WORLD TRADE G/SCM/N/3/TUN
G/SCM/N/16/TUN
ORGANIZATION G/SCM/N/25/TUN
27January 1998
(98-0275)
Original: French Committee onSubsidies
andCountervailing Measures
SUBSIDIES
Notifications Pursuant toArticle XVI:1 oftheGATT 1994 andArticle 25
oftheAgreement onSubsidies andCountervailing Measures
TUNISIA
Thefollowing communication, dated 20October 1997, hasbeenreceived fromthePermanent
Mission ofTunisia.
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CONTENTS
Page
I. BENEFITS GRANTED FOR REGIONAL DEVELOPMENT ...............2
II. INCENTIVES FOR POLLUTION CONTROL AND ENVIRONMENTAL
PROTECTION ............................................4
III. PROMOTION OFTECHNOLOGY, RESEARCH AND DEVELOPMENT
AND ENERGY SAVING ......................................6
IV. ENCOURAGEMENT OFNEW ENTREPRENEURS, SMALL BUSINESSES
AND LIGHT INDUSTRIES ....................................9
V. EXPORT PROMOTION ......................................12
VI. OTHER ADVANTAGES GRANTED UNDER LAW NO.93-120 OF
27DECEMBER 1993 PROMULGATING THE CODE OFINVESTMENT
INCENTIVES .............................................14
VII. NATIONAL UPGRADING PROGRAMME ..........................14
VIII. AMOUNTS OFTHE INCENTIVES GRANTED .......................16G/SCM/N/3/TUN
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INVESTMENT SUBSIDIES
Thefollowing notification issubmitted pursuant toArticle 25.1oftheAgreement onSubsidies
andCountervailing Measures, forthesakeoftransparency. Itreviews thedifferent taxandfinancial
incentives forinvestment. Byvirtue ofArticle 25.7oftheAgreement onSubsidies andCountervailing
Measures,thenotificationofthesemeasuresdoesnotprejudgeeithertheirlegalstatusunderGATT1994
andtheAgreement onSubsidies andCountervailing Measures, theireffects within themeaning ofthe
latter Agreement, orthenature ofthemeasures themselves.
General description oftheinvestment promotion policy
Since the1970s, Tunisia hasbeenimplementing anactive policy ofencouraging investment
intended toensure thecountry 'sindustrial andeconomic development, boost private initiative, attract
foreign direct investment andcreate jobsforagrowing labour force. Alltheseincentives arecurrently
governed bytheCode ofInvestment Incentives, enacted byLawNo.93-120 of27December 1993.
Investment incentives inthedifferent spheres ofactivity cover allinvestment operations (those
involving creation, expansion, replacement, rehabilitation andconversion). Thecriteria forthegranting
ofincentives aresethorizontally anddonotfavour anyenterprises overothers. Applications forthese
incentives areexamined bydifferent committees whose make-up guarantees thestrict application of
therulesinforce, onthebasisofobjective data(project studies, financing plans involving aminimum
ofequity assets, thelevelofwhich issetbydecree, preliminary diagnoses, etc.).
I. BENEFITS GRANTED FOR REGIONAL DEVELOPMENT
1. Investmentincentivestoindustrialactivitiestakingplaceinregionaldevelopmentareascomprise
taxrebates, capital grants, payment bythegovernment ofemployer contributions tothestatutory social
security scheme andcertain infrastructural expenses.
2. Thisnotification covers theperiod 1995-1997.
3. These incentives come within theoverall programme forregional development aimed mainly
atthecentral andsouthern regions ofTunisia, which arestillatadisadvantage compared tothecoastal
areaswhere economic activity isheavily concentrated. Theyaredesigned toencourage theestablishment
ofsmall andmedium-sized enterprises inthese regions andtoreduce interregional disparities.
Thelegaltextsgoverning regional development incentives are:
- LawNo.93-120 of27December 1993 enacting theCode ofInvestment Incentives;
- Decree No.94-426 of14February 1994 delimiting regional development areas;
- Decree No.94-539 of10March 1994 setting outthecapital grants, listsofactivities
andinfrastructural andcommunity facility projects eligible forregional development
incentives;
- Decree No.94-494 of28February 1994laying down theprocedures forthepayment
bythegovernment ofemployer contributions tothestatutory social security scheme;G/SCM/N/3/TUN
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- LawNo.73-82 of31December 1973 establishing theIndustrial Promotion and
Decentralization Fund (FOPRODI).
