Withholding tax in Tunisia: main rates and obligations for companies

Withholding tax at source is one of the most present mechanisms in the daily life of a Tunisian company: the payer deducts part of the amount due and pays it to the Treasury on behalf of the beneficiary. For a foreign-owned subsidiary, it concerns both local purchases and payments to the group. Here is the essential.

Who must withhold?

Legal entities and individuals under the real regime that pay amounts subject to withholding: purchases of goods and services, fees and commissions, rents, salaries, dividends, interest, royalties, and payments to non-residents. The payer is liable for the tax not withheld.

The main rates (indicative)

• 1% on purchases of goods, equipment and services of TND 1,000 including VAT or more (general rate);
• 3% on fees and commissions paid to legal entities and to individuals under the real regime;
• 5% on rents;
• 10% on dividends distributed to individuals and to non-residents, subject to tax treaties;
• Specific rates on interest, royalties and services paid to non-residents, reduced where a double taxation treaty applies and the residence certificate is provided;
• Income tax withholding on salaries under the progressive scale.

The exact rate depends on the nature of the transaction, the status of the beneficiary and the applicable treaty; the list above is a guide, not a substitute for a case-by-case check.

Deadlines and formalities

Withholdings are paid monthly with the monthly tax return, by electronic filing. The payer issues a withholding certificate to the beneficiary, who uses it as a tax credit; the annual employer's declaration recaps all amounts paid and withheld during the year.

Payments to the group

Management fees, royalties, interest and dividends paid to the foreign parent combine three topics: the withholding tax (domestic rate or treaty rate), VAT on imported services, and the exchange-control documentation required for the transfer. Treating them together, with the transfer pricing policy, avoids the most common adjustments.

Penalties

Failure to withhold or late payment triggers penalties and, in case of audit, the payer's liability for the tax due. A rigorous follow-up of certificates also protects the beneficiary's credits.

MGI BFC sets up withholding parameters, certificates and filings, and advises on cross-border payments. See tax advisory in Tunisia, transfer pricing and accounting services.

Sources: Tunisian income tax code (withholding provisions), finance laws. Rates may evolve; check their application to your situation. Article written by the MGI BFC teams; it is not personalised advice.

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