The Weight of the Tunisian Tax System
By Skander SALLEMI, Tax Advisor
Introduction
The burden of the Tunisian tax system does not solely stem from the level of tax rates or the volume of tax liability. It also lies in how the legislation defines the tax trigger, i.e., the date or event from which the tax becomes payable. In other words, the question is not only how much we pay, but when and on what real basis the tax becomes due.
Taxes on Unreceived Income
It frequently happens that taxpayers are liable for taxes or duties on income, profits, or turnover that has not yet been realized or collected. This discrepancy results directly from the legal provisions related to the tax trigger. In the case of Value-Added Tax (VAT) and consumption tax, for example, the tax trigger occurs as soon as the invoice is issued, the goods are delivered, or the service is performed. Thus, an entrepreneur who is paid in installments or faces client insolvency is still required to pay VAT as soon as the invoice is issued or the goods are delivered, regardless of actual collection.
Commitment or Collection: A Distinction with Significant Consequences
The core of the problem lies in the distinction between the commitment system and the collection system, which determine when the tax becomes payable.
| System | Moment when tax becomes payable | Economic Logic |
|---|---|---|
| Commitment System | At the time of invoicing, delivery, or service provision, even without payment | Tax is calculated on completed operations |
| Collection System | At the time of actual payment | Tax is calculated on paid operations |
In Tunisia, tax legislation primarily retains the commitment system, both for VAT (Article 5 of the VAT Code) and for income tax and corporate tax. This choice, while favoring rapid tax collection, penalizes businesses exposed to payment delays or non-payment. In contrast, the collection system – where tax becomes payable only at the time of actual payment – is more suitable for very small businesses, newly created companies, or those whose cash flow depends heavily on client payment deadlines. It allows them to better manage their cash flow and avoid financing tax on unreceived income.
When Tax Legality Becomes a Financial... or Even Criminal Risk
This legal mechanism becomes particularly burdensome in the event of a tax audit. The administration, applying the law strictly, demands unpaid VAT from the date of invoicing, plus late payment penalties. In situations where these amounts represent 30% of turnover, the risk can even become criminal. Businesses, weakened by collection difficulties or an unfavorable economic climate, then suffer a double shock: financial and tax-related. The system, designed to secure state revenue, paradoxically exacerbates the risk of insolvency of the productive fabric.
A Tax Trigger Contrary to the Nature of VAT
The VAT tax trigger, as defined by Article 5 of the VAT Code, appears to be in contradiction with the pecuniary and real nature of this tax. Tunisian tax jurisprudence has, however, already affirmed on several occasions that VAT is a tax on actual expenditure, i.e., on a transaction actually collected. Similarly, for income tax and corporate tax, jurisprudence has established the principle of tax reality, recalling that it can only affect actually realized income.
Towards a Reform of Economic Consistency
The question of the tax trigger is not technical: it affects the heart of the relationship between taxation and real economic activity. A reform in this sense – aligning tax liability with the reality of economic flows – would allow for reduced cash flow tensions, improved voluntary compliance, and restored trust between taxpayers and the administration. Adapting the collection system to small structures and start-ups could constitute an effective lever for economic survival and investment recovery.
S.S. Note: The opinion expressed in this article is the sole responsibility of its author and represents a personal viewpoint.