Theareas forthepromotion ofregional development were designated inAnnex IofDecree
No.94-426 of14February 1994onthebasisofobjective standards, principally thelevelofeconomic
andsocial development oftheregions concerned.
5. Theincentives given toinvestments made inregional development areas taketheform of:
(a) Deduction ofallincome orprofits ploughed backintoequity ortoincrease theinitial
capital oftheenterprise from personal income taxorcompany tax;
(b) deduction ofincome orprofits from these investments from personal income taxor
company taxforthefirsttenyears, anddeduction of50percentofsuchincome or
profits from thetenyears following;
(c) fulldeduction ofprofits reinvested inthecompany fromnetprofits subject tocompany
tax;
(d) waiver ofcontributions tothelow-income housing development fundforthefirstfive
years ofoperation;
(e) payment bythegovernment ofemployer contributions tothestatutory social security
scheme foraperiod offiveyears;
(f) aninvestment grant of8percentofthecostoftheproject, excluding working capital,
butincluding thecostofstudies;
(g) agrant bywayofgovernment participation intheinfrastructural expenditure necessary
totheimplementation oftheproject.
Thisgrant could cover onethird, onehalfortwothirds ofexpenditure oninfrastructure within
oroutside theenterprise.
6. Allinvestors inthemanufacturing activities setoutinDecree No.94-492 of28February 1994,
establishing thelistsofactivities bysector covered bytheCode ofInvestment Incentives, intheregional
development areas areeligible forthebenefits foreseen intheCode.
Thetaxadvantages mentioned inparagraphs 5(a), (b)and(c)areaccorded directly bythe
responsible departments oftheMinistry ofFinance upon presentation ofaninvestment declaration
certificate;
Thecapital grant andthegrant bywayofgovernment participation inthecostofinfrastructure
necessary fortheproject, described inparagraphs 5(f)and(g)above, aremade available through the
Industrial Development andDecentralization Fund (FOPRODI), setupunder LawNo.73-82 of
31December 1973.
Anycompany wishing tobenefit fromthese incentives mustsubmit anapplication supported
byaproject feasibility study.G/SCM/N/3/TUN
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Applications arestudied byacommittee chaired byarepresentative oftheMinistry ofIndustry
andmade upofrepresentatives from thedepartments concerned aswellasarepresentative ofthe
profession.
Theamounts ofthegrants arebased ontheinvestment project asapproved bytheIncentives
Committee.
Grants aremade bydecision oftheMinister ofIndustry andaregiven onlyonce, when the
investment ismade.
Thebenefit ofthepayment bygovernment ofemployer contributions tothestatutory social
security scheme isgranted bydecision oftheMinister ofSocial Affairs, ontheproposal ofacommittee
chaired bytherepresentative oftheMinistry ofSocial Affairs.
7. Seetableattached.
8. Seeparagraph 5.
9. Theincentives accorded fortheestablishment ofenterprises intheregional development areas
donotleadtoanexpansion ofexports bythebeneficiaries. These incentives aregiven onlyonce,
atthetimewhen theinvestment ismade andnotduring theproduction phase.
II. INCENTIVES FOR POLLUTION CONTROL AND ENVIRONMENTAL PROTECTION
1. Incentives favouring investments bycompanies tocounteract thepollution resulting fromtheir
activities orbythose specializing incollecting, processing andtreating wastes andrefuse taketheform
oftaxrebates, capital grants andexemptions from duties andtaxes payable oncapital goods.
2. Thisnotification covers theperiod 1995-1997.
3. These incentives areintended toassist industrial companies toinstall separate sewerage systems
fortheirwaste water, make adjustments totheirmanufacturing procedures, avoid wastage, reduce and
recycle waste, recycle waste water, useclean technologies andthussuppress atsource problems of
industrial pollution anddamage, install unitsforthepre-treatment ofliquid andgaseous effluents before
theirrelease, thusensuring compliance withindustrial emission standards, detoxify dangerous waste,
andimprove themanagement ofindustrial waste byrecycling oreliminating itinanenvironmentally
friendly manner.
