The year 2010 is due to be over in two months. Except from presidential and legislative elections that will surely mark the economic life in Tunisia and are present in minds of all traders and investors, eyes and ears are glued to the next Finance Act. A first draft had been outlined at the last cabinet meeting. It would include a number of important measures which are already good news to businesses and Tunisian entrepreneurs for the year 2010.
The first news of the new financial year had already been provided by the Tunisian Minister of Finance, in an interview with Jeune Afrique. Rachid Kechiche said that there will be no tax increase in 2010. “The preliminary plan to balance the 2010 budget does not include an assumption of higher taxes, especially at the level of production structures,” stated the minister.
Olive oil sector
In fact, the good news would be numerous in the draft budget law for 2010. The first one, according to our information, deals the debts of oil mills sector. It will be recalled that, a few years ago, this sector was too quickly expecting a soaring oil international price. Large number of olive oil traders was then used to purchase and store this food commodity. The surprise of the sudden prices fallout resulted rapidly in banking debts involving many of them, as from 2006. The debt exceeds, according to some reliable financial sources, 200 MTD and the problem found no solution so far. The 2010 Finance Act, if passed and enacted in these terms, should allow the concerned banks to halve the amount of interest rates relating to these loans and to completely abandon the delay penalties. This should allow olive oil professionals to repay the principal of the debt that should be increased only by 50% of interests that have been applied to these credits.
Companies facing hardships
The financial authorities also are likely to provide additional support through the next Finance Act 2010, to businesses facing hardships as a result of the international economic crisis and its impact on exports in particular. A support plan was already developed for the consolidation and rescheduling of outstanding debts on export credits. In his interview with Jeune Afrique, the Finance Minister had stated that “, only 240 out of 2800 exporting firms have used these mechanisms. If the draft of the Finance Act 2010 is adopted in these terms, 2010 should provide for the extension of the mechanism currently enjoyed by only credit institutions, i.e. banks, to the remaining companies in the finance sector other than banks. Deduction of losses arising from the abandonment of debt claims of companies experiencing hardships will be extended to the remaining financial institutions other than banks.
Encouraging oriented-export markets companies
Two other measures could provided for by the 2010 Finance Act. This aims, according to our information, to suspend the VAT for handling services and maintenance at airports, as well as work training on aircraft such as the “Aviation Training Center” in the northern suburbs of Tunis. It would also suspend the VAT on raw materials and equipment for building contracts, won abroad by Tunisian companies. This will certainly help encourage these firms to make contracts to export more and give a good boost to the export of raw materials such as cement and bricks , and building equipment that Tunisia also manufactures.
The Tunisian dinar convertible by 2014.
We will not conclude without recalling the announcement by the head of state of Tunisia, Zine El Abidine Ben Ali, in his speech on the occasion of the start of the electoral campaign. «Given the large strides our country has made toward the convertibility of the dinar, and as the national economy has acquired a greater capacity to interact with international conditions, we will endeavor to achieve full convertibility of the dinar by the end of 2014, while reviewing the Code of Exchange so that it keeps up with this evolution”. The Tunisian president has also made many important tax announcements.” As regards the financial and taxation policy, we will continue, during the coming stage, reducing customs duties and decreasing the number of applicable rates.
The taxation system will accordingly be reviewed in light of the developments occurring in the world, whether with partner or competing countries, by reducing the tax burden on active enterprises as regards their profit or some elements of their production costs, while taking compensating measures at the level of the taxation system to preserve the State’s financial balances.
The formulae and procedures for the recovery of overpaid VAT will also be reviewed, in order to clarify and simplify them, and speed up the treatment of files.
We will also adopt a special taxation system for small and medium-sized enterprises, based on reviewing the tax assessment system, and extending the 20% deduction from the tax base to small enterprises that join integrated management centers. This deduction applies to such enterprises for five years from the date of joining these centers. This in addition to allowing small and medium-sized enterprises to deduct an incremental percentage – 75% then 50% then 25% – from the tax base during the first three years of activity”.