Analysis of Tunisia’s 2027 Finance Bill

An Economic, Tax, and Social Assessment Based on the Draft Finance Bill, Focusing on Its Implications for Businesses, Citizens, Investment, and Tax Fairness

First: Overall Assessment of the Bill

Tunisia’s 2027 Finance Bill is built around a fundamental balancing act: financing the state’s needs and preserving its social role while attempting to stimulate investment, ease the tax burden on businesses, and integrate the informal economy into the formal sector.

The bill sets out seven main policy priorities, including support for small and medium-sized enterprises (SMEs), strengthening social protection, food security, investment promotion, the energy transition, settlement of certain public enterprise debts, and continued tax reform.

However, a genuine assessment of the bill must go beyond its stated objectives and address three key questions:

• Are the proposed measures sufficient to stimulate private investment and create jobs?
• Is public budget financing sustainable without increasing the tax burden on businesses and citizens?
• Is the tax system moving towards a broader tax base and greater fairness, or will compliant taxpayers continue to bear additional costs?

Preliminary conclusion: The bill includes important incentive measures in certain sectors, but it raises clear fiscal challenges due to the size of the budget deficit and the significant reliance on borrowing. The impact of its tax measures on business competitiveness, consumption, and investment also requires careful assessment.

Second: Key Public Finance Indicators

According to Articles 1, 2, and 7 of the bill:

Indicator	Amount
State revenue	TND 54.280 billion
State expenditure	TND 68.895 billion
Budget deficit, taking grants, allocations, and confiscated assets into account	TND 14.615 billion
Domestic and external borrowing resources	TND 26.722 billion

Source: Articles 1, 2, and 7, pages 3–5 of the draft bill.

1. What Do These Figures Mean?

• The revenue-expenditure gap: The deficit amounts to TND 14.615 billion, equivalent to approximately 21.2% of total budget expenditure.
• Reliance on tax revenue: Tax revenue stands at TND 49.6 billion, representing approximately 91.4% of total estimated budget revenue.
• Reliance on borrowing: Domestic borrowing is estimated at TND 19.845 billion, while external borrowing is estimated at TND 6.877 billion.
• Repayment of principal: The bill allocates TND 6.823 billion to repay domestic debt principal and TND 6.484 billion to repay external debt principal.

These figures show that the fiscal challenge is not limited to raising additional revenue. It also involves controlling expenditure growth, managing debt costs, and strengthening the economy’s capacity to generate sustainable revenue.

It is also important to distinguish between the budget deficit and financing requirements. The TND 28.122 billion figure referred to in Article 7 covers deficit financing, debt principal repayments, and other Treasury operations. It does not represent an additional budget deficit.

2. Fiscal Assessment

The bill faces a genuine dilemma. If financing needs are met primarily through domestic borrowing, pressure on the liquidity available to the private sector could increase. If external borrowing expands, foreign-exchange risks and debt-servicing costs become more significant.

The proposed recourse to Central Bank financing of up to TND 9.8 billion, interest-free and repayable over 15 years, including a three-year grace period, is a financially significant measure. Its implications for monetary policy, liquidity, and the independence of monetary decision-making require careful assessment. The bill provides for an agreement governing withdrawals and repayments.

Recommendation: Budget financing should be accompanied by measurable targets for increasing productive investment, improving the efficiency of public expenditure, and establishing a clear path towards gradually reducing the deficit.

Third: Tax Reform and Tax Fairness

This is the most important area in terms of balancing the state’s financing needs with businesses’ capacity to invest and grow.

1. Easing the Tax Burden on Businesses

The bill includes several potentially positive measures:

• Article 22: Extension of the corporate profit tax exemption scheme for newly established businesses created between 1 January 2027 and 31 December 2030, subject to the conditions of the previous scheme. Certain sectors are excluded, including financial services, energy except renewable energy, mining, real estate development, trade, and other specified activities.
• Article 23: Exemption from withholding tax for amounts received by self-employed entrepreneurs operating under the declared activity covered by the scheme, effective from 1 January 2027.
• Article 39: Extension of certain VAT incentives to comparable locally manufactured equipment, subject to the applicable conditions and approval by the Ministry of Industry.
• Article 40: Exemption from customs duties for a specified list of raw materials and semi-finished products unavailable locally, benefiting certain industrial sectors.

Assessment: These measures could reduce start-up and production costs and support industrial investment. However, their effectiveness depends on clear eligibility criteria, timely processing of applications, and a stable legislative framework.

Extending tax exemptions alone will not be sufficient to attract investment if businesses continue to face financing difficulties, delays in collecting receivables, or complicated administrative procedures.