Thelegaltextsregulating pollution abatement incentives are:
- LawNo.93-120 of27December 1993establishing theCode ofInvestment Incentives;
- LawNo.92-122 of29December 1992 promulgating theFinance Actforthe1993
budget year, providing fortheestablishment ofaNational Pollution Abatement Fund
(FODEP) (Articles 35to37);
- Decree No.93-2120 of25October 1993setting outtheprocedures andconditions for
FODEP assistance.G/SCM/N/3/TUN
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5. Theincentives granted toinvestments inpollution control andenvironmental protection are
thefollowing:
(a) Exemption from customs duties andwaiver ofVAT oncapital goods;
(b) taxdeduction ofincome orprofits invested intheinitial company capital orusedto
increase it,ofupto50percentofincome orprofits subject topersonal income tax
orcompany tax;
(c) taxdeduction ofupto50percentofprofits ploughed backintotheenterprise;
(d) taxdeduction ofincome orprofits from these activities forpersonal income taxor
company taxpurposes;
(e) agrant capped at20percentofthecostoftheinvestment. Thisgrant isgiven by
FODEP, created byLawNo.92.122 of29December 1992.
6. These benefits areaccorded toallenterprises wishing toinvest inpollution control and
environmental protection.
Exemption fromcustoms duties andcharges ontheequipment needed forsuchinvestment is
granted bydecision oftheMinister ofFinance, based onanopinion bytheNational Environment
Protection Agency (ANPE).
Thetaxadvantages mentioned inparagraphs 5(b), (c)and(d)areaccorded directly bythe
responsible department oftheMinistry ofFinance.
Government financial assistance covering 20percentofthecostofinvestment ispaidfrom
FODEP funds. Itisgranted bydecision oftheMinister oftheEnvironment andNational Planning,
based onanopinion bytheAdvisory Committee responsible forawarding theFODEP assistance.
Tobeeligible forFODEP funding, thefollowing conditions must bemet:
- Presentation ofapollution certificate issued byANPE;
- submission ofaproject study approved byANPE;
- conclusion ofaperformance contract setting outthetimetable fortheoperations to
becarried out;and
- aninvestment andfinancial planinvolving atleast30percentequity assets.
FODEP aidistargeted, being restricted tothetransformation ofexisting facilities.
7. Seesection VIII.
8. Seeparagraph 5.
9. Theincentives granted forinvestments inpollution abatement programmes donotleadto
increased exports bythebeneficiary sectors.G/SCM/N/3/TUN
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III. PROMOTION OFTECHNOLOGY, RESEARCH AND DEVELOPMENT AND ENERGY
SAVING
A. Research anddevelopment
1. Theincentives provided forinvestments made bycompanies inresearch anddevelopment
comprisetaxrebatesforinvestors,exemptionfromcertaindutiesandcharges,capitalgrantsandpayment
bygovernment ofcertain infrastructural expenditures andsocial security costs ifyoung graduates are
employed.
2. Thisnotification covers theperiod 1995-1997.
These incentives fallunder thenational policy topromote industrial research andtechnological
advancement. They areintended toencourage research anddevelopment within companies, the
acquisition oftechnological know-how andtechnological development toenhance productivity andfoster
relations between enterprises andresearch centres.
4. Thelegaltextsgoverning incentives forresearch anddevelopment are:
- LawNo.93-120 of27December 1993 enacting theCode ofInvestment Incentives;
- Decree No.94-536 of10March 1994establishing theamount andtheprocedures for
according capital grants forresearch anddevelopment byenterprises intheindustrial,
agricultural andfisheries sectors;
- Decree No.94-494 of28February 1994 setting outtheprocedures forthepayment
bygovernment ofemployer contributions tothestatutory social security scheme.
5. Investments made inresearch anddevelopment intheindustrial sector benefit from:
(a) Exemption from customs duties, waiver ofVAT andoftheconsumption taxon
purchases ofcapital goods needed fortheinvestment;
(b) payment bythegovernment of50percentofsocial security contributions overfive
years, forforeign personnel brought intooptimize production capacities andfor
Tunisian nationals holding certificates ofhigher education;
(c) acapital grant forresearch anddevelopment activities representing 20percentofthe
cost,uptoalimitofD100,000, ofthecreation andtechnical testing ofprototypes,
fieldexperiments andtheacquisition ofscientific laboratory equipment needed for
research anddevelopment projects, aswellas30percentofthecost,uptoalimit
ofD25,000, oforiginal studies necessary fordeveloping newproducts orprocesses.
This grant ischarged tothebudget oftheState Secretariat forScientific Research and
Technology.
