Cosmetic Manufacturers Call for Regulatory Framework and Tax Relief
During a recent press conference held at the Confederation's headquarters, members of the cosmetic manufacturers' group called for the establishment of a regulatory framework to organize the sector and for a reduction in the tax burden on local industries. These measures are deemed necessary to preserve the competitiveness and sustainability of Tunisian cosmetic products.
The Importance of the Cosmetic Industry
"The manufacture of cosmetics is not a luxury industry. In addition to perfumery products, it includes personal hygiene products used daily, such as toothpaste, soap, and shampoos... It's a promising sector, and we can create national champions capable of competing with internationally renowned brands," said Aslan Berjeb, President of Conect, at the opening of the press conference recently organized by the professional group of cosmetic product manufacturers to highlight the challenges facing the cosmetic industry in Tunisia.
Challenges Facing the Industry
With over 10,000 jobs and 600 companies, the cosmetic manufacturing sector is a significant local industry that contributes substantially to the national economy. However, this high-potential sector is currently facing several challenges that penalize local producers. The members of the group under Conect lamented the high tax burden on Tunisian manufacturers, which has had a direct impact on their competitiveness in the market. The decline in their market share from 24% in 2015 to 15% in 2020 has benefited the informal sector, whose weight has increased from 23% to 35% over the same period.
Taxation and Regulatory Issues
In addition to customs duties applied to imported raw materials and packaging, certain cosmetic products, such as perfumes, skin care, and makeup, are subject to a 25% consumption tax. This tax, introduced in 2018, applies to both imported and locally manufactured products. "If the state, in an effort to increase its short-term tax revenues, has opted for the introduction of such measures, their impact would be negative on the local industrial fabric. They have been reflected in the prices of local products and therefore on their competitiveness. This situation has contributed to the development of informal trade and tax evasion. In the medium term, these increases result in a loss of tax revenue and, above all, a risk to the sustainability of sector enterprises," warned the President of Conect.
Calls for Regulatory Reform
Furthermore, the group members lamented the absence of a regulatory framework governing the sector. Except for the standards recommended by Inorpi, the sector is not subject to any mandatory regulations ensuring consumer health safety. This legal vacuum has favored, according to them, unfair competition exacerbated by the development of the informal sector. This is why the group is calling for the development and implementation of a legislative arsenal inspired by international standards, particularly European and American norms.
Demands for Tax Relief and Regulatory Changes
Local producers are also demanding the abolition of the consumption tax applied to certain cosmetic products, as well as exemption from customs duties on imported raw materials and packaging. They also recommend canceling the monopoly regime on alcohol, a system that limits, according to them, their ability to choose the quality of imported alcohol, generates cumbersome administrative procedures, and leads to an increase in the cost of this essential raw material for the manufacture of most cosmetic products.