2. Does the Bill Promote Tax Fairness?

The bill explicitly aims to strengthen tax fairness and integrate the informal economy. However, tax fairness is not simply a matter of increasing public revenue. It also requires:

• Broadening the tax base fairly.
• Combating tax evasion and fraud without overburdening compliant businesses.
• Reducing administrative complexity and the cost of tax compliance.
• Ensuring that penalties are proportionate to the nature and severity of violations.
• Evaluating tax incentives according to their actual contribution to investment, employment, and value creation.

The key question is whether the reforms will distribute the tax burden more equitably or whether formal businesses will continue to bear a disproportionate share of public financing.

3. Integrating the Informal Economy: Digitalisation and Oversight

Article 66 requires providers of delivery services for goods sold online or through audiovisual broadcasting channels, as well as platforms connecting suppliers with delivery providers, to submit nominal lists to the tax authorities every six months.

These lists must include supplier identification details, their tax identification number or national identity card number, and the amounts of their transactions.

The article also proposes a penalty equivalent to 5% of undeclared transaction amounts, plus TND 200 for each missing, incomplete, or inaccurate item of information in cases unrelated to transaction amounts.

This is an important step towards tracking e-commerce transactions and broadening the tax base.

However, successful implementation requires practical safeguards:

• Secure and limited data sharing.
• Clear allocation of responsibilities among the parties involved in the sales and delivery chain.
• Avoiding the imposition of liability on delivery companies for errors they cannot reasonably verify.
• Providing reasonable deadlines for corrections and appeals.
• Developing the tax administration’s digital services alongside expanded enforcement powers.

Most importantly, integrating the informal economy should combine oversight with incentives to encourage formal registration, rather than relying exclusively on penalties.

Fourth: Investment and Job Creation

The bill establishes several financing facilities for SMEs, private and collective initiatives, and other targeted groups.

TND 10m

Support for Start-ups — Article 13

Interest-free participatory loans to strengthen the equity of businesses holding an official Start-up Label, during 2027 and 2028.

TND 10m

Support for Small Businesses — Article 14

A financing facility offering preferential terms to businesses with no more than three years of activity, covering working capital requirements and temporary financial difficulties.

TND 5m

Student and Vocational Training Entrepreneurs — Article 16

Preferential loans to finance business creation by eligible students and vocational training graduates.

TND 20m

Low-Income Groups — Article 17

Interest-free loans of up to TND 10,000 per loan, repayable over a maximum of six years, including a one-year grace period.

TND 35m

Community Enterprises — Article 20

Additional funding for community enterprises, with eligibility for the financing scheme extended until the end of 2028.

The amounts above are specified in Articles 13, 14, 16, 17, and 20. They represent separate financing facilities with different eligibility conditions and implementation periods.

Economic Assessment

The positive aspect is that the bill recognises the importance of equity financing and working capital, two major needs facing businesses during their early stages.

However, three potential weaknesses deserve attention:

• Limited funding volumes: The allocations should be assessed against the number of eligible businesses and projects, rather than simply being presented as newly established financing facilities.
• Actual access to loans: Announced financing does not necessarily translate into accessible funding if application requirements, collateral obligations, or processing times prevent businesses from benefiting.
• Lack of outcome indicators in the provisions presented: Regular reporting should cover loans granted, projects completed, jobs created, and business survival rates.

The priority should not be limited to financing business creation. It should also help businesses survive, expand, and grow.

Fifth: The State’s Social Role and Purchasing Power

The bill includes significant social measures but combines direct support with certain provisions that could increase consumer costs.

Key Measures

• Social contributions for new businesses — Article 14: The state covers social security contributions, up to the guaranteed minimum wage level, during the first three years: 100% in the first year, 75% in the second, and 50% in the third, within the allocated budget.
• Housing — Articles 29 and 30: Exemptions relating to undeveloped land intended for certain social housing and rent-to-own programmes, and application of the tariff under Article 20 of the Registration and Stamp Duty Code to a first home purchase, once per buyer.
• Healthcare — Articles 25 to 28: Continuation of certain support measures for the Central Pharmacy of Tunisia, tax adjustments relating to healthcare services, and a programme to integrate children with autism spectrum disorders into kindergartens.

Increases in Certain Duties

Article 24 proposes revisions to consumption duties on certain products, including:

• Raising the duty on games and competitions from 40% to 60%.
• Increasing the duty on international trips from TND 60 to TND 80.

These increases could generate additional revenue for an account dedicated to diversifying social security financing, but their effects on consumers and the sectors concerned require assessment.

Assessment: The bill attempts to combine social solidarity with the financing of social security systems. However, the net impact on households must be measured, particularly for low-income groups. A distinction should be made between duties targeting discretionary consumption and those that could affect broader economic activity.

Sixth: Regional Development, Food Security, and Energy Security

1. Agriculture and Olive Oil

Article 37 establishes a TND 100 million financing facility for the period 2027–2030, offering seasonal and investment loans at preferential interest rates to small-scale farmers and cooperative companies operating in the olive sector.

