Ministry of Finance Cracks Down on Tax Evasion through Flat-Rate Regime
The Ministry of Finance has made significant efforts in recent years to reduce the number of taxpayers benefiting from the flat-rate regime. This generous system allows artisans and small business owners to enjoy light taxation, paying a fixed sum in advance that frees them from any future obligations.
In practice, these professionals can operate perfectly outside of official channels, making most of their sales in cash and off the books. Moreover, these businesses must be non-importers and not subject to Value-Added Tax (VAT). They can supply themselves from vendors who declare nothing and only use cash in their transactions, erasing any traceability and avoiding any checks. Meanwhile, the administration's strike force is rapidly increasing with enhanced digitalization, prompting a growing number of taxpayers to switch to the real regime. As a result, tax revenues generated by flat-rate taxpayers continue to rise. After exceeding the 100 MTND threshold for the first time in 2022, they are expected to reach 119 MTND by 2025.
The challenge for the coming years will be to control the beneficiaries of the self-entrepreneur status. Many will adhere to it, but everyone will have the reflex to stay below the 75,000 TND sales threshold. In a few years, we believe this problem will arise and will be the subject of widespread debates. We will revisit this topic.
