41.6 million to support the development of northwest Tunisia. This should improve social and economic conditions of the rural population while protecting and improving the natural resources of the region. On 3 May 2011 the World Bank announced joint assistance with the AfDB to Tunisia for US $1 billion.

AfDB The AfDB has made a â&#x201A;Ź236 million loan to Tunisia for roads. It is the biggest project that AfDB has ever funded in Tunisia. The project covers rehabilitating 863 km of roads, constructing 12 bridges and bypasses, developing about 80 km of rural tracks, and doubling of 52.6 km of regional roads.

UK Trade & Investment Doing business in Tunisia

EIB The EIB has provided some €3.6 billion of loans to Tunisia over the past 30 years. On 20 January 2011 representatives of EIB said on 20 January EIB is ready to help Tunisian progress towards economic and social prosperity. The EIB is Tunisia’s leading financial partner and operates in Tunisia within the framework of the Facility for Euro-Mediterranean Investment and Partnership (FEMIP). It has contributed to modernising Tunisia’s economy, creating jobs and improving people’s living conditions through financing of projects in industry, transport, water, environment and energy,including renewable, in addition to lines of credit to local banks to finance the development of small and medium enterprises (SMEs). Recent EIB funding has included the following in December 2010: •

Two loans totalling €313 million. These were for the power production project in Sousse and construction of new suburban railways.

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An €185 million loan to upgrade the ageing power network and improve the grid interconnection with its Algerian neighbour. This includes the erection of 660 km of hightension electricity lines and the building of transformers.

Opportunities in Tunisia The unstable political situation has had an impact on the economy and has made identifying opportunities less certain. But many other countries are showing interest with visiting trade delegations scoping out potential opportunities. The elections this year will hopefully give a clearer picture about the direction of the country.

Tourism In 2010 tourism accounted for about 12% of GDP. It provides about half a million jobs directly and indirectly. The impact of the revolution on the sector has been negative with: • • •

bookings for the summer of 2011 are 60% less than during the same period in 2010, up to 40,000 jobs related to tourism were lost in the first quarter of 2011, and earnings in the sector were down by 45% in the first quarter of 2011.

The Tunisian government has announced a £25 million on a campaign to promote Tunisia. The new campaign will target Algeria with the aim of attracting 350,000 Algerians in the important summer season in June and July. The Tunisian Tourism Ministry plans to improve 12 archaeological sites in order to make them more attractive to tourists. The success of the 2011 tourism season will depend on the security situation, which remains uncertain.

Agriculture and Food Processing Industry Agriculture accounts for 11–15% of GDP. Combined agricultural and food processing sectors account for 9–14% of exports (depending on harvests). This sector employs about 16% of the Tunisian workforce. The main exports are olive oil (about 3% of all exports), seafood, dates and citrus fruit. The sector hopes to achieve a 6% growth rate in 2011, particularly after a good rain in April.

UK Trade & Investment Doing business in Tunisia

ICT Tunisie Telecom, the national fixed line, 2G and 3G operator went through a number of staff strikes that revealed the corruption that was affecting the development of the company.

Transport The rapid rail network (Réseau Ferrovier Rapide or RFR) is meant to relieve the light rail routes of their longer-distance traffic, add much-needed extra capacity and improve journey times to the outer suburbs. Construction of the RFR network is expected to take around 15 years, beginning with a first phase costing £800 million. This covers the inner sections of each of the four new routes, adding up to 29 route-km in total, plus an initial build of rolling stock, stabling depot and maintenance workshops. Line C would be built as far as Bir Kassaa, Line D to Goubaa, Line E to Zahrouni station in Ezzouhour, and Line F as far as Borjel. The studies for the RFR project were prepared by a consortium of four companies: SESTRA from France, SCET and STUDI from Tunisia and PCA from Japan. A tender for the civil engineering works for the first phase was issued on 7 May 2011 for a deadline of 8 June 2011.

Construction Tunisia has a modern motorway network that runs over 400 km from Bizerte in the north to Sfax in the south. The building of the extension to Gabes has started but is currently on hold because of strike action. The transition government has announced that it will be extending the motorway network to reach the remote regions from where the revolution has started. It is also working on developing roads in rural areas. The Minister of Transport and Equipment has announced that it will build 1,750 km of rural roads and repairing other 500 km. The prices of construction materials have increased after the revolution because of an upsurge in demand. The boom in construction is apparently because of the previous difficulty in obtaining authorisation licences from municipalities. The licences were very difficult to obtain under the previous regime, which encouraged corruption.

