2025 Finance Law includes ranges of VAT rate changes and simplifications
Tunisia has introduced the Finance Law for 2025, which implements several significant changes in indirect taxation. Key amendments regarding VAT are summarized below:
- Reduction of VAT on Low-Voltage Electricity for Domestic Use (Article 31): The VAT rate on the sale of low-voltage electricity for domestic consumption has been reduced from 13% to 7%. This reduction applies to individuals whose monthly electricity consumption does not exceed 300 kWh, aiming to provide financial relief for lower-income households.
- Suspension of the VAT Regime and Other Taxes for Community Enterprises (Article 56): Community enterprises have been granted a suspension of the VAT regime and other related taxes, likely to encourage their establishment and growth.
- Suspension of the VAT Regime for Pharmaceutical Industries (Article 34): The Finance Law suspends the VAT regime for pharmaceutical industries, which is expected to reduce production costs and potentially make medications more affordable for consumers.
- Tax Relief on Coffee and Tea (Article 35): Specific tax reductions have been introduced for coffee and tea, essential commodities in Tunisian households. This measure is anticipated to ease the financial burden on consumers.
- Tax Relief for Buses Acquired by Industrial Enterprises for Employee Transport (Article 54): The VAT rate has been reduced to 7% (down from 19%) for buses purchased by industrial enterprises for employee transportation. This applies to buses classified under customs tariff code 87-02 and whose age does not exceed 10 years from the date of initial registration. This measure is designed to support industrial enterprises in providing safe and efficient transport for their workers.
- VAT Exemption on Loan Interest for Crowdfunded Projects (Article 57): Interest on loans for projects financed through crowdfunding platforms is now exempt from VAT, providing an incentive for innovative and alternative financing methods.
- Reduction of VAT on Certain Agricultural Products for Processing (Article 59): The VAT rate has been reduced on specific agricultural products used in processing. This is expected to promote the agricultural sector and enhance value-added activities.
- Revision of VAT on Residential Buildings by Real Estate Developers (Article 64): Changes to the VAT structure for residential property sales by real estate developers aim to streamline costs and stimulate the housing market.
General VAT Rules in Tunisia
In addition to the changes introduced by the 2025 Finance Law, Tunisia’s VAT system generally operates with multiple rates to cater to different sectors. The standard VAT rate is 19%, but reduced rates of 13% and 7% apply to specific goods and services. Exemptions exist for essential items such as certain foodstuffs and educational materials to ensure affordability for the population.
VAT registration is mandatory for businesses exceeding a prescribed turnover threshold, with compliance requirements including regular VAT declarations and payment schedules. Tunisia has also established mechanisms to refund VAT on inputs for exporters and specific industries, supporting their competitiveness in international markets.
By implementing these amendments and maintaining a structured VAT framework, Tunisia seeks to balance revenue generation with economic development and social equity.
