Tunis GMT +1
AMC Ernst & Young Boulevard de la Terre Centre Urbain Nord 1003 Tunis Tunisia
Indirect tax contacts
Faez Choyakh +216 (70) 749-111 faez.choyakh@tn.ey.com
Omar Rekik +216 (70) 749-111 omar.rekik@tn.ey.com
Maryam G Jammouci +216 (70) 749-111 maryam.g.jammouci@tn.ey.com
A. At a glance
Name of the tax
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
Thresholds
Monthly
Registration None (apart from TND100,000 for retail traders)
Recovery of VAT by non-established businesses Yes
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.
• Other activities subject to VAT include professional services, wholesale trade (excluding food stuffs) and retail trade (for traders that make an annual turnover of TND100,000 or more), excluding foods, medicine, pharmaceuticals and products subject to administrative approval tariffs.
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 exemp tion 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.
Non-established businesses. Nonresident companies that do not have a permanent establishment 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 stand point, 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 non-established 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 nonestablished 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 WHT 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 sup plies 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 supplies, the Tunisian regulations do not provide a particular rule for the collection of VAT (neither through VAT registration nor the reverse charge), and as such no VAT is collected.
For imported goods, there is no requirement for the nonresident supplier to collect the Tunisian VAT (neither by direct payment nor through the reverse charge). In practice, the VAT is paid by the Tunisian importer when the goods are cleared at customs.
Nonresident businesses in Tunisia that are selling computer software and internet-based services are subject to a royalty of 3% on the turnover earned with resident individuals and corporate entities. Please note, however, that this royalty is not qualified as VAT. The nonresident compa nies concerned shall proceed with the filing of their abovementioned turnover on a quarterly basis. Reporting and payment procedures will be established by a governmental decree. At the time of preparing this chapter, further details have not yet been published.
Online marketplaces and platforms. No special rules exist for online marketplaces and platforms in Tunisia.
The same rules as outlined above for nonresident businesses are applicable to online market places and platforms.
Registration procedures. Each individual who would practice an industrial, commercial or non commercial profession, and every legal entity must, before the initiation of the activity, file in person, at the territorially competent tax control office, a declaration of existence according to the preset model required by the tax authorities. Online registration is not allowed.
• A copy of the Articles of Association for the legal entities
• A copy of the agreement or the administrative authorization, if the activity or the place where the activity is performed are subject to a prior authorization
After filing the declaration of existence, the taxable person obtains a tax identification card, which includes the tax identification number.
The application for registration must be submitted by the taxable person itself or its legal repre sentative or by any other person with a power of attorney to register.
Deregistration. In the case of termination of activity, the taxable person submits a termination application, with the tax identification card and declaration of existence, to the territorially competent tax control office.
In case of a deregistration following an optional VAT registration by a person or legal entity not subject to VAT (because its economic activities), the deregistration, or the renunciation of the status of a taxable person, would be made after 31 December of the fourth year that follows the year of the optional registration. The deregistration in this case leads to the regularization of the VAT that has been deducted on the purchased inventories and assets during the period of the optional registration.
Changes to VAT registration details. A taxable person must notify the tax authorities with any changes to its VAT registration details when these changes concern the following:
• Corporate name
• Corporate purpose
• Address
• Tax regime
• Share capital amount
In this regard, the taxable person must submit an application to the tax authorities to update the tax registration documents with the changes and provide the tax authorities with the documents that reflect these changes.
The time limit to notify the tax authorities for changes to a taxable person’s VAT registration details is 30 days, starting from the date of the decision of such changes.
D. Rates
The term “taxable supplies” refers to supplies of goods and services that are liable to a rate of VAT.
The VAT rates are:
• Standard rate: 19%
• Reduced rates: 7%, 13%
The standard rate of VAT applies to all supplies of goods and services unless a specific measure provides for a reduced rate, a suspension or an exemption.
