Repatriating dividends from Tunisia: the exchange-control guide for foreign investors

The question every foreign investor asks before setting up in Tunisia: "Will I be able to get my money out?" The answer is yes, for dividends, for the proceeds of a sale and for the repayment of shareholder loans, provided the investment was brought in and documented in the right way. The Tunisian exchange-control regime guarantees the transfer of income and proceeds of foreign investments made in foreign currency; the practical condition is the documentation. Here is how it works.

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The principle

Tunisia applies exchange control: the dinar is not freely convertible for residents, and transfers abroad by a resident company go through an authorised bank that checks their basis. Foreign investments benefit from a guarantee of transfer of their income (dividends, profits) and of the proceeds of their liquidation or sale, in the currency of the original investment, when the investment was financed by an import of foreign currency and is documented as such.

What to do from day one

1. Bring the capital in foreign currency from abroad, through a Tunisian bank, onto the account opened for the company; the bank issues the documents evidencing the import of currency and its allocation to the capital.
2. File the investment form on the Central Bank platform within two months of the investment being completed, and have it validated by the account-holding bank: this is the document that evidences the import of currency and its allocation.
3. Declare the investment with the competent bodies where required, and keep the investment certificate in the permanent file.
4. Document shareholder loans the same way (import of currency, loan agreement, registration where required): their repayment and interest follow the same logic.
5. Keep the file: bank certificates, investment declarations, capital increase documents, loan agreements, general meeting minutes. Missing documents are discovered too late, at the first transfer request.

The investment form: the document that opens the right to transfer

Under Central Bank of Tunisia circular no. 2018-14, a foreign investment is declared through a digital investment form (fiche d'investissement), completed by the non-resident investor or their agent on the Central Bank platform within two months of the investment being completed, then validated by the account-holding bank within the following month. The completion date is that of the registration of the newly formed company, of the capital increase, of the registration of the share purchase agreement, or of the land registration, depending on the transaction.

In four situations the form is replaced by a bank investment certificate issued by the bank: acquisition by inheritance; free allotment of shares on a capital increase by incorporation of reserves; subscription by conversion of shareholder current-account advances; acquisition paid abroad between non-residents of foreign nationality.

Older investments made under the paper-form regime are digitised at the first transfer. Those that were never covered by a form can be the subject of a regularisation form, based on any document from a bank established in Tunisia evidencing the import of the currency and its allocation to the investment. An incomplete file is therefore not hopeless, but rebuilding takes time: it is done before the distribution, not after. Note too that transfers are executed by a single authorised intermediary bank, with which the company files its permanent record.

Tax clearance: the article 112 certificate

Transferring taxable income abroad, and even exempt income, is conditional on a tax clearance certificate issued in the name of the beneficiary of the funds: the certificate of article 112 of the Code of tax rights and procedures. It is requested from the competent tax control office, or from the Large Taxpayers Directorate, and the official procedure sheet provides for issuance within five days of a complete file being filed.

The file comprises the request on the administration's template, stating the purpose "transfer of income subject to final withholding tax", copies of the receipts evidencing that returns were filed and taxes paid, and where applicable a copy of the final withholding tax certificate. Where the income is exempt under ordinary law, the certificate is not required provided the transfer request states the category of income and the legal basis of the exemption.

This is where files usually stall: a company in perfect order on the exchange-control side will transfer nothing while a late return or an unpaid tax prevents the certificate from being issued.

The dividend transfer, step by step

• Approval of the accounts and decision of distribution by the general meeting, within the deadlines of the Commercial Companies Code;
• Payment of the withholding tax on dividends (10% domestic rate for non-residents, reduced where a double taxation treaty applies and a residence certificate is provided);
• Obtaining the tax clearance certificate of article 112 of the Code of tax rights and procedures, in the name of the beneficiary of the funds;
• Transfer request to the authorised intermediary bank with the supporting file set out in annex 2 of circular 2018-14;
• Transfer in foreign currency to the parent company.

The documents required by annex 2

1. Investment form and, where applicable, bank investment certificate.
2. Tax clearance certificate, or exemption certificate, in the name of the beneficiary of the funds.
3. Evidence of non-resident status at the date of transfer: full passport or foreign residence permit for an individual, extract from the commercial register for a foreign company.
4. Minutes of the meeting, or collective decisions, allocating the result, signed and registered with the tax collection office.
5. Up-to-date list of shareholders, with each one's place of residence and shareholding, stamped by the management.
6. Statement of the dividends allocated to non-residents.
7. Financial statements for the year.
8. Tax return for the year, stamped by the tax administration.

Two points of form explain much of the back and forth with the bank: the minutes must be registered and the tax return stamped. Plain copies will not do.

Sale proceeds and liquidation

The same guarantee covers the proceeds of the sale of shares to another investor and the liquidation surplus, again in proportion to the documented foreign investment and after the applicable taxes on capital gains. Structuring the sale with the exchange-control file in mind avoids surprises at closing.

Common mistakes that block transfers

• Capital paid in dinars from a local source, or brought in cash, without bank documentation of the import of currency;
• Shareholder loans undocumented or not declared;
• A subsidiary created in the name of a local person "to simplify";
• Capital increases or reinvested profits not documented as foreign investment;
• Distributions decided without up-to-date accounts, approval or tax payment;
• An investment form never filed, or filed outside the two-month deadline, and never validated by the account-holding bank;
• Minutes not registered with the tax collection office, or a tax return not stamped by the administration;
• Late tax returns, which prevent the tax clearance certificate from being issued and block the transfer even though the exchange-control file is complete.

Intragroup payments

Management fees, royalties and interest follow their own rules: contract, arm's length pricing (transfer pricing), withholding tax and VAT on imported services, then transfer through the bank with the supporting documents. Treated together from the start, they pass without difficulty.

MGI BFC organises the exchange-control file of foreign investments from the first transfer, handles distributions and intragroup payments with the bank, and keeps the books and the tax compliance of the subsidiary. See setting up a subsidiary in Tunisia, tax advisory and our free subsidiary compliance check. A partner answers within 24 hours through the request for proposal.

General information article written by MGI BFC, chartered accountants in Tunis, member of MGI Worldwide. Exchange-control rules are set by the Central Bank of Tunisia and evolve through circulars; each situation is reviewed individually. It is not personalised advice.

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