The Law 72-38: A Double-Edged Sword for Tunisia's Economy
The Law 72-38, adopted in 1972, has profoundly marked Tunisia's economy by establishing a favorable tax regime for export-oriented companies. These companies benefit from a total exemption from corporate tax for their first ten years of activity, followed by a preferential rate of 10% for the next decade. This "offshore" system has also allowed companies with at least 66% of their capital held by non-residents to repatriate their profits in foreign currencies, while enabling them to sell up to 50% of their production on the local market. Although these measures initially attracted foreign investment and created jobs, they have also created major economic distortions.
This special tax regime now represents two-thirds of Tunisia's exports, creating a problematic economic dependence. Tunisia has become trapped in the lower rungs of the global value chain, particularly in the textile sector, without being able to move up the value chain as planned. This situation has exacerbated fiscal inequalities between "offshore" and "onshore" companies, with the latter being taxed at 25% (initially 35%). The 34,317 offshore companies recorded in 2022 by the National Institute of Statistics (INS) play a crucial role in the national economy, but their presence undermines the local industrial fabric and complicates the upskilling of Tunisian workers.
To avoid a catastrophic scenario, experts recommend a progressive and strategic overhaul of Law 72. Rather than simply aligning tax rates, it has become urgent to rethink Tunisia's economic positioning in the global value chain. This requires transforming the current economic model by encouraging the upgrading of local productions and developing high-value-added sectors. The success of this transition depends on the government's ability to balance fiscal attractiveness, social justice, and sustainable development, while preserving employment and international competitiveness.