Ports The construction of a £1.06 billion deepwater port near the industrial zone of Ennfidha has been put on hold due to environmental concerns announced recently by the Minister of Equipment and Transport. However, the Government will be extending the Ports of Rades and Gabes.

Energy BG Tunisia is the largest single foreign investor in the energy sector with an investment of about US $3.5 billion. It produces around 60% of the country gas needs. BG Tunisia plans to invest US $300 million in 2011 to develop its two production sites, including the drilling of two new wells and maintenance of the offshore platforms. Tunisia’s potential in renewable energy is promising. In particular, there are plans for electricity production using solar CSP and photovoltaic, cogeneration and biomass. These plans are for both national and export markets.

UK Trade & Investment Doing business in Tunisia

Financial Sector Tunisia planned in 2011 to merge two of its state owned banks before the revolution. This project is put on hold as the revolution has revealed that the family of the ousted President was abusing its position to obtain loans from those banks with very low interest. Also, the assets frozen from the family of the former President family included important stakes of three private banks. Tunisia now has a unique opportunity to reform its banking sector by merging its public-owned banks. The private banks can also be encouraged to merge, which will strengthen their positions.

Other sectors Other performing sectors include the food processing industry, pharmaceuticals and chemicals. The services sector accounting for around 59% of GDP has been a major engine of growth, in particular in telecommunications, transport and commerce, while growth in tourism remained modest. Financial services and information technology also have bigger potential in 2011, as well as agriculture – including bio - education and vocational training.

Aid Funded Business Since 2003 the temporary headquarters of the African Development Bank (AfDB) has been located in Tunis. This presents huge opportunities that are not very well exploited by British companies. The main opportunities lay in consultancy services, but other opportunities also exist in the following areas: § § §

infrastructure, which includes power supply, water, sanitation, transport and communication, governance, focusing on strengthening transparency and accountability in public resources management, private sector initiatives, such as supporting private enterprise, strengthening financial systems, building competitive infrastructure, promoting regional integration and trade, improving the investment climate, and higher education and technology, for upgrading and rehabilitating existing facilities, improving conditions for scientific and technological innovations, bridging major gaps in ICT across the continent.

For more information see African Development Bank below and for the opportunities at the AFDB contact www.afdb.org/en/home/

Trade between the UK and Tunisia UK total imports from Tunisia in 2010 UK imports from Tunisia were £634 millions in 2010, a 56% increase from 2009 figures. UK total exports to Tunisia in 2010 UK exports to Tunisia totalled £202 million in 2010, a 32% increase from 2009.

UK Trade & Investment Doing business in Tunisia

Main UK investors in Tunisia • • • • • • • • • • •

BG Group Lee Cooper Group Oxford University Press Regus International Pertrofac Shell Unilever Elektron Coats Viyella Fashion Wear International Check Safety First

Bilateral Agreements In 2004, the UK and Tunisia signed a Memorandum of Understanding (MoU) on Energy providing a framework for UK energy companies to learn about new opportunities in Tunisia. Its steering committee meets twice a year, co-chaired by British Embassy Tunis and the Tunisian Directorate of Energy. The MoU also provides for regular exchange of expertise and commercial visits. Other agreements signed by the UK and Tunisia, establishing a framework for business development, are: • • • • •

investment promotion and protection agreement, convention for the avoidance of double taxation, road haulage transport agreement, MoU for public services reform, and Tunisia/UK Bilateral Forum (between respective Ministries of Foreign Affairs).

Politics There has been dramatic political transformation in Tunisia since the flight of the former President Ben Ali and his family on 14 January 2011. Since then Tunisia has been working to transform itself into an open and democratic society. Elections are scheduled for 24 July 2011 for a constituent assembly that should oversee the democratic transition process. The international community, and the EU in particular, are strongly supporting the process. The EU is looking to establish a closer relationship with a democratic Tunisia. The process would guarantee transparency and good governance for political development and business transactions.