6. Allinvestments inindustrial activities aimed atpromoting research anddevelopment and
enterprise -research centre links areeligible forthebenefits provided under theCode inrespect of
research anddevelopment.G/SCM/N/3/TUN
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Thetaxadvantages forthepurchase ofcapital goods needed forresearch anddevelopment
projects aregranted toenterprises bydecision oftheMinister ofFinance, based onanopinion bythe
committee sitting attheState Secretariat forScientific Research andTechnology.
Thecapital grant forresearch anddevelopment mentioned inparagraph 5(c)isgiven bythe
Secretary ofStateforScientific Research andTechnology onthebasisofaperformance contract setting
outtheinvestment andfinancing plan, alistoftheequipment needed, atimetable fortheoperations
tobecarried out,theamount ofthegrant aswellastheprocedures foritsdisbursement andthe
undertakings given bythebeneficiary enterprise.
Theincentive ofgovernment payment ofcontributions tothestatutory social security scheme
mentioned inparagraph 5(b)isaccorded bydecision oftheMinister ofSocial Affairs, ontheproposal
ofacommittee chaired bytherepresentative oftheMinistry ofSocial Affairs.
7. Seesection VIII.
8. Seeparagraph 5.
9. Theincentives granted forinvestments inresearch anddevelopment donotleadtotheexpansion
ofexports bythebeneficiary sectors.
B. Promotion oftechnology andtechnological expertise
1. Incentives forinvestments toacquire technology andtechnological expertise taketheformof
direct financial assistance paidfromtheTechnological Expertise Promotion Fund (FOPROMAT), and
thepayment bythegovernment ofhuman resource training costs.
2. Thisnotification covers theperiod of1995-1997.
3. Theobjective oftheaidistohelpindustrial companies tofinance theacquisition oftechnology
andtechnological know-how inorder toincrease theirlocalcontent.
4. Thelegaltextsgoverning incentives fortheacquisition oftechnology andtechnological expertise
are:
- LawNo.93-120 of27December 1993 enacting theCode ofInvestment Incentives;
- LawNo.90-111 of31December 1990 containing theFinance Actforbudget year
1991;
- Decree No.92-1748 of28September 1992, asamended byDecree No.94-878 of
18April 1994, ontheorganization andfunctioning ofFOPROMAT;
- Decree No.94-540 of10March 1994 establishing theconditions andprocedures for
benefiting fromgovernment payment ofhuman resource training costs inconnection
withinvestment intechnology.
Theincentives granted toinvestments toacquire technology andtechnological expertise are:
(a) Financial assistance from FOPROMAT fortransactions toacquire technology and
technological expertise.G/SCM/N/3/TUN
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Thisassistance covers 50percentofthecostoftechnological andquality audits uptoaceiling
ofD10,000, 50percentofthecostofpurchasing engineering design andmonitoring equipment up
toamaximum ofD100,000, 50percentofthecostoffeasibility studies fortechnological investments
uptoaceiling ofD10,000 andtechnical assistance intheamount of50percentoftheoverall cost
ofrestructuring operations toimprove thequality ofmanufactured products andthecompetitiveness
oftheenterprise, uptoamaximum ofD50,000.
(b) Payment bythegovernment ofupto50percentofthecostofhuman resource training
inconnection withtechnological investment, uptoaceiling ofD125,000.
Training expenses includes registration fees, transport andaccommodation costs andother
training-related outlays.
6. AllindustrialenterprisesmaybenefitfromFOPROMATassistance,whichisgrantedbydecision
oftheMinister forIndustry, based onastudy andreport byatechnical committee.
Asregards payment ofhuman resource training costs, anyenterprise wishing tobenefit from
thismeasure mustsubmit totheNational Centre forContinuing Education andVocational Advancement
atraining planalong thelinesofamodel drawn upbytheresponsible department intheMinistry for
Vocational Advancement andEmployment.
7. Seesection VIII.
8. Seeparagraph 5.
9. Incentives granted forinvestments intheacquisition oftechnology andtechnological know-how
donotincrease exports bythebeneficiary sectors.
C. Energy saving
1. Incentives accorded toenterprises making energy-saving investments taketheformofexemption
fromduties andtaxes oncapital goods, andfinancial assistance fromtheEnergy Management Agency
(AME).
2. Thisnotification covers theperiod 1995-1997.
3. Theseincentivescomeunderthenationalprogrammeforthemanagementofenergyconsumption
designed toprepare forthepost-petroleum phase when Tunisia willhaveanenergy deficit. They are
meant toencourage companies tomake energy savings andtoconduct research intoanddevelop
renewable sources ofenergy aswellasgeothermal energy.