Examples of goods and services taxable at 7%
• Transport of goods
• Activities carried out by doctors and analytical laboratories
• Materials and supplies for pharmaceutical products
• Tourism activities
Examples of goods and services taxable at 13%
• Services rendered by lawyers, tax advisors and other experts
• Sales of low-voltage electricity intended for domestic consumption and the sale of mediumand low-voltage electricity used from the functioning of water pumping equipment for agricul tural irrigation
• Sales of buildings constructed for the exclusive use of housing by real estate developers for the profit of private persons or by public real estate developers (the rate of 13% will increase to 19% effective 1 January 2024). Supplies of buildings constructed for the exclusive use of hous ing by real estate are allowed to deduct the VAT charged on the stock held on 31 December 2017. The deduction of the VAT does not give rise to the possibility of refund of the nonattributed VAT credit
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.
Examples of exempt supplies
• Banking interest
• Maritime air transport
• Food products (for example, milk and flour)
Examples of supplies outside the VAT scope
• Agriculture is out of the scope of the application of VAT
VAT suspension. VAT may also be suspended. A special authorization from the tax administration is required to obtain a suspension of VAT 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 that are no more 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, and there fore 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 acquisi tion of materials, products and services necessary for the realization of export operations
Entities subject to VAT may be entitled to VAT suspension on their local purchases of raw mate rials 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 implementa tion 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.
VAT suspension may be obtained by requesting a VAT suspension certificate from the tax admin istration. This certificate may be issued annually or for certain transactions. A copy of the certificate and a copy of 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.
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 sup ply 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 in case 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 considered to be 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
Leased assets. The tax law does not explicitly indicate the time of supply rules for leased assets. However, according to the point 3 of Article 5 of the VAT code, VAT is collected on services, when the service is rendered or when the overall price or advances are collected before the ser vice is rendered. The same rule applicable for services is applicable to leasing operations.
Imported goods. The time of importation for imported goods is when the goods are cleared at customs.
F. Recovery of VAT by taxable persons
A taxable person may recover VAT with respect to purchases of goods and services that are used for business activities and contribute effectively to the realization of taxable transactions. The VAT deduction is made on the basis of a valid invoice, customs document or withholding VAT certificate.
There is no set time limit for a taxable person to reclaim input tax in Tunisia. However, the VAT receivable/credit position can only be refunded where it is less than three years (see the Refunds subsection below).
Companies partially subject to VAT deduct VAT based on the following rules:
• Full deduction is allowed for VAT on purchases used exclusively in a business activity that is subject to VAT
• No deduction of VAT is allowed for purchases used exclusively in a business activity that is not subject to VAT
• Deduction on a proportionate basis is allowed for purchases used in both a business activity subject to VAT and a business activity not subject to VAT
A withholding tax with regard to VAT is due at the rate of 25% on amounts equal to or exceeding TND1,000 (including VAT) and must be paid by the state, local authorities, enterprises and pub lic institutions in return of their acquisitions of goods, equipment, services, buildings and busi nesses.
Nondeductible input tax. Input tax may not be recovered on purchases of goods and services that are not used for business purposes and that are considered to be nondeductible expenses for corporate tax purposes (for example, goods acquired for private use by an entrepreneur).
Examples of items for which input tax is nondeductible
• Passenger vehicles used for the transport of persons (other than those representing the purpose of the business such as taxi and car rental companies), cars used by hotels for tourist trips, and
also the rental of passenger vehicles and any other expenses incurred in order to ensure their operation and their maintenance
• Purchases made from individuals or legal entities that are outside the scope of VAT but that have invoiced VAT incorrectly
• Goods, properties and services fully paid in cash in amounts equal to or exceeding TND5,000 (excluding VAT)
• VAT on goods and services acquired from residents in territories with privileged tax regime
According to Tunisian rules, input tax that can be deductible is not limited. In fact, any input tax charged on the acquisition of goods or services that are necessary for the operation and so related to a taxable business use can be deductible. However, according to Article 10 of the VAT code, the deduction of VAT cannot be accepted on the items listed below.