Population Main statistics: §

10.54 million inhabitants (2010)

Demographic growth rate: 1.18%

UK Trade & Investment Doing business in Tunisia

Life expectancy: §

73.6 years for men

77.2 years for women

2/3 of Tunisians live in urban areas

Ethnic groups: §

97% of Tunisians are of Arab-Berber origin

the rest are of European origin

Religions: §

98 % Muslim (Sunni)

1% Christian

1% Jewish and other

Languages: §

Arabic (official, administration & education

French (widely used in commerce)

English (making inroads as business language)

Getting here and advice about your stay

FCO Travel Advice The FCO website has travel advice to help you prepare for your visits overseas and to stay safe and secure while you are there. For advice please visit the FCO Travel section

UK Trade & Investment Doing business in Tunisia

Preparing to Export to Tunisia Identifying an importer-distributor with a good reputation is a key step towards succeeding in the Tunisian market. This should follow a careful assessment of the potential of the market. The UKTI team in Tunisia can provide a range of services to British-based companies wishing to grow their business in the Tunisian market and also in Africa more widely through the AfDB. Our services include the provision of market information or validated lists of agents/potential partners, identifying key market players or potential customers, establishing the interest of such contacts in working with your company and arranging appointments. In addition, we can also organise events for you to meet contacts or promote your company and your products/services.

You can commission our Overseas Market Introduction Services to assist your company to enter or expand your business in Tunisia. Under this service, the Embassyâ&#x20AC;&#x2122;s Trade & Investment Advisers, who have wide local experience and knowledge, can identify business partners and provide the support and advice most relevant to your company's specific needs in the market. To find out more about commissioning work, please contact your local UKTI office. See also: www.ukti.gov.uk

UK Trade & Investment Doing business in Tunisia

How to do business in Tunisia Gateways/Locations â&#x20AC;&#x201C; Key Areas for Business Greater Tunis, in the north of the country, with a population of 1.944 million (2005), is the capital city and the main centre of government, business and industry. It is also the chief port. Sfax (population 869,700) is located on the east coast and about four hours drive away from Tunis. It is the second economic city and also has a port. The main industries in Sfax are based on phosphates and offshore gas fields. Sfaxians pride themselves on their industrial and commercial success. Sousse (population 557,700) on the east coast and Bizerte (population 529,400) on the north coast, are ports and industrial administrative centres. Sousse is also a popular resort for European package tourists. Kairouan (population 547,700), in central Tunisia, is an administrative centre and an Islamic holy city. Almost all important business is handled through Tunis and, with the exception of Sousse and Sfax, the other towns are of little commercial importance.

Customs and Regulations Custom duties are ad valorem duties based on the CIF value. Tunisia utilises the Harmonised System of Classification (HS) which is the standard classification of goods used by most countries. Goods have to carry an 11-digit number, the first 6 digit of the harmonised code are the international classification and the following 5-digit are the national nomenclature. Importers must have a customs code number before they can obtain an import certificate, an import authorisation, an import licence or an import card for controlled products. Customs duties for most goods vary between 0% and 43%, depending on the product's importance to the Tunisian economy. The zero rate is applicable only to capital goods which have no locally manufactured equivalent. A Customs Inspection Tax of 3% of the CIF value is levied on all declared items inspected by customs. Since 2008 Tunisia has liberalized the trade of industrial goods with Europe due to the Association Agreement signed in 1995. Most of EU manufactured goods can be imported in Tunisia without paying any customs duties. You will be able to check the duties on your products from with the EU Market Access Database: http://mkaccdb.eu.int/mkaccdb2/indexPubli.htm The EU is working on a project to translate this website into English. To enjoy the EU preferential rates, an EUR 1 Certificate will need to be provided. EUR 1 movement certificates are issued for goods (of EU origin) which enjoy preferential access to Tunisia. At least two copies of the invoice are required, bearing the declaration: Nous certifions que les marchandises faisant l'objet de cette fourniture sont fabriquees en/au (nom du pays) par nous-memes et que la valeur surmentionnee est juste et conforme a nos ecritures.

UK Trade & Investment Doing business in Tunisia

(We certify that the goods described in this invoice are manufactured in (name of country) by us and that the value stated above is correct and agrees with our records). Health certificates are required for some foodstuffs and for plants and live animals. Packing lists and bills of lading are required; there are no special regulations on the form these should take.