Thelegaltextsgoverning incentives forenergy saving are:
- LawNo.93-120 of27December 1993 enacting theCode ofInvestment Incentives;
- LawNo.90-62 of24July1990 onenergy management;
- Decree No.87-50 of22November 1987 instituting compulsory energy audits;
- Decree No.94-537 of10March 1994 setting theamounts andcriteria forthecapital
grants forinvestments inenergy management.G/SCM/N/3/TUN
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5. Investment incentives inthefieldofenergy management takethefollowing forms:
(a) Exemption from customs duties, waiver ofVAT andconsumption taxonpurchases
ofcapital goods needed fortheinvestment;
(b) aspecific grant forenergy management projects including renewable energy and
geothermal energy: Thisgrant covers:
- 50percentofthecostofconducting energy audits, uptoaceiling ofD10,000;
- 50percentofthecostofdemonstration projects, uptoaceiling ofD50,000;
- 5percentofthecostofinvestments inrational energy useandrenewable
energies, uptoamaximum ofD100,000.
6. Allindustrialenterpriseswishingtomakeenergy-savinginvestmentsareeligiblefortheincentives
envisaged inparagraph 5.
Taxadvantages forthepurchase ofcapital goods needed forresearch anddevelopment projects
areaccorded toenterprises bydecision oftheMinister ofFinance, based onanopinion ofthetechnical
committee.
Thespecific grant isaccorded bydecision oftheMinister ofIndustry, based onanopinion
bythecommittee chaired bythemanaging director ofAME. Itisgranted within theframework of
aperformance contract concluded between AME andtheenterprise concerned, setting outallthe
technical, economic andfinancial aspects oftheinvestment project, aswellastheamount oftheaid
granted, theeligibility conditions andtheprocedures foritsrelease.
7. Seesection VIII.
8. Seeparagraph 5.
9. Thegrants given forinvestments inenergy-saving projects donotleadtoanincrease inexports
from thesectors concerned.
IV. ENCOURAGEMENT OFNEW ENTREPRENEURS, SMALL BUSINESSES AND LIGHT
INDUSTRIES
A. Newentrepreneurs
1. Incentivestonewentrepreneurscomprisecapitalgrants,capitalloansandpaymentbygovernment
ofemployer contributions tothestatutory social security scheme.
Those considered asnewentrepreneurs include natural persons ofTunisian nationality, whether
ornotgrouped together inacompany, undertaking theirfirstinvestment project, managing theproject
personally onafull-time basis andhaving therequisite experience andqualifications, butnotenough
capital oftheirown.
2. Thisnotification covers theperiod 1995-1997.G/SCM/N/3/TUN
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3. These incentives aredesigned toencourage thecreation ofmicro-, small- andmedium-sized
enterprises, foster thespirit ofprivate enterprise, combat unemployment andtoencourage therenewal
oftheproduction apparatus.
Thelegaltextsgoverning these incentives are:
- LawNo.93-120 of27December 1993 enacting theCode ofInvestment Incentives;
- Decree No.94-538 of10March 1994 granting investment incentives tonew
entrepreneurs;
- LawNo.73-82 of31December 1973 establishing theIndustrial Promotion and
Decentralization Fund (FOPRODI);
- Decree No.94-494 of28February 1994 establishing theprocedures forpayment by
thegovernment ofemployer contributions tothestatutory social security scheme.
5. Newentrepreneurs whomake investments inindustry notexceeding atotalcostofD1million,
mayreceive thefollowing benefits:
- Acapital grant of6percentofthecostoftheproject, uptoaceiling ofD300,000,
including working capital;
- agovernment grant towards defraying thecostoftheproject study; thisgrant isset
at1percentofthecostoftheproject andmaynotexceed D5,000;
- acapital loanatasubsidized interest rateof3percentperannum foramaximum of
12years, withafive-year grace period, soastoenable them toown51percentof
thecapital oftheenterprise tobecreated;
- payment bygovernment ofemployer contributions tothestatutory social security
scheme, covering salaries paidtoTunisian nationals during thefirstfiveyears of
activity.
6. Thecapital grants andloans mentioned inparagraph 5aremade available forindustrial projects
from theIndustrial Promotion andDecentralization Fund, following examination andstudy bythe
technical committee, onthebasis ofaproject feasibility study.
