Clearly, the state is still struggling to boost its tax revenues from flat-rate taxpayers. The latest body to highlight this issue is the Tunisian Institute of Strategic Studies (ITES), which notes that although taxpayers under this regime “account for 38.9% of all taxpayers, their contribution to tax revenues has not exceeded 0.5% over the past five years.”
In a recently published report entitled “Towards a Fair, Incentive-Based and Resilient Tax System in the Service of Vision 2035,” the Institute deplores the fact that “the flat-rate regime is a clear illustration of inequality within Tunisia’s tax system.”
“An analysis of the fairness of Tunisia’s tax system reveals worrying imbalances, both in terms of horizontal equity (equal treatment of taxpayers in similar situations) and vertical equity (progressivity according to ability to pay),” according to ITES.
Regarding horizontal equity, ITES points out that the existence of multiple preferential regimes has created significant distortions.
It refers to a 2022 study conducted by the Center of Social Research and Studies (CRES), which identified 347 tax derogation measures from common tax law, resulting in an estimated revenue loss of 2.8% of GDP.
“These derogations mainly benefit export-oriented sectors and regional development zones, without their economic effectiveness being systematically evaluated.”
As for vertical equity, the Institute notes that “the progressivity index calculated by the National Institute of Statistics (INS) (INS) for 2023 shows that households in the poorest decile (the 10% of the population with the lowest standard of living) bear an effective tax rate of 18.2%, compared with 16.7% for the richest decile.”
This finding motivated the reform of the income tax scale introduced by the 2025 Finance Law, which raised the marginal rate to 40% and adjusted the brackets of the personal income tax (IRPP).
1,000 tax measures introduced in less than 14 years
Moreover, ITES highlights the complexity of the tax system, noting that more than 1,000 measures have been introduced into Tunisia’s tax legislation in less than 14 years. “This regulatory instability creates legal uncertainty that is detrimental to investment and increases compliance costs for businesses.”
On another front, the Institute states that “the overall yield of Tunisia’s tax system shows a considerable gap compared with international standards,” as the average ratio of tax revenue to GDP in Tunisia stood at just 25.2% in 2023, compared with 33.9% in Organisation for Economic Co-operation and Development (OECD) countries.
“This underperformance—more than an eight-percentage-point gap compared with the OECD average—highlights the scale of Tunisia’s fiscal challenge and masks significant structural inefficiencies.”
ITES thus estimates the “tax gap” (the difference between potential revenues and those actually collected) at around 4.2% of GDP, or nearly 5.2 billion Tunisian dinars. This underscores the urgency of designing a structural tax reform based on several pillars, including the full digitalisation of tax administration and the tax economy, the introduction of green taxation aligned with the Sustainable Development Goals, stronger tax fairness and social inclusion, improved economic competitiveness through incentive-based taxation, alignment of Tunisia’s tax system with international standards, and the introduction of anti-evasion rules.
Once implemented, such a reform would improve collection efficiency, reduce the tax gap, and gradually broaden the tax base, leading to an increase in tax revenues of 3 to 4 percentage points of GDP by 2035, equivalent to an additional 4 to 5 billion dinars in annual resources.
Administrative simplification: 0.3 to 0.4 points of growth
Economically, simplifying the tax system, improving predictability, reducing compliance costs, and introducing targeted incentives for investment and innovation would stimulate economic activity. Productivity gains of 0.5 points per year could be expected from administrative simplification alone, translating into an additional 0.3 to 0.4 points of annual GDP growth.
It should be noted that tax reform must be designed within a coherent strategic vision, aligned with the objectives of sustainable development and social inclusion set out in Vision Tunisia 2035.
As a reminder, Vision Tunisia 2035 outlines a development model built on four strategic pillars: democratic governance; a competitive, job-creating economy; human development; and environmental sustainability.