Import Control SGS provides control services to exporters and importers from the UK and Tunisia: SGS Tunisia Rue 8612, Impasse No 5 ZI La Charguia I 2035 Tunis Carthage Tel: +216 71 205 100/71 205 464 Fax: +216 71 205 082 Email: sgs.tunisie@sgs.com http://www.sgs.com URL: Some goods are prohibited from import, including coins, currency notes (except in registered letters and subject to exchange controls), gold, jewellery, platinum, precious stones, silver (except in registered letters) and playing cards. Narcotics and pornographic materials are strictly prohibited. The import of explosives, military and security-related equipment is tightly controlled and is by licence only. There are restrictions on the importation of cigarettes, cigars and tobacco.

Commercial Samples and Temporary Imports Samples of no commercial value are admitted free of duty and taxes. Samples of commercial value can be granted temporary duty free admission, on payment of a deposit or the provision of a bond equivalent to the normal duties and taxes. The deposit is refunded, or the bond cancelled, provided the samples are re-exported within six months. Enterprises that are defined as off-shore (wholly exporting companies with off-shore status in the form of bonded factories, which can be established anywhere in Tunisia) are allowed to import goods duty free for transformation and re-export. Goods may also be granted temporary entry for use in trade fairs.

Legislation and Local Regulations Local Regulations Barriers to foreign investment-such as outright bans on participation in some sectors and discriminatory operating approval procedures-have been removed. Foreign investors may invest in Tunisia without prior approval, under the same conditions as Tunisian investors except from limited services activities, which require the High Commission of Investment authorisation when foreign participation to the capital exceeds 50%. The legal definition of foreign investor also includes Tunisians domiciled outside the national territory. Foreign investors may remit abroad any net and realised profits as a result of their investments and may also repatriate their capital.

Private Ownership and Establishment Companies with foreign capital may access the domestic credit market with the same rights and conditions as domestic capital. Foreign entities may own 100% of a company's capital and may

UK Trade & Investment Doing business in Tunisia

repatriate capital and remit profits back to the home country without limit. Foreigners can also purchase shares in listed and non-listed companies for up to 49% without any restriction. Nonresident foreign portfolios have been able since July 1995 to buy stakes in other non-resident companies established in Tunisia. Foreigners may lease farmland. The Tunisian Code of Commerce provides for a variety of business forms, all of which are available to foreign investors under Tunisia's liberal foreign investment policies. Investors are free to structure their business activities using corporations, partnerships, joint ventures, branch offices or subsidiaries, co-operative society or simple agency or licensing agreements.

Debt-to-Equity Requirement No debt-to-equity requirements are imposed in Tunisia except for financial institutions.

Tax System Tax rules have been designed to favour corporate investment, regional development and international expansion. These include measures such as accelerated depreciation, exemptions and loss carry forwards.

Non-Double Taxation Agreement A non-double taxation agreement between the UK and Tunisia came into effect on 1 January 1984 covering income tax, corporation tax and capital gains tax. These are taxed in the state where the activity is performed. Dividends and interest are taxed differently, depending on whether the source is Tunisian or foreign. The agreement is accessible on the website http://www.inlandrevenue.gov.uk.

Accounting and Reporting Standards Tunisia adopted in 1996 a new charter of accounts to bring its requirements in line with the international accounting standards (IAS). The new charter of accounts includes a balance sheet, an income statement, a financial flows statement and explanatory notes. Various depreciation methods may be used including the straight-line declining balance or variable methods.

Exchange Control Exchange control is administrated by the Central Bank of Tunisia (BCT). With the introduction in 1993 of the convertibility of the Tunisian Dinar for current transactions, transfer relating to payments concerning current operations may be made freely. Current convertibility implies payments in foreign currency for foreign trade transactions, operations related to production such as technical assistance, analysis and expertise, transport, insurance operations, operations related to the revenues of the capital and general operations such as advertising and subscriptions. Most trade-related transactions are controlled through letters of credit.

Repatriation of Revenues Foreign entities may repatriate capital and remit profits back to the home country without limit. This include dividends and profits distributed to the net income royalties including payments for the use of technical process, studies and technical assistance, interest charged on loans and proceeds from sales or liquidators even if these amounts exceed the initial invested capital.

UK Trade & Investment Doing business in Tunisia

Tunisian branches of foreign companies may freely remit profits. The repatriation in Tunisia of sales revenues deriving from exports is not required for: § § §

non-resident totally exporting companies, non-resident international trade companies, and non-resident companies operating in free-trade zones.

Wages of foreigners may be freely remitted up to 50% net of tax.