Theincentive ofgovernment payment ofemployer contributions tothestatutory social security
scheme isaccorded bydecision oftheMinister ofSocial Affairs, ontheproposal ofacommittee chaired
bytherepresentative oftheMinistry ofSocial Affairs.
7. Seesection VIII.
8. Seeparagraph 5.
9. Thegrants given forinvestments bynewentrepreneurs donotleadtoincreased exports by
thebeneficiary sectors, asthose incentives aregiven uponestablishment oftheenterprise andnotduring
theproduction phase.G/SCM/N/3/TUN
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B. Small businesses andlightindustries
1. Incentives tosmall businesses andlightindustries takeformofcapital grants andcapital loans.
Smallandmedium-sizedenterprisesaredeemedtobe:projectswhoseinvestmentcost,including
working capital, doesnotexceed D50,000, intheform ofindividual companies, partnerships or
cooperatives ofTunisian nationals withtherequired qualifications andwhoundertake tomanage the
enterprises personally andonafull-time basis.
2. Thisnotification covers theperiod 1995-1997.
3. Incentives forinvestment incrafts andtrades andlightindustries come within thestrategy
launched overtenyears agotopromote handicraft projects andencourage thetrades, considering their
impact onemployment.
Thelegaltextsgoverning these incentives are:
- LawNo.81-76 of9August 1981 creating theNational Fund forthePromotion of
Crafts andTrades andLight Industries (FONAPRAM);
- LawNo.93-120 of27December 1993promulgating theCodeofInvestment Incentives;
- Decree No.96-1444 of12August 1996 defining small businesses, establishing their
sphere ofactivity, andthecriteria andprocedures forgranting thebenefits forwhich
theyareeligible.
5. Smallandmedium-sizedenterprisesengagingintheactivitiesenvisagedintheDecreeareeligible
for:
(a) Acapital loanequivalent to90percentofequity assets corresponding tothefirst
D10,000 oftheinvestment andto80percentofequity assets ofthepartofthe
investment between D10,000 andD50,000. Thissumisrepayable freeofinterest
asoftheeighth year.
(b) Acapital grant of6percentofthetotalcostoftheinvestment.
Anyperson wishing toinvest inthecrafts andtrades orengage inanyoftheactivities referred
toinDecree No.96-1444 of12August 1996maybenefit fromtheadvantages mentioned inparagraph 5.
Thecapital loans andgrants arepaidoutofFONAPRAM funds, which aremanaged bybanks.
7. Seesection VIII.
8. Seeparagraph 5.
9. Thegrants given tosmall andmedium-sized enterprises donotleadtoincreased exports by
thebeneficiary sectors.G/SCM/N/3/TUN
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V. EXPORT PROMOTION
1. Thebenefits accorded toexporting enterprises include taxrebates forinvestors inequity and
fortheenterprise when itploughs backcapital.
2. Thisnotification covers theperiod 1995-1997.
3. Thesystem oftotally export-oriented enterprises wasestablished in1972 inorder toattract
foreign direct investment andcreate jobsforanexpanding labour force.
Itwasprolonged byLawNo.93-120 of27December 1993, andaffects allforeign ordomestic
investments inexport processing zones (EPZ). Apartial export regime hasalsobeenestablished to
benefit companies exporting partoftheiroutput.
Theincentives granted tototalorpartial export companies areintended tobuild upexport
production capacity tomeetinternational standards.
Thelegaltextsgoverning these incentives are:
- LawNo.93-120 of27December 1993 enacting theCode ofInvestment Incentives;
- Decree No.94-423 of14February 1994 setting outtheprocedures forbonded
operations oftotally export-oriented enterprises;
- Decree No.94-122 of14February 1994establishing theflatratedeposit toguarantee
import duties andtaxes under thetemporary admission orin-bond warehouse system;
- Decree No.94-424 of14February 1994 laying down theprocedures andcriteria for
therefund ofimport duties andtaxes paidoncapital goods.
5. Theincentives varyforthetotalorpartial export regime.
Total export regime
Enterprises deemed tobetotally export-oriented arethosewhose entire output isshipped abroad,
thoseworkingexclusivelywithsuchcompaniesandthoseworkingexclusivelywithcompaniesestablished
intheEPZs.
TotalexportcompaniesarenotsubjecttotaxationinTunisia,exceptingcertaindutiesandcharges
bywayoffeesandinreturn forcertain services provided tothese companies, onthesame basis as
companies producing forthedomestic market.
