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New legal and institutional framework for investment in Tunisia

New legal and institutional framework for investment in Tunisia

Wednesday 03-29-2017

On the occasion of the enactment of the implementing decrees of the Investment Law and the entry into force of the new legal framework as from the 1st of April 2017, the Minister of Development, Investment and International Cooperation, Mr. Mohamed Fadhel AbdelKefi presented the objectives and main characteristics of this new legal and institutional investment framework at a press conference held on Tuesday, 28th March 2017, at the Presidency of the Government. He pointed out that the new Law aims to encourage the promotion of private investment and in particular to promote the creation and development of businesses, in particular through the following steps:

  • Increasing the value added, competitiveness, export capacity and technological content of the Tunisian economy at the regional and international levels, as well as developing priority sectors,

  • Creating jobs and enhancing human resources skills,

  • Achieving integrated and balanced regional development,

  • Achieving sustainable development.

The new legal framework also includes a number of provisions which enshrine the principle of freedom of investment through:

  • Removing several sector-specific authorisations, in particular for market access,

  • Setting the deadlines for the approval of authorisations,

  • Requiring authorities to justify the rejection and considering their silence after deadline expiry as an implicit authorisation,

  • Revising technical specifications and simplifying administrative procedures in the investor's favour..

Moreover, this new legal framework grants investors the freedom of recourse to justice and arbitration in the event that conciliation solutions fail to settle a dispute. It also reinforces the principle of free international transfer of funds for foreign investors.

The new legal framework for investment also enshrines the principle of freedom to recruit foreign executives up to a maximum of 30% of the total number of the company ‘sexecutives during the first three years from the start of the project, subject to the adoption of a program to gradually integrate Tunisian employees from the fourth year onwards.

With regard to investment incentives, the Minister of Development, Investment and International Cooperation declared that the new legal framework includes several incentives for investment, including mainly:

  • Investment allowances targeting regional development projects, priority sectors and economic sectors, as well as infrastructure expenditure under regional development schemes,

  • Allowance in agriculture and fishing: This allowance varies between 15% for medium and large projects and 30% for small projects with a ceiling of 1MD, in addition to a specific grant for material investments in mastering new technologies and improving productivity up to 55% for "A" category investments in agriculture, fisheries and aquaculture and 60% for mutual companies.

  • Economic performance grants for material investments in mastering new technologies and improving productivity, intangible investments, research and development expenditures, employee training expenditures leading to certification of skills,

  • Allowance for the development of job creation capacity: State's subsidy of the employer's contribution to the statutory social security schemes for wages paid to employees of Tunisian nationality for their first recruitment on a permanent basis, and state subsidy of a share of the wages paid to Tunisian employees based on the level of supervision in all activities except activities excluded from incentives under regional development.

  • Sustainable development grant of 50% of the approved investment cost with a ceiling of three hundred (300) thousand dinars (water and atmospheric decontamination projects for pollution resulting from the company's activity, projects adopting clean and non-polluting technologies, enabling the reduction of pollution at source or management of resources exploitation, collective decontamination equipment carried out by public or private operators, on behalf of several companies or generating the same type of pollution).

On the institutional level, the new Investment Law and the Government Decree on Investment Governance provide for the adoption of a new institutional arrangement which mainly comprises:

  • The High Investment Council: Chaired by the Head of Government and composed of ministers concerned with investment and the Governor of the Central Bank of Tunisia.
    The purpose of this Council which replaces the Higher Investment Commission is to approve the State's investment policy, strategy and programs in particular by evaluating the investment policy and taking the necessary decisions to promote the business climate, grant incentives for projects of national interest and review investment laws and regulations.

  • The Tunisian Investment Authority whose tasks mainly consist in:

    • Proposing policies and reforms in coordination with the private sector,

    • Supervising and guiding the investor and assessing applications for grants for projects costing more than 15 million dinars,

    • Granting authorisations in accordance with the provisions of Article 4 of the Investment Law,

    • Reviewing and processing investors' inquiries in order to resolve the problems that arise in coordination with the various concerned structures,

    • Studying and evaluating projects of national interest and submitting them to the Council,

    • Collecting and disseminating investment information and preparing investment evaluation reports.

  • A Tunisian Investment Fund with the following missions:
    - Disbursing investment grants,
    - Subscribing to mutual investment funds and development capital funds through:

    • Creation of seed funds and development funds in each region,

    • Creation of funds for priority sectors.

With the new legal framework for investment and structural economic reforms such as the 2015 Law on Public-Private Partnership, the 2015 law on investment in renewable energies and the 2017 new law on tax incentives, Tunisia aims to change the present winded economic model and to adopt a new economic model based on efficiency and productivity through the development of investments in innovative and high value-added sectors that will improve the competitiveness of the national economy and reduce unemployment and regional disparities.