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Tunisia: tax experts reject Finance Bill 2014; argue for

The draft budget law for 2014 still creates controversy. Those who oppose it are more numerous! Today it was the turn of the Tunisian Union of Industry, Trade and Handicrafts (UTICA)’s Tax commission to formulate its complaints and observations.

At a roundtable held Thursday, November 14, 2013 at the seat of UTICA, Taoufik Laaribi , Executive Board Member and Chairman of the UTICA‘s Tax Commission, strongly criticized the draft budget.

He singled out the massive taxation that will only lead, according to him, to deepen the crisis and impoverish the middle class. He acknowledged, however, that taxation is a national duty and it is very important to ensure the financial stability from the country’s own resources and without foreign debt. It remains important, too, that taxation needs to be rationalized, he has said, calling therefore, on the government to propose a simplified tax system that serves the investment and private initiative, while controlling treasury resources.

He also pointed out that although the law comes in economic and financial conditions marked by an unstable business climate and a political situation dominated by tension, it did not contain reassuring measures that help boost investment.

Taoufik Laaribi blasted the introduction of a 10% withholding tax on dividends earned on the local market and 5% on dividends earned at exports.

The tax commission is also against the introduction of a new administrative penalty tax set at 20 % of the amount of any transaction equal or higher than 20,000 dinars, if payment is not made by bank or postal transfer, electronic payment or compensation, indicating that severe restrictions have been imposed in relation to the deduction of taxes on invoices missing, incomplete or non-compliant to payments.

The draft budget law, which will be approved shortly by the National Constituent Assembly (NCA), also provides for imposing a 10% withholding tax on dividends on shares distributed from January 1, 2015. Add to that the taxation, from next year, imposed on cars with an additional fee ranging from 50 to 700 depending on the tax rating of the vehicle.

Taoufik Laaribi noted in this context that a radical solution to taxation is needed, calling to incorporate all the measures and procedures in a single code.

He specified that the provisions of the current law will worsen the financial situation of the middle class, in the light of the depreciation of the dinar, the deterioration of the purchasing power and the budget deficit. According to him, the Finance Act has not responded to the major problems of the country, including tax evasion and parallel trade. Note that the informal economy represents 35% of the GDP and 53% of firms within it have never paid taxes.

For his part, financial expert and member of the National Board of Taxation, Jamel Bourkhis, said this bill will accentuate the crisis. “The government should rationalize the draft budget for 2014 and review some decisions, especially regarding taxation on 4 or more horse-power cars,” he said, noting that these decisions are unsustainable and unfair to both citizens and investment.

Jamel Bourkhis said that the only solutions are savings, investment and production. In a statement to Africanmanager, he said that the middle class is the biggest victim especially with the freezing of wages, the depreciation of the dinar and the deterioration of purchasing power, calling on the government to seek liquidity from the parallel market which has absorbed much of the resources of the state.

As a solution, Jamel Bourkhis also suggested a “national loan.”


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