Vacation Rentals: The Business That Escapes the Taxman
Every summer, thousands of homes change hands for a few days or weeks in a booming rental market. But behind the boom lies a revealing phenomenon: the explosion of a shadow economy where the tax authorities are entirely absent.
Sun, sea, crowded beaches... and undeclared rentals. Every summer in Tunisia, thousands of properties are rented out via digital platforms or simply through word of mouth. The summer rental market has grown spectacularly in recent years, driven by strong local demand and the Tunisian diaspora.
According to a study, apartments make up 67% of national summer rental searches, and villas with pools reach sky-high prices. Cap Bon alone accounts for 67% of the coastal demand, with Hammamet North leading the way, while in El Kantaoui, villas go for up to 1,750 dinars per night. Djerba, Bizerte, and Mahdia round out the list of the most sought-after regions.
This seasonal surge reflects a dual dynamic: on one hand, an unregulated tourism craze, and on the other, a rental sector entirely disconnected from tax regulations. While listings abound and prices soar, tax revenues are not keeping pace.
The Vacation Rental Market: A Goldmine for Individuals
The market is dominated by individuals who rent out their properties for a few days or weeks, often without intermediaries and without any declaration to tax authorities. It’s a simple business with no administrative burdens and high returns: a well-located villa with a pool can generate up to 50,000 dinars in a single summer.
More affordable one- or two-bedroom apartments allow small owners to keep their properties fully booked throughout the season, with nightly rates ranging from 135 to 450 dinars depending on the location. Hammamet, Kélibia, El Kantaoui, Midoun, and Rafraf see high turnover rates. Seasonal renting has thus become a full-fledged activity for thousands of Tunisians, often more profitable than traditional annual leasing.
But this profitability comes at a cost to the state. The income goes undeclared, untaxed, and completely unregulated. The tax administration turns a blind eye, focusing instead on registered taxpayers who must account for every millime.
A Windfall That Slips Through the Tax Net
The discrepancy is stark. While compliant taxpayers face audits, payment obligations, and even jail time—as seen last week with Mehdi Ben Gharbia—a booming rental economy thrives with total impunity. Payments are made in cash, contracts are rarely signed, and the lack of paper trail enables tax invisibility.
This is not a marginal issue. According to tax expert Mohamed Salah Ayari, a member of the National Tax Council, Tunisia's tax evasion rate hovers around 50%, representing a revenue shortfall estimated at 23 billion dinars. The summer rental sector is a prime example: highly profitable, yet completely off the radar.
In a recent appearance on Diwan FM, Ayari highlighted the system’s inequity: salaried workers pay the bulk of taxes through withholding, while others—especially those profiting from informal activities like tourist rentals—slip through the cracks. This imbalance worsens the deficit and fuels a sense of tax injustice.
A Powerless or Complicit State?
The government’s tolerance toward this tax evasion raises many questions. Why hasn’t the tax administration implemented a mechanism to register or require declarations for seasonal rentals, even though websites and Facebook groups are filled with publicly visible offers?
The inaction is especially glaring given that regulating this market would allow the state to diversify tax revenues, control prices, and protect renters from abuse. Yet nothing has been done. Meanwhile, property owners pocket earnings without issuing invoices, paying taxes, or sometimes even declaring the existence of the property.
A Two-Tier Market and Sky-High Prices
A study highlights another reality: the growing polarization of the rental market. Between modest apartments in Mahdia or Hammamet South at 135–170 dinars/night and premium villas in El Kantaoui or Djerba Tourist Zone at 1,250 to 1,750 dinars/night, the gap is widening. Tunisia's coastline is becoming a two-speed market where only the wealthy can afford top-tier comfort.
This price inflation shows no signs of slowing. On the contrary, it’s encouraged by property scarcity, strong demand from Tunisians living abroad, and the lack of price caps. Villas with pools have become luxury goods, sought not only for vacations but also for private event rentals (weddings, birthdays, etc.).
A Market Out of Touch, Regulation Absent
The informal nature of the market prevents any attempt at urban planning or public oversight. No standards regulate pricing, property quality, or tenant safety. Abuses are widespread: unkept promises, run-down properties, scams, unreturned deposits. Victims often have no recourse due to the lack of legal framework.
The rise of domestic tourism and social media has made this market even more chaotic—and paradoxically, even more tolerated. The tax authority, omnipresent when dealing with registered entrepreneurs, seems suddenly blind to this summer economy.
Lost Revenue, A Challenge for the Future
In a country struggling to reduce its deficit and where tax revenues are stagnant, letting an entire segment of the economy grow without any taxation is, at best, negligence—and at worst, complicity.
Regulating the seasonal rental market is not a technocratic fantasy. It’s not only feasible but essential. It requires political will, basic enforcement, and tax reform that no longer relies solely on salaried income and the overburdening of SMEs.
Because beyond governance, there must be observation, regulation—and above all—tax collection.
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