Article 38 provides for the establishment of a dedicated account to finance the development of this sector.

Assessment: This is a positive measure, but financing should be linked to improvements in productivity, storage, processing, packaging, and exports, rather than merely increasing raw production.

2. Small Farmers and the National Livestock Herd

Article 35 allocates up to TND 40 million during 2027–2030 to rebuild and preserve the national cattle herd, including grants for small-scale livestock farmers.

Assessment: Supporting domestic production is important for food security. However, results will depend on the availability of animal feed and water, improvements in veterinary productivity, and better organisation of distribution channels.

3. The Energy Transition

Article 49 proposes exemptions from customs duties, VAT, and the relevant professional levy for imported batteries used to store electricity, subject to the conditions set out in the bill.

Assessment: These exemptions could encourage electricity storage and support investment in renewable energy. Their impact will depend on equipment costs, grid connection requirements, and the availability of financing for businesses and households.

Regional development cannot be achieved through small financing facilities alone. It requires investment in infrastructure, transport, industrial zones, vocational training, and public services, supported by indicators measuring the distribution of investment and job creation across regions.

Seventh: Public Enterprises and Interconnected Debts

The bill includes measures to settle certain debts between the state, public enterprises, and the National Pension and Social Insurance Fund (CNRPS).

These include the state assuming certain public enterprises’ debts to the fund, settling some tax penalties owed by the fund, and addressing obligations involving other public entities.

Such measures could help resolve accumulated financial and accounting imbalances. However, they do not, on their own, address the structural causes of financial difficulties.

For debt settlements to be sustainable, they should be accompanied by:

• A clear financial diagnosis of each enterprise.
• Targets for improving productivity and service quality.
• Better control of subsidies and public transfers.
• Governance reforms and performance monitoring.
• Publication of measurable results following the settlement.

Otherwise, debt settlements may postpone the problem rather than resolve it.

Eighth: Summary Table of Key Measures

Area	Main Strength	Key Challenge
Public finances	Clear identification of revenue, expenditure, and financing needs	Reducing the deficit and controlling debt
Taxation	Exemptions and incentives for certain businesses and activities	Ensuring fair tax distribution and stable rules
Investment	Financing facilities and support for equity	Converting financing into productive projects
Employment	Support for new businesses and low-income groups	Creating sustainable rather than temporary jobs
Social protection	Measures supporting social security, healthcare, and housing	Sustainable financing and protection of purchasing power
Regional development	Support for agriculture and businesses in less-developed regions	Improving infrastructure and the actual distribution of investment
Public enterprises	Settlement of debts and financial imbalances	Governance reform and improved performance
Digital tax enforcement	Tracking e-commerce transactions	Data protection and proportionate penalties

Ninth: What Should Be Added to the Finance Bill?

From the perspective of economic and tax reform, the following measures should be prioritised.

1. Move from Temporary Exemptions to Stable Tax Reform

Evaluate existing tax incentives, simplify tax returns and administrative procedures, reduce delays in refunding taxes owed, and clarify legislation to minimise disputes.

2. Reduce the Burden on Productive Investment

Direct incentives towards investment that creates value, generates employment, and develops exports. Every tax incentive should be evaluated periodically to determine its actual results.

3. Integrate the Informal Economy Gradually

Combine digital oversight with easier formal registration and simplified procedures for small businesses, while safeguarding taxpayers’ rights.

4. Link Public Financing to Performance Indicators

Publish results for each financing facility, including the number of beneficiaries, investment volumes, jobs created, regional distribution, and project survival rates.

5. Assess the Impact Before Introducing New Duties

Study how each proposed increase could affect prices, consumption, businesses, and expected revenue instead of relying solely on direct fiscal estimates.

6. Establish a Clear Path for Deficit and Debt Reduction

Set measurable, gradual targets while distinguishing expenditure that generates essential economic and social benefits from expenditure that produces insufficient results.

Tenth: Final Conclusion

Tunisia’s 2027 Finance Bill includes positive measures to support SMEs, finance private and collective initiatives, assist the agricultural sector, expand certain tax incentives, and integrate e-commerce into the tax system.

However, there is a gap between the bill’s economic ambitions and the country’s existing fiscal constraints. The substantial deficit and borrowing requirements make it essential to improve the efficiency of public spending and broaden the tax base fairly, rather than placing a disproportionate burden on compliant businesses and citizens.

The bill should ultimately be judged by its actual impact, not by the number of measures it contains.

The key questions are:

• Does it increase private investment?
• Does it create sustainable jobs?
• Does it reduce regional inequalities?
• Does it achieve greater tax fairness without undermining business competitiveness?

The answers to these questions will determine whether the 2027 Finance Bill represents a meaningful step towards sustainable economic growth or primarily a short-term response to the state’s financing needs.