Tunisia's Recent Salary Increases May Not Translate to Significant Net Income Gains for Employees, Warns Tax Expert

Tunisia's recent announcements of salary increases are based on gross salaries and do not necessarily translate to significant net income gains for employees, according to tax expert Anis Ben Saïd.

Speaking on Express Fm, Ben Saïd explained that these increases are directly subject to social security contributions and income tax, which significantly reduces the real gain perceived by employees. In the private sector, employees bear a withholding tax of approximately 9.68% for social security contributions, in addition to progressive taxation based on income brackets. As a result, a 5% gross salary increase may translate to a net gain of only around 4%, or even less. In some cases, withholding taxes can reach up to 40% of the value of the increase.

Ben Saïd also highlighted disparities between the public and private sectors, particularly in terms of taxation and withholding mechanisms. He mentioned possible ambiguities in the application of withholding taxes in the public sector, which may lead to adjustments during annual tax declarations.

In this context, Ben Saïd emphasized the importance for all employees to submit their annual tax declarations, even in cases where withholding taxes are applied, to avoid tax arrears. He reminded that tax authorities can conduct audits up to 10 years in cases of non-declaration.

From an economic perspective, Ben Saïd believes that these increases, in a context of high inflation and limited growth, will have a reduced impact on purchasing power. Without improvements in production, salary increases may stimulate consumption and put additional pressure on prices, particularly in an economy heavily reliant on imports.

He also warned that these salary increases may burden private companies with additional costs, potentially affecting employment and investment.

Ben Saïd also drew attention to existing disparities in pension benefits between the public and private sectors, highlighting that public sector pensions can reach up to 90% of the last salary, compared to around 80% in the private sector, often capped.

He criticized the continued taxation of pension benefits despite declining income, while noting that some foreign retirees benefit from significant tax advantages, including a reduction of up to 80% when transferring their pensions in foreign currencies.

Ben Saïd called for a comprehensive and profound reform of Tunisia's tax system, aiming to strengthen equity among taxpayers, simplify procedures, improve tax collection, and better align salary increases with real economic growth, ensuring a lasting impact on purchasing power and the national economy.

Related Article: Mohamed Salah Ayari Décortique l'Impact des Retenues d'Impôts sur les Augmentations Salariales Read More