Total export companies mayapply forfulltaxdeduction ofincome orprofits derived from
exports, forcompany orpersonal income taxpurposes, foraperiod oftenyears asfromthefirstexport
transaction. Thisdeduction isreduced to50percentasoftheeleventh yearforanindefinite period.
They arealsoentitled toafulltaxwaiver onprofits ploughed backintothecompany.
Similarly, profits andincome invested bynatural orlegalpersons ininitial capital ortoincrease
company equity aretaxdeductible forpersonal income orcompany tax-purposes.G/SCM/N/3/TUN
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Exemptions arealsogranted fromcustoms duties andVAT onimports intothehome market
ofthecapital goods andrawmaterials needed forproduction.
Partial export regime
Companies engaging inexport operations under thepartial export regime receive thefollowing
benefits:
(a) Waiver ofVAT payable onimports intothehome market ofcapital goods andraw
materials needed forproduction;
(b) fulltaxdeduction ofincome andprofits fromexports foraperiod oftenyears. After
thisperiod, thededuction isreduced to50percent;
(c) refund ofexpenses andcharges incurred inrespect ofinputs imported forprocessing
andre-export;
(d) refund ofduties andtaxes paidoncapital goods imports.
6. Allcompaniesproducingexclusivelyorpartiallyforexportareeligibleforthebenefitsenvisaged
intheCode ofInvestment Incentives.
7-9. Seesection VIII.
8. Seeparagraph 5.
Export Promotion Fund (FOPRODEX)
1. Inaddition toitsmainactivity ofexport promotion (participation infairsandexhibitions, market
surveys, information, training, studies, etc.), FOPRODEX alsogrants financial support tocertain
agricultural products andagri-foodstuffs soastoreduce export marketing costs, andprovides assistance
forinternational transport bymeeting partofthecostofairfreight, shipping ormultimodal transport.
Thisactivity iscontemplated inArticle 9.1(d) oftheWTO Agreement onAgriculture.
3. Thepurpose ofFOPRODEX istopromote exports, assist companies incarrying outsurveys
ofnewmarkets, andpromote newTunisian products.
4. Created under theFinance Actof1984, thefunctioning ofFOPRODEX wasdefined in
Decree No.85-944 of22July1985, which setsouttheprocedures forthegranting ofFOPRODEX
assistance.
FOPRODEX mayprovide direct financial assistance and/or defray 50percentofthecostof
international transport.
6. Those eligible forFOPRODEX assistance arenewexporters orthose producing anewrange
ofproducts forexport tonon-traditional markets. These benefits gotocompanies resident inTunisia
whose products havesufficient localcontent.
FOPRODEX assistance isgranted bydecision oftheMinister ofTrade, based ontheopinion
oftheExport Promotion Advisory Committee (CCPE), thecentralized unitresponsible forexamining
applications forassistance.
7-8-9 Seesection VIII.G/SCM/N/3/TUN
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VI. OTHER ADVANTAGES GRANTED UNDER LAW NO.93-120 OF27DECEMBER 1993
PROMULGATING THE CODE OFINVESTMENT INCENTIVES
1. Taxandfinancial advantages maybeaccorded toinvestments ofparticular importance orinterest
tothenational economy orforthedevelopment ofborder areas.
2. Thisnotification covers theperiod 1995-1997.
3. These benefits aredesigned tofoster thecreation ofenterprises inpursuit oftheobjectives
oftheeconomic andsocial development programmes laiddown inthefive-year plan.
4. Theyareprovided under LawNo.93-120 of27December 1993enacting theCode ofInvestment
Incentives.
6. These benefits areaccorded bydecree, based ontheopinion oftheHigh-Level Investment
Committee, intheform of:
(a) Income orcompany taxexemption foruptofiveyears;
(b) agovernment contribution towards thecostofinfrastructure;
(c) acapital grant notexceeding 5percentoftheamount invested;
(d) awaiver oftaxes andduties onthepurchase ofcapital goods needed forthepurposes
oftheinvestment.
7. Thefirms thathavereceived benefits bydecision oftheHigh-Level Investment Committee
aregenerally enterprises established inborder areas, enterprises thatcreate jobs,orenterprises whose
activities helptoattain theobjectives ofeconomic development programmes (food security, etc.).
