2025 Finance Bill includes hike from 13% to 19% for goods
The Tunisia government has issued its Finance Bill for 2025 which includes the following reclassifications to VAT rates. Presently, the standard rate is 19%, with a 13% reduced and 7% super reduced rate. Some essentials are at the zero rate.
- Goods rising from 13% to 19%
- Reclassification from 13% to 7% for electric cars and bicycles
- Tea and coffee cut to zero rate
The reduced rate of 13% that applies for real estate transactions only, may also increase (to be confirmed) to 19% effective 1 January 2025.
Tunisian VAT regime
The Tunisian VAT regime is a comprehensive consumption tax levied on most goods and services at each stage of their production or distribution.
VAT in Tunisia functions on the principle of neutrality, meaning businesses act as intermediaries in collecting the tax but bear no ultimate VAT burden. They are responsible for charging VAT on their sales (output tax) and are entitled to deduct VAT paid on their purchases (input tax). This mechanism, known as the “right to deduction,” ensures that VAT is only paid by the final consumer, and businesses reclaim the tax paid at earlier stages of production or distribution. This right is fundamental to preventing tax cascading, where VAT would otherwise accumulate at each stage of the supply chain.
Compliance requirements
Businesses must register for VAT once they exceed specific turnover thresholds. VAT returns are typically filed monthly, although small businesses may file quarterly if their turnover is below a specified limit. Certain sectors, including financial, insurance, healthcare, and educational services, are VAT-exempt under Tunisian law. These exemptions reflect both economic policy and social welfare priorities, ensuring that essential services remain accessible.
Cross-border transactions
In cases of cross-border transactions, Tunisia follows the destination principle, whereby VAT is charged in the country of consumption. This aligns with international VAT/GST practices and is crucial for managing imports and exports.