Dispute Settlement Tunisia is a member of the International Centre for the Settlement of Investment Disputes (ICSID) and is a signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. An arbitration Code has been ratified by law 93-42 of 26 April 1993 and is largely inspired by the New York convention. The Tunisian arbitral authority guarantee therefore the enforcement of arbitral awards rendered in any country and in any language. In case of disagreement, parties can submit the disputes to the ICSID. A Centre for Mediation and Arbitration has been created in order to promote the arbitration culture for resolving business disputes and to control the application of arbitration procedures conducted either ad hoc or institutional arbitration on the national or international level.

Protection of Property Rights Tunisia belongs to the World Intellectual Property Organisation (WIPO) and is a signatory to the Bern Convention for the Protection of Literary and Artistic Works (copyright) and the Paris Convention for the Protection of Industrial Property (patent, trademark and related industrial property). As a member of the World Intellectual Property Organisation (WIPO) and a signatory to the UNCTAD agreement on the protection of patents and trademarks, Tunisia undertakes to protect foreign property rights (but see below on intellectual property rights).

Representatives in the Market These will depend to a great extent on the nature of the business. However, the Tunisians do like to deal with someone with whom they can build up mutual respect. Good interpersonal skills are therefore important, as well as the technical ability to inspire confidence in the product or service as well as the capacity to make decisions locally. Language aptitude is highly desirable. It may be a better option to employ a Tunisian national than to try to represent yourself.

Investment - Why Invest? Investment from overseas countries is actively encouraged and a package of attractive incentives is available. Areas in which investment would be particularly welcome pharmaceutical, automotive components, hosiery and electronics. A unified investment code was introduced in January 1994 and covers most sectors except energy, mining, finance and domestic trade. Some of the incentives available to encourage foreign investment include: § § §

tax exemption of 35% for income earned and reinvested in Tunisia, suspension of VAT and Consumption tax on capital goods manufactured locally, and reduction of customs duties to 10% on imported equipment (where none similar is manufactured locally).

UK Trade & Investment Doing business in Tunisia

Further information can be obtained from the website of the Foreign Investment Promotion Agency (FIPA) http://www.investintunisia.tn/

Setting Up in Business - What is the Best Way of Setting Up? There is no barrier to setting up a 100% owned foreign company in Tunisia with resident or offshore status. The Tunisian Code of Commerce provides for the following forms of business enterprise: § § § § § §

public limited company private limited company general partnership company limited partnership societies by participation sole proprietorships

The public limited company and the private limited company are the most commonly used forms of business enterprise. Responding to Tenders Although private enterprise is developing and generating many business opportunities, stateowned companies still provide a large source of business opportunities. These public owned companies can contract with private companies only through issuing calls for tenders either national or international for projects that exceed the value of 5,000 Tunisian dinars (about £2,500). The Tenders’ specification books are usually issued in French and are available only in a hard copy format.

Recruiting and Retaining Staff Employment law in Tunisia is contained in the Labour Code, which was enacted in 1966 and has been amended on several occasions. The Labour Code applies to private, governmental, religious and non-religious employers in the industrial, trade and agricultural sectors. It also covers the liberal professions, handicraft enterprises, co-operatives, civil companies (companies that are considered to be non-commercial under Tunisian law, such as mutual funds), unions and associations. The Labour Code is complemented by: § §

general Mutual Agreements, and 46 sector-based Mutual Agreements covering the different sectors of the Tunisian economy.

These Mutual Agreements fix the following: wages; bonuses; criteria for performance evaluation and for promotion; severance pay; and paid holidays. Mutual Agreements must be in writing. They apply to all employment contracts, unless the terms of particular employment contracts are more favourable to the workers. Wages in the private sector are set by Mutual Agreements. In the government sector, a salaries' grid, which is enacted by decree, sets wages. For employees of state-owned companies, wages depend on the status of the particular employee. Labour is relatively inexpensive and depends on qualification and seniority. The employer's social costs represent 16% of gross wages, plus a professional tax varying between 1-2% depending upon the type of activity. In addition, there is a premium for work injury, varying between 0.5% and 7.2%, according to the type of activity. A bonus of a quarter of the maximum premium