Examples of items for which input tax is deductible (if related to a taxable business use)
• Passenger cars used for the transport of persons other than those that are the object of operation, as well as the rental of passenger cars and all costs incurred to ensure their operation and main tenance
• Products delivered and the services rendered by the persons who are not subject to the VAT (not liable to collect the VAT)
• Commodities, goods and services of which the amount is greater than or equal to 5,000 dinars exclusive of taxes and that is paid in cash
• Amounts paid to persons resident of established in low tax jurisdictions
Partial exemption. Input tax directly related to making exempt supplies is generally not recoverable. If a taxable person makes both exempt and taxable supplies, it may not recover its input tax in full. This situation is referred to as “partial exemption.”
A Tunisian taxable person that makes both taxable and exempt supplies may calculate the amount of input tax it may recover in several ways. The standard partial exemption calculation method consists of the following two-stage calculation:
• The first stage identifies the input tax that may be directly allocated to taxable and to exempt supplies. Input tax directly allocated to taxable supplies is deductible, while input tax directly related to exempt supplies is not deductible. Supplies that are exempt with credit are treated as taxable supplies for these purposes.
• The second stage identifies the amount of the remaining input tax (for example, input tax on general business overhead) that may be allocated to taxable supplies and recovered. The amount of recoverable VAT is determined by making a pro rata calculation based on the respective values of taxable and exempt supplies made.
When taxable persons make both taxable and exempt supplies, the VAT partial regime is directly indicated within the tax identification card based on a prior application to the tax authorities at the time of registration for tax purposes. As such, approval from the tax authorities is not required to use the partial exemption standard method in Tunisia. Special methods are allowed in Tunisia.
Capital goods. VAT on investments of all types required for operation (except passenger cars intended for the carriage of passengers and not constituting an object of exploitation) is deduct ible. This includes capital goods.
However, in case of transfer, contribution, change of use of these assets and in the event of cessation or abandonment of the taxable person’s regime, a payment must be operated equal to the amount of the deducted VAT or which should have been paid or reimbursed, reduced by one-fifth for each calendar year or fraction of a calendar year of detention in the case of capital goods or equipment, and one-tenth by calendar year or fraction of calendar year of detention in the case of a building.
If capital goods are used for both taxable and exempt activities, the amount of the deductible tax that should be operated is calculated according to a percentage resulting from the ratio between the following elements achieved during the previous financial year:
• Income subject to VAT plus those resulting from the exportation of taxable goods or services or deliveries made in suspension of such tax and incomes from international air transport operations, including due VAT or VAT of which payment is not required
• The sums referred to in the above paragraph plus income from exempted business or business situated outside the scope of VAT
Refunds. VAT liability (output tax) is computed by multiplying all taxable sales by the applicable VAT rate. The enterprise subtracts the total VAT paid on purchases of goods (input tax) from output tax and pays the net amount to the tax administration. If the input tax exceeds the output tax, the resulting amount is refunded with a restitution claim made to the tax administration and, in the majority of the cases, after a tax audit has been completed by the tax administration. The VAT receivable/credit position can be refunded where it is less than three years.
The regime of VAT credit refunds varies according to the source of the credit and the local tax authority.
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 Investments made according to the Investment Incentives Code (refund in 30 days)
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. 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 in Tunisia is not recoverable. However, there are special rules for non-established and tax representatives that may deduct the VAT paid on pur chases of goods and services necessary to perform the transactions subject to VAT. For further details please see the Tax representatives subsection above.
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.
Credit notes. A VAT credit note as such may not be used to reduce VAT charged and reclaimed on a supply of goods or services. Instead, the initial transaction must be voided, and a new VAT invoice must be issued for the correction of genuine mistakes.
Electronic invoicing. Electronic invoicing is allowed in Tunisia but not mandatory. Taxable per sons using electronic invoices must submit a declaration to the competent tax authorities together with a certificate provided by the authorized entity’s automated management system for electronic invoices processing. Electronic invoicing is mandatory for companies that fall under the Division for Large Enterprises.
Electronic invoicing users are not obliged to maintain digital copies of invoices, the authorized invoicing entity assumes the responsibility of keeping the digital invoices and may issue to the sender or the receiver a digital copy if requested.
