Fiscal Reforms Underpin 2009 Tunisian Budget

by Lorys Charalambous, Tax-News.com, Cyprus

01 December 2008

Emphasising the importance of pressing ahead with radical reform, and of rigorously adhering to the fiscal policy detailed by Tunisian President Ben Ali, designed to improve competitiveness and stimulate investment, Prime Minister Mohamed Ghannouchi unveiled the draft budget for 2009 before the Chamber of Representatives.

Despite the prevailing global economic crisis, the Prime Minister maintained that the Tunisian economy is forecast to remain strong in 2009, with a predicted growth rate of 5%, and foreign investment expected to reach TND2.4bn. In a bid to keep the budget deficit at around 3% of Gross Domestic Product, the draft state budget has been set at TND17.206bn (USD15bn).

Alluding to the reformist fiscal initiatives heralded by Ben Ali, during a meeting to mark the 21st Anniversary of Change, the Prime Minister confirmed that the key banking sector and fiscal reforms, set forth by the President as part of the on-going presidential program, would be followed.

Regarding tax initiatives, the Prime Minister detailed the following measures for the coming year, designed to modernize and simplify the existing tax system, and to alleviate the burden borne by individuals and businesses alike:

• Implementation of a tax amnesty.
• Reduction in the rate of direct corporate tax.
• Abolition of the maximum value-added tax rate.
• Consolidation of taxpayer's rights with regard to the administration.
• Simplification of procedures applying to the transfer of businesses.
• Reduction of tax penalties in all cases where a tax audit releases, at the same time, details of amounts owed to the state and amounts returnable to an individual or company.

The Chamber of Representatives is currently examining the 2009 budget.

Pertaining to the financial and banking sectors, crucial measures previously outlined by the President include:

• Increasing development spending from TND3,200m this year, to TND3,900m next year, aimed at improving basic infrastructure, supporting enterprise and investment, and boosting exports.
• Revising the 1985 law governing financial institutions, intended to benefit non-residents.
• Establishing a research and financial studies centre.
• Restructuring the existing system of export insurance, intended to strengthen exports by guaranteeing essential trade credits, and reducing the compensation period.
• Stimulating investment by small and medium-sized enterprises (SMEs) and encouraging new businesses, by doubling the capital allocated to the SME Finance Bank, and by restructuring the system of guaranteed loans.
• Increasing from 10% to 20%, the advance entrusted to SMEs, in order to consolidate their position on domestic and foreign markets.

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