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IMF Welcomes Tunisian Tax Proposals

by Lorys Charalambous,, Cyprus

20 October 2015

The International Monetary Fund (IMF) has welcomed Tunisia's plans for tax reform, noting that they will improve equity in the tax regime, simplify tax rules, and boost revenues.

In its 2015 Article IV consultation report for Tunisia, the Fund called for the quick implementation of the tax reform package, which it described as "appropriate."

Tunisia intends to address the complexity of the indirect tax system by installing just two rates of value-added tax, of six and 18 percent. Excise duties will be levied on a smaller list of products and just three customs duty rates will be imposed, instead of seven.

For companies, the corporate tax rates for onshore and offshore activities will be gradually aligned and tax rules for small firms will be simplified.

The personal income tax regime will be made more progressive. Previously, the Government had announced that the personal income tax-exempt threshold would rise from TND1,500 to TND5,000 (USD2,540) from January 1, 2016. This will now reportedly take place from January 1, 2017, instead.

The IMF said that, while improving the fairness of the tax regime, the measures should boost revenues relative to the size of the economy by 1.5 percent. Concluding, it called on the Government to only temporarily allow a reduced rate of VAT for the hospitality sector and encouraged authorities to quickly complete tax administrative reforms, such as improvements to functioning of the large taxpayer unit.

TAGS: tax | economics | value added tax (VAT) | tax incentives | export duty | fiscal policy | law | gross domestic product (GDP) | budget | International Monetary Fund (IMF) | tax rates | Tunisia | import duty | tax reform | individual income tax

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