Simplified VAT invoices. Simplified VAT invoicing is not allowed in Tunisia. As such, full VAT invoices are required.
Self-billing. Self-billing is not allowed in Tunisia.
Proof of exports. VAT is not chargeable on supplies of exported goods in Tunisia. However, to qualify as VAT-free, the exported goods must be documented by a customs declaration proving that the goods have left Tunisia. In addition, persons subject to VAT that are primarily or exclusively engaged in activities relating to exports may benefit from suspended VAT on their pur chases of goods and services required for the production of exported goods.
Foreign currency invoices. A VAT invoice for transactions performed between two resident entities must be issued in the domestic currency, which is the Tunisian dinar (TND), according to the exchange legislation. If one or both of the parties are nonresident, the VAT invoice may be issued in a foreign currency.
Supplies to nontaxable persons. There are no special invoicing rules for supplies to nontaxable persons in Tunisia. As such, full VAT invoices are required.
Records. There are no specific rules for which documents must be kept for VAT purposes in Tunisia. All accounting and tax documents should be held.
In Tunisia, VAT books and records must be held within the country. Such records must be held at the taxable person’s premises at the address that is reflected on the taxable person’s VAT reg istration documents.
Record retention period. The accounting system of businesses, financial statements relating to an accounting period, as well as the documents, books, balance and supporting documents relat ing thereto must be kept by taxable persons for at least 10 years.
Electronic archiving. There are no specific VAT rules dealing with electronic archiving. In case of tax audit, all supporting documents should be presented on hard original copies.
I. Returns and payment
Periodic returns. Tunisian VAT returns must be filed on a monthly basis. Returns must be filed by the 28th day of the following month for legal entities and by the 15th day of the following month for individuals.
Periodic payments. Payments must be paid by the 28th day of the following month for legal enti ties and by the 15th day of the following month for individuals. The payments must be paid in Tunisian dinar (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 allowed in Tunisia, but not mandatory. However, the elec tronic 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 date of registration 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 declara tions within the aforementioned 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 late filing of VAT returns or underpayments of VAT, penalties are imposed at a rate of 0.5% per month or fraction of a month for which the return or payment is late.
The following are other penalties related to VAT:
• 1.25% per month or fraction of a month for underpayments of VAT resulting from a tax audit
• 0.75% per month or fraction of a month in certain other cases
• 1% per month or fraction of a month when the taxable person agrees to pay the tax due, as determined by the audit, and makes payment to the tax administration within 30 days of that acknowledgment (i.e., the penalties will be reduced by 20%)
In addition, by virtue of Article 51 of the Finance Act for the year 2019, a new fixed penalty that applies in case of late payment of tax is instituted at the rate of:
• 1.25% based the amount of the due tax, when the payment delay does not exceed 60 days
• 2.5% of the amount of the due tax, when the payment delay exceeds 60 days
The new fixed penalties are added to the due delay penalties, either in the case of spontaneous delay payment or in case of tax audit.
The new fixed penalty established by the Finance Act cannot be lower than the due minimum penalty equal to TND5 even in the absence of a payable tax amount.
These provisions do not apply to amounts reported on tax returns filed spontaneously prior to 1 April 2019 and to notifications of results of tax audit undertaken before the above date.
For the sales and purchases under the VAT suspension regime, fines and penalties, which would be incurred by the purchaser and the supplier in case they do not comply with some formalities, are as follows:
• The purchaser: In 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
• 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 sub ject 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 Directorate of Large Business (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 for failure to notify or late notification to the tax authorities for 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, please see the subsection above, Changes to VAT registration details.
Penalties for fraud. A penalty of imprisonment of 16 days to 3 years and a fine of TND1,000 to TND50,000 for any person who keeps double accounts or uses falsified accounting documents, 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 help ing to keep accounts and who have knowingly established or helped in making false accounts or false accounting documents in order 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 per sonally 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 3 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 com puter systems or applications relating to the keeping of accounts or the preparation of tax returns in the event that 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 reduc tion 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 3 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 to 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 follow ing 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.