HomeFeatured NewsTunisia: offshore regime and April 1972 law called into question!

Tunisia: offshore regime and April 1972 law called into question!

Tunisian think tanks (Cercles de réflexion et de suivi), including the Tunisian Observatory of the Economy (OTE), have recently called for a review of the offshore (non-resident) regime and the law of April 27, 1972 that introduced it by creating a special legal framework for fully exporting industries, which is still in force.

The reasons given vary. OTE based its argument on the enormous loss of convertible currency revenues to the Tunisian State as a result of the offshore regime, arguing that Tunisia could have avoided the substantial foreign debt it is now facing if non-resident companies had been subject to the common regime.

Article 6 of the April 1972 Law, which is contained in Section 3 on the foreign exchange regime for wholly exporting industries, provides in substance that “Legal entities (companies) which are non-resident within the meaning of this law shall not be obliged to repatriate the proceeds of their exports, services and supplies”.

Companies are considered non-resident if their capital is held by non-residents through the import of non-convertible foreign currency equivalent to 66% of the capital.

There are currently some 29,000 offshore companies operating under the special regime established by Law No. 72-38 of April 27, 1972. They are subject to systematic administrative control to ensure that they fully comply with the provisions of the law. Nearly 41% of them are foreign-owned, while 80% of all foreign companies operate under the offshore regime.

In a recent report submitted as a contribution to the current debate on the independence of the BCT, the OTE proposed the suspension of the special regime for the transfer of profits of non-resident companies abroad and its replacement by the common foreign exchange regime via the BCT.

For the OTE, this means that these non-resident companies will be obliged to contribute their profits to the foreign exchange reserves of the BCT when they carry out export operations.

According to OTE, Tunisia loses around 4.3 billion dinars in convertible foreign currency each year as a result of this special regime.

Indeed, this special regime has provided non-resident companies with numerous financial, tax and customs advantages, as well as significant facilities in terms of administrative formalities, which are often cumbersome for activities carried out under the common regime.

The cumulative trade surplus under the offshore regime is estimated to reach 87 billion dinars between 2012 and 2020, compared to around 35 billion dinars between 2002 and 2011.

However, the law of April 1972, adopted under the government of Hédi Nouira in the wake of the liberalization of the Tunisian economy following the socialist experiment of the 1960s, was intended, according to its authors, to promote employment and technology transfer and had nothing to do with the mobilization of foreign currency.

From this pragmatic point of view, the OTE is probably mistaken when it describes the advantages granted under the offshore regime as “a legal encouragement to the evasion of money and the protection of foreign capital against certain economic and monetary risks, such as the depreciation of the Tunisian dinar”.

According to other analysts, however, the April 1972 law should be revised because it has created an economic schism by dividing the Tunisian economy into two components, namely the common or resident regime and the offshore or non-resident regime, i.e. an onshore regime and an offshore regime.


According to an analytical report on the subject, “the onshore-offshore model initially contributed to Tunisia’s development in the 1970s and 1980s. The onshore-offshore duality contributed to Tunisia’s economic transformation because the offshore sector attracted foreign investors and brought in much-needed foreign currency, while the heavily protected onshore sector facilitated the development of a local industrial base.

Indeed, the offshore regime has been undeniably successful in attracting foreign investors, supporting the creation of new businesses and creating jobs relative to the rest of the economy. 

However, these results have come at a high price, and the subsequent weak economic performance shows that the two-tier economic model is no longer the right one to support the development of the Tunisian economy. 

Indeed, most studies suggest that the two-tier system has become detrimental to Tunisia’s development in a number of ways. The offshore sector has remained trapped in low value-added activities, and profiteers have monopolized the rents generated by the restrictions on access to the onshore sector.

On the other hand, the onshore sector entails high fiscal costs (incentives) that have yielded limited returns in terms of attracting investment and creating jobs. These differences reflect the fact that the separation between onshore and offshore companies has been an obstacle to the smooth transfer of technology and know-how.

“Unequal treatment between exporters and other companies has distorted the economy and prevented a level playing field for all investors. In addition, regulatory constraints prevent offshore companies from working with the onshore sector, which has therefore remained isolated from the rest of the economy, creating an internal ‘enclave’ rather than a beneficial engine for the whole economy”.


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