There are no specific tax rules for groups of companies in Tunisia.
Transfer pricing rules applicable starting from January 1st, 2021
The 2021 finance law provided major changes in the Transfer Pricing conditions that were provided by the 2019 Finance Law and which are applicable from FY20. Indeed, the threshold for the TP filing and documentation requirements was increased from TND 20 millions (VAT included) to TND 200 millions (VAT excluded).
Besides, 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 100.000 Dinars.
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 from 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 included) is equal to or exceeds TND 200 millions VAT excluded (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 100.000 TND, 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:
- issue group consolidated accounts
- own or control, directly or indirectly, a company or companies resident abroad
- realise an annual consolidated turnover (excluding taxes) for the year preceding the one concerned by the CbC report equal to or exceeding TND 1,636,800,000, and
- are not owned by a company tax resident in Tunisia that has the obligation to establish the CbC report or a company tax resident or established outside that is subject to the obligation to establish such a CbC report under the domestic law of a foreign country.
Moreover, this obligation is compulsory for Tunisian tax resident companies that are owned or controlled directly/indirectly by a company tax resident in a state not included in the list of countries and territories having promulgated laws with regards to the CbC reporting obligation and that concluded an agreement for the automatic exchange of CbC reports with Tunisia and that comply with such an obligation. In fact, Tunisian tax resident companies will have the obligation to file a CbC report in case:
- it is designated by the group to perform such an obligation and inform the tax administration accordingly, or
- it has not been proved that any other group company tax resident in Tunisia or resident in a state included in the list of countries and territories having promulgated laws with regards to CbC reporting obligation and that concluded an agreement for the automatic exchange of CbC reports with Tunisia and that comply with such an obligation.
The CbC report filing obligation will be applicable starting from the fiscal year 2020. Such CbC report, when required (by Tunisian tax resident companies that meet the above-mentioned conditions), 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 condition.
As per article 30 of Finance Law 2019, both the model and content of the CbC report and the list of countries having promulgated laws with regards to the CbC report and that concluded an agreement for the CbC reports automatic exchange with Tunisia will be fixed by the Finance Minister decision.
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.