UK Trade & Investment Doing business in Tunisia

payable for work injury is given to those enterprises that show they have taken measures to reduce the risk of work-related accidents. Inspection officers are responsible for enforcing the rules governing work relations between employers and employees. To further the efficient application of the law, the inspection officers provide information and technical assistance to employers and employees. Labour disputes are heard by the industrial tribunal, which is supervised by the magistrate's court and is composed of a presiding magistrate, an employer representative and an employee representative. Before the revolution, strikes were uncommon in Tunisia. In the unrest following the departure of the former President there were numerous strikes as workers sought a dividend from the revolution. Employers are represented by the Tunisian Union for Industry, Trade and Handicrafts. The Tunisian Workers General Union represents employees. Farmers and fishers are represented by the Tunisian Agriculture and Fishing Union. In general, a foreign national wishing to work in Tunisia must sign an employment contract and obtain a work permit. After obtaining a work permit, the foreign national must obtain a residence permit that contains the language “authorised to work in Tunisia”. Before a foreign employee begins employment in Tunisia, the employer must submit to the Ministry of Professional Training and Employment a signed employment contract with the employee. The employer must establish that no suitably qualified Tunisian national is available. If the Ministry approves the contract, it issues a work permit for the employee and signs the employment contract. Employment contracts with foreign employees must have one-year terms and may be renewed once; additional renewals are subject to Ministry authorisation.

Standards and Technical Regulation Tunisia has moved towards ISO9000 standards. The Tunisian standards organisation is: National Institute for Standardisation and Industrial Property (INNORPI) 8, rue 8451 (par la rue Alain Savary) BP.57, Cite El Khadra 1003 TUNIS Tel: +216 71 806 758 Fax: +216 71 807 071 Email: innorpi@planet.tn http://www.innorpi.com.tn The INNORPI website includes a database listing all the Tunisian standards and their reference numbers. The text of the standards can be provided on payment basis and can be provided by the UKTI team in Tunis as part of an OMIS service. The INNORPI include Standards for labeling, which were amended recently to require an Arabic translation of the text providing name of manufacturer, the importer and the date of manufacturing and expiring.

Intellectual Property Rights Tunisia is a signatory to many multilateral conventions and agreements, including the: § § § §

World Organisation of Copyrights, Paris Convention (protection of patents), Hague Agreement (registration of industrial plans and models), and Vienna Agreement (trade mark classification).

UK Trade & Investment Doing business in Tunisia

Tunisia is also a member of the World Intellectual Property Organisation (WIPO) and a signatory to the UNCTAD agreement on the protection of patents and trade marks. The National Institute for Standardisation and Industrial Property (INNORPI) is responsible for patents and trademarks. Foreign patents and trademarks should be registered with INNORPI. Tunisian law does not provide protection for those that are unregistered. The duration of patents is 20 years from date of filing; additional patents expire with principal patent. The registration of a trademark is granted for 15 years from the date of application and is renewable for like periods indefinitely. There is evidence of imitation of trade marks in Tunisia, particularly in clothing, cassettes, videos and computer software.

Copyright Tunisia is a party to both the Berne Convention for the Protection of Literary and Artistic Rights and the Universal Copyright Convention. Since both the UK and Tunisia are parties to the Berne Convention works of UK nationals, residents or works first published in the UK are entitled to the same protection as Tunisia grants to its own nationals. Tunisia's 1966 Law Relating to Literary and Artistic Property applies to "all original literary, scientific or artistic works, irrespective of their value, purpose, manner or expression". However, on closer inspection, it does not appear to protect sound recordings as such or computer works specifically as literary creations. The general duration of protection is lifetime plus 50 years. The Organisme Tunisien de Protection des Droits d'Auteur (OTDPDA, the Tunisian Body for the Protection of Authorsâ&#x20AC;&#x2122; Rights) is responsible for the administration and management of authors' rights. Although Tunisian law appears to be broadly in line with internationally accepted standards, its enforcement is variable. Infringement of copyright is particularly prevalent in the area of print, audio and video media.

UK Trade & Investment Doing business in Tunisia

Business Etiquette, Language and Culture Clothing Formal attire should be worn for business meetings. However beach wear should be limited to tourist resorts. In the summer months, men will need light weight clothing. Women should take light weight dresses or suits during the summer months, and a light wrap for evenings. For the remainder of the year, clothing as worn in Britain is suitable. Although temperatures never fall to freezing in the winter, buildings are rarely heated, and it is therefore necessary to have warmer suits or dresses for the winter months. From November to March, visitors should take a warm topcoat. It is advisable to take a raincoat and umbrella from October to May, particularly in the north of the country.