8. Seeparagraphs 5-6.
9. These benefits donotaffect exports bythebeneficiary companies.
VII. NATIONAL UPGRADING PROGRAMME
1. Thenational upgrading programme initiated in1996provides financial assistance toindustrial
enterprises carrying outrestructuring. Such restructuring includes:
(a) Physical investments, inparticular, investments inthetechnical andtechnological
modernization oftheproduction process, conversion inorder toadapt tomarkets, and
improving thecompany 'scompetitiveness;
(b) Intangible investments, inparticular, those covering diagnostic studies preliminary to
theupgrading, andthose making forgreater competitiveness ofthecompany.
2. Thisnotification covers theperiod 1995-2000.
3. Theopening oftheeconomy andtheestablishment ofafree-trade areawiththeEuropean Union
callsfortheupgrading oftheindustrial sector byputting inplace aprogramme andstructures forG/SCM/N/3/TUN
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modernizing theeconomy andstrengthening thecapacities offirms toadapt tothedemands ofthe
international market.
Upgrading entails apackage ofactions within thecompany anditsenvironment. Ittherefore
affects aspects suchastechnology, organization, financial balance, vocational training, etc.
Asregardsthecompany'senvironment,upgradingaffectsbasicinfrastructure,supportstructures
andtherange ofproduction andservice entities related totheindustry.
Initial costestimates forthefirstphase ofthisprogramme (1996-2000) stand ataround
D2.5billion, 60percentofwhich willbespent onupgrading andmodernizing ofenterprises and
40percentonupgrading andreinforcing theinfrastructural environment.
Theprogramme isfinanced bytheenterprises andthefinancial sector. Government assistance
complements market mechanisms andisdesigned tofoment andsupport efforts byenterprises, inview
ofthecostoftheoperation.
4. Government assistance isfinanced from theIndustrial Competitiveness Development Fund
(FODEC), established byLawNo.94-127 of27December 1994. Theorganization, working and
operating procedures ofFODEC arelaiddown inDecree No.95-2495 of18December 1995.
5. Government assistance takes theform ofcapital grants setasfollows:
- 20percentofphysical investments financed from equity assets;
- 10percentofinvestments financed withother resources;
- 70percentofthecostofdiagnostic studies preliminary toupgrading, upto
aceiling ofD30,000;
- 70percentofthecostofanyothernon-tangible investment designed toimprove
thecompany 'scompetitiveness.
6. Theupgradingprogrammecoversprivate-sectorindustrialenterprisesandindustry-relatedservice
companies which arenotindifficulty andshowgrowth potential, regardless ofsize,category orlocation.
Government assistance isgranted bydecision oftheMinister ofIndustry based onanopinion
bythesteering committee oftheupgrading programme. Tothatendanagreement isconcluded between
theMinistry ofIndustry andtheenterprise, setting outtherights andduties ofeachoftheparties.
7. Seesection VIII.
8. Seeparagraph 5.
9. Theupgrading programme hasnodirect impact onexports bythebeneficiary enterprises.G/SCM/N/3/TUN
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VIII. AMOUNTS OFTHE INCENTIVES GRANTED
Following isabreakdown oftheamounts oftheincentives accorded toenterprises fortheyears
1995 and1996:
1. Taxincentives forallcategories ofinvestment:
- Company tax:D141.2 million in1995 andD192.5 million in1996;
- personal income tax:D4.8million for1995 andD5.5million for1996;
- waiver ofduties andtaxes oncapital goods purchases: D201,148 million in1995
andD170,538 million in1996.
2. Financial incentives forallcategories ofinvestment:
Industrial capital grants:
- Regional development: D500,000 in1995 andD2,800,000 in1996;
- forpollution control: D619,864 for1995 andD1,630,462 for1996;
- newentrepreneurs: D1,300,000 in1995 andD1,400,000 in1996;
- acquisition oftechnology andtechnological expertise: D1,300,000 in1995 and
D2,300,000 in1996;
- energy saving: D736,000 fortheyears 1995 and1996;
- national upgrading programmes: D1,245,000 for1996;
- lightindustries: D239,000 in1995 andD792,000 in1996;
- research anddevelopment: D385,896 fortheyears 1995 and1996.
Contribution tocostofbasic infrastructure: D52,000 in1995 andD12,000 in1996.
Payment bygovernment oftheemployer contribution tothestatutory social security scheme:
- Regional development: D1,014,419 for1995 and1996;
- research anddevelopment: D45,485 for1995 and1996;
- newentrepreneurs: D105,288 for1995 and1996.
Export promotion:
- International transport: D0.7million for1995 andD1.76million for1996.