There are no specific tax rules for groups of companies in Tunisia.
Transfer pricing rules applicable starting from 1 January 2021
The Finance Law 2021 provided major changes in the transfer pricing conditions that were provided by the Finance Law 2019 and which are applicable from FY20. Indeed, the threshold for the transfer pricing filing and documentation requirements was increased from TND 20 million (VAT included) to TND 200 million (VAT excluded).
Additionally, the transactions to be documented by the said companies are those concluded with companies having only dependency or control relationships with companies that are non-resident, non-established in Tunisia, and which are higher than TND 100,000.
Transfer pricing rules applicable up to 2019
According to the Tunisian tax legislation, where there is evidence for the tax authorities of the existence of commercial or financial business transactions between a company and other dependent companies, which, for the determination of their value, are based on rules that differ from those governing relations between independent companies and which result in the reduction of taxable benefits, the tax department is allowed to add back to the taxable result of the invoicing company the differential between the benefits that would have been realised if the practiced prices were in line with the arm's-length principle and those actually accounted for by the company.
The burden of proof is on the tax department.
There are no transfer pricing documentation or filing requirements.
Transfer pricing rules applicable as of 2020
The Finance Law 2019 provides new provisions regarding transactions realised between dependent companies to be aligned with transfer pricing international standards. Indeed, as per article 48 of the CIT Code (as modified by Finance Law 2019), for the purpose of determination of CIT due by companies resident or established in Tunisia having relations of dependence or control with other companies belonging to the same group, that are non-resident, non-established in Tunisia (as per 2021 Finance Law), the profits indirectly transferred to the aforementioned companies following the increase or the reduction of applied transfer prices, or by any means, are reintegrated into their taxable income. Such profits indirectly transferred are determined on the basis of their comparison with profits that would have been realised in the absence of a relationship of dependency or control.
It should be noted that companies are considered to have dependency or control relationships with other companies in case one of them owns more than 50% of the share capital or voting rights in the other company or has an effective decision-making right or are controlled by the same company/person (control is defined under the same conditions).
Also, as per Finance Law 2019, companies resident or established in Tunisia having relations of dependence or control with other companies as defined above, whose gross revenue (VAT excluded) is equal to or exceeds TND 200 million (as per the provisions of Finance Law 2021) and which have transactions with companies having dependency or control relationships that are non-resident, non-established in Tunisia, with amounts exceeding TND 100,000, should submit, under the same delay as CIT submission, a transfer pricing annual declaration according to a model to be set by tax authorities. Such requirement should apply starting from 1 January 2020.
The transfer pricing annual declaration includes, in particular, transfer pricing policy information applied by the group and information relating to transactions with companies having a dependency or control relationship.
Advance pricing agreement (APA)
Companies having a dependency or control relationship (within the meaning of Article 48 of the CIT Code) with companies located outside Tunisia may submit for an APA relating to the transfer pricing method on their future transactions for a period ranging between three and five years.
The said agreement cannot be terminated before the expiry of its term.
The procedures for concluding the agreement and its effects will be set by a ruling of the Finance Minister.
These provisions apply to fiscal years beginning from 1 January 2020.
Country-by-country (CbC) reporting requirement
Companies concerned by the CbC report
The CbC reporting requirement is applicable to:
- Tunisian tax resident companies that:
- own directly or indirectly a company or companies which makes it required to issue consolidated financial statements in accordance with the accounting legislation in force or when it is required to do so if its shareholdings are listed on the Tunis Stock Exchange; and
- realise an annual consolidated turnover (excluding taxes) for the year preceding the one concerned by the CbCR equal to or exceeding TND 1,636,800,000, and
- are not owned, direclty or indirectly, by other company within the meaning of the first indent of this paragraph.
- Tunisian tax resident or established companies that:
- are owned or controlled directly/indirectly by a company tax resident in a state that does not require the filing of the CbCR but which would be required to file this declaration if it is established in Tunisia, or
- are owned or controlled directly/indirectly by a company tax resident in a state that is not included in the list of countries and territories that concluded an agreement for the automatic exchange of CbCR with Tunisia; or
- are designated by the group to perform such an obligation and inform the tax administration accordingly,
- are owned or controlled directly/indirectly by a company established in a state included in the list of countries and territories that concluded an agreement for the automatic exchange of CbC reports with Tunisia, when it is informed by the tax authorities of a systemic failure of the State of tax residence of the company that owns it directly or indirectly.
The CbC report filing obligation will be applicable starting from the fiscal year 2020. Such CbC report, when required, shall be filed no later than 12 months after the closing date of the fiscal year covered by the filing.
Modality and documentation
CbC reports will be exchanged with countries and territories that have concluded an agreement with Tunisia, under reciprocity conditions.
The model and content of the CbC report have been fixed by the Finance Minister decision on April 29, 2022.
The publication of the list of countries/ states having concluded an agreement with Tunisia authorizing the automatic exchange of CbCR has been published on June 15, 2022.
Exceptionally, the tax administration provides that CbCR obligations were not required in 2020 and 2021 for companies resident or established in Tunisia that are owned by foreing MNE.
Projects may be financed by shareholders’ equity, shareholders’ loans, or external debts.
Interest due on shareholders’ loans is tax deductible within the limit of an interest rate of 8%, provided that the following conditions are met:
- The capital is fully paid-up.
- The amount of the sums put at the disposal of the company must not exceed 50% of the capital.
In case shareholders’ loans exceed 50% of the share capital, then interests due in the part exceeding 50% are not tax deductible.
Controlled foreign companies (CFCs)
There is no provision in Tunisia for CFCs.