Social Customs The legacy of French rule is considerable in the towns and a rather formal attitude to courtesy prevails. Personal relationships are important in business and time is usually spent in light conversation over tea or coffee before embarking on business matters. Regular visits and personal contact are essential to maintain the business relationship. Ramadan is a month of fasting, when virtually the whole population will fast from sunrise to sunset each day. If visits must be made during Ramadan, expect business to become harder to conduct, with a shorter working day and an attitude of postponing decisions and action until after Ramadan is over. Visitors should not eat, drink or smoke in public during daylight hours in Ramadan. Some mosques in Tunisia are open to non-Muslims, provided visitors dress discreetly, covering the head, arms and legs.

Women Business Travelers The constitution provides for equal treatment of women in Tunisia, and there are many women now in high positions in politics and commerce. Attitudes towards gender in the major cities are more cosmopolitan, although female visitors should dress modestly if they do not wish to receive unwelcome attention. Such attention rarely poses any danger, but can become annoying.

UK Trade & Investment Doing business in Tunisia

What are the challenges? Getting Paid - Terms of Payment It is recommended to use letters of credit. This is the best secure payment method as advance payments are not possible due currency exchange controls. Tunisian companies can also pay for the imported goods on sight of documents. This payment method is recommended once the two parties know each other well. Total convertibility of the Tunisian dinar was expected by 2014, which would make advance payment possible. However, convertibility was delayed under the previous regime and it is not certain whether the new government will pursue this as a policy objective.

Language Although the Tunisian government is making an effort to increase the use of English, French remains the prevailing business language. Furthermore, all the tenders issued by public institutions and bidding will need either to have French speaking staff or to allocate a budget for translating.

Administration Dealing with administration can be difficult. Businesses should not underestimate the delays possible due to procedures with authorities such as customs officials.

Size of the Market and Strong Competition The Tunisian market remains a small market with limited natural resources. This explains the reliance on soft finance and on aid from many sources, particularly from France (a traditional business partner). Other countries have also a strong position in Tunisia thanks to the financial support they provide. This is the case of the Germans, the Italians and the Spanish.

EU Market Access Facilitation The EU is creating a mechanism with the Tunisian authorities to resolve the constraints that EU exporters may encounter. For example, during a meeting in March 2010 with the Ministry of Commerce, the EU was able to clarify the situation regarding the import of alcoholic drinks. The import of these products was unclear after the privatisation of the company who had the monopoly of their importation. The Ministry of Commerce has confirmed that the import of beer and wine does not require an import licence. But the Ministry has also confirmed that the import of spirits could only be done through the company called Magro. This demonstrates that doing business here can be complicated, and it is advisable to obtain specialist advice, either from the British Embassy UKTI team or from a local lawyer.

Working with the African Development Bank (AfDB) There are many opportunities in Tunisia and throughout Africa via the AfDB. The AfDB has been through an intensive programme of upgrading policy and procedures to World Bank standards, particularly in terms of good governance, economic reforms, transparency and accountability. However, doing business with the AfDB can be time-consuming and complex.

UK Trade & Investment Doing business in Tunisia

It is recommended for companies interested in doing business with the AfDB register their interest on the AfDB website. It is also essential for companies to develop a good understanding of AfDB procedure. For that, companies may need advice from the UKTI team at British Embassy in Tunis and/or the services of a local company. The UKTI Team in Tunis can provide assistance under the Overseas Market Introduction Service (OMIS). We can also help you to identify companies who can provide assistance. Because of the long lead-times we highly recommend making contact with the British Embassy UKTI team for help well in advance.

UK Trade & Investment Doing business in Tunisia

How to Invest in Tunisia British companies intending to invest in Tunisia are recommended to contact the London office of the Tunisian Foreign Investment Promotion Agency (FIPA). The FIPA website includes useful information to identify sectors of investment and costs of key factors. FIPA also provides assistance for companies to set-up in Tunisia and to prepare all the necessary documentations. The FIPA website is: http://www.investintunisia.tn

Financial Assistance Tunisia has 20 banks, 2 merchant banks and 8 offshore banks and a range of specialised financial institutions. These institutions can provide finance for new projects. New investment in high priority areas will enjoy the financial support of the Tunisian government. This level of support can vary up to the quarter of the value of the investment.

