VAT is levied under the Tunisian VAT Code and is due on all transactions taking place in Tunisia. The sale of goods is considered as taking place in Tunisia and thus subject to VAT if the goods sold are delivered in Tunisia. The sale of services is considered as taking place in Tunisia and thus subject to VAT if the services sold are consumed or used in Tunisia.
VAT was introduced in June 1988 to replace the ‘Tax on production’, the ‘Consumption tax’ and the ‘Tax on services’, in force from 1955.
Rates and scope
The standard rate of VAT is 18%. Lower rates of 6% and 12% apply to specifically designated operations.
Some operations, products or services are out of the scope of VAT in Tunisia and some others are expressly exempt from VAT.
Unless expressly exempt, transactions that take place in Tunisia relating to commercial operations other than sales (sale operations subject to VAT are expressly designated), industrial and artistic operations and independent personnel services are subject to VAT. This is regardless of the targets, the results and the legal status of the persons conducting the relevant operations and regardless of their liability for other taxes.
With regard to services, transactions are considered as taking place in Tunisia when the service or the right provided is used or consumed in Tunisia.
The following persons are liable for compulsory registration:
individuals and companies carrying out transactions that are subject to VAT;
individuals and companies mentioning, by mistake, VAT on their invoices, despite the fact that they are not subject to VAT. However, these individuals and companies are to be considered as subject to VAT only in respect of the relevant operations;
individuals and companies that opt to be liable for VAT;
entities affiliated to companies subject to VAT, regardless of their legal forms; and
persons storing alcoholic drinks and wholesalers of wine and alcoholic drinks.
Persons liable for VAT can be either totally or partially subject to VAT.
Voluntary registration is allowed where persons:
carry out activities that are outside the scope of Tunisian VAT. In this case, the option has to be a full option, which means that all the activities carried out by these persons will be subject to VAT; or
carry out operations that are exempt from VAT and that are destined for export, or supply products and services that are exempt from VAT to persons liable for VAT. In this case, the option may be a partial or a full option.
Group and branch registration
The branch or the subsidiary must register for VAT with the Tax Department, regardless of its liability for VAT, in order to obtain a tax identification number that shows the status of the registrant in regard to VAT. The registration must be made prior to starting any activity.
In a case where VAT is due on a transaction invoiced by an entity that is neither resident nor established in Tunisia, VAT will be withheld at source by the Tunisian entity and paid on behalf of the nonresident, non- established entity in Tunisia to the Tunisian Government within 28 days following the end of the month during which the transaction took place.
The entity not established in Tunisia that carried out a transaction liable for VAT in Tunisia may file a return with the Tunisian Tax Authorities in order to deduct the input VAT on the purchase of goods and services necessary for the realisation of the transaction subject to VAT in Tunisia from the amount of the VAT due in Tunisia on that transaction, and which was withheld at source by the Tunisian client.
Application for registration
A written application is to be filed with the relevant Tax Authorities by newly created enterprises before starting any activity.
In case of voluntary registration, the application may be submitted at any time during the tax year (most of the time, the tax year coincides with the calendar year) and the option becomes effective from the first day of the month following the one during which the optional registration is accepted by the tax authorities.