UK Trade & Investment Doing business in Tunisia

Contacts If you have a specific export enquiry about the Tunisian market which is not answered by the information on this report, you may contact:

UK Trade & Investment Enquiry Service Tel: +44 (0)20 7215 8000 Fax: +44 (0)141 228 3693 Email: enquiries@ukti.gsi.gov.uk You will be signposted to the appropriate section on our website, or transferred directly to the British Embassy in Tunisia

British Embassy Tunis

In the UK

Julia Smyth Head of Trade and Investment British Embassy Tunis Email: julia.smyth@fco.gov.uk Sector of responsibility: Aid Funded Business

Kate Roye Senior Manager, Tunisia UK Trade & Investment 1 Victoria Street London SW1H 0ET Tel: 020 7215 4892 Email: kate.roye@ukti.gsi.gov.uk

Rached Chaibi Deputy Head of Commercial Section / Senior Trade Officer British Embassy Tunis Email: rached.chaibi@fco.gov.uk Sector of responsibility: Financial services including banking, insurance and capital markets, construction and retail Monia Djelassi Boumaiza Trade Officer British Embassy Tunis Email: monia.boumaiza@fco.gov.uk Sector of responsibility: Energy including renewable energy, EU and aid-funded business

UK Trade & Investment Doing business in Tunisia

Sandrine Jayet Country Manager, Tunisia UK Trade & Investment 1 Victoria Street London SW1H 0ET Tel: 020 7215 4947 Email: sandrine.jayet@ukti.gsi.gov.uk

Resources/Useful Links Business Link: International Trade Business Linkâ&#x20AC;&#x2122;s International Trade pages provide an overview of export basics including licensing, customs procedures, classifying and movement of goods, other regulatory information and export paperwork issues. It also introduces exporters to the UK Trade Tariff.

Essential reading for exporters! Find out more at: http://www.businesslink.gov.uk/bdotg/action/layer?r.s=tl&r.lc=en&topicId=1079717544

Country Information: British Embassy website: http://ukintunisia.fco.gov.uk FT article on Tunisia dated 7 May 2011-05-11 http://www.ft.com/cms/s/2/9272ed50-76b9-11e0-bd5d-00144feabdc0.html#ixzz1LxlAaplp Tunisian British Chamber of Commerce Website http://www.tbcc.org.tn/ BBC Website: http://news.bbc.co.uk/1/hi/country_profiles/default.stm FCO Country Profile: http://www.fco.gov.uk/en/travel-and-living-abroad/travel-advice-by-country/country-profile/

Customs & Regulations: HM Revenue & Customs: www.hmrc.gov.uk Import Controls and documentation (SITPRO): http://www.sitpro.org.uk Tunisian customs website: http://www.douane.gov.tn/

Culture and communications: CILT â&#x20AC;&#x201C; National Centre for Languages - Regional Language Network in your area: http://www.cilt.org.uk/workplace/employer_support/in_your_area.aspx Kwintessential culture guides: http://www.kwintessential.co.uk/

Economic Information: Economist: http://www.economist.com/countries/

Export Control Export Control Organization:

UK Trade & Investment Doing business in Tunisia

http://www.berr.gov.uk/whatwedo/europeandtrade/strategic-export-control/index.html/strategicexport-control/index.html

Export Finance and Insurance: ECGD: http://www.ecgd.gov.uk/

Intellectual Property Intellectual Property Office: www.ipo.gov.uk

Market Access Market Access Database for Tariffs (for non-EU markets only): http://mkaccdb.eu.int/mkaccdb2/indexPubli.htm SOLVIT â&#x20AC;&#x201C; Overcoming Trade Barriers (EU Markets only) www.bis.gov.uk/EUMarketAccessUnit

Standard and Technical Regulations: British Standards Institution (BSI): http://www.bsigroup.com/en/sectorsandservices/Disciplines/ImportExport/ National Physical Laboratory: http://www.npl.co.uk/ Intellectual Property: http://www.ipo.gov.uk/ Tunisian Standards Institution: http://www.innorpi.com.tn

Trade Statistics: National Statistics Information: http://www.statistics.gov.uk/hub/index.html UK Trade Info: https://www.uktradeinfo.co.uk/

Travel Advice: FCO Travel: http://www.fco.gov.uk/en/travel-and-living-abroad/ NHS: http://www.nhs.uk/nhsengland/Healthcareabroad/ Travel health: http://www.travelhealth.co.uk/

UK Trade & Investment Doing business in Tunisia