1 Ratification by the Assembly of the Representatives of the People on September 17, 2016 Draft Investment Law Unofficial Translation of the Tunisian Investment Law Chapter One. General Provisions Article One: This law aims to promote investment and encourage company creation and development according to the priorities of the national economy, especially through: Increasing added value, competitiveness and export capacity, technological content in the national economy both at the regional and international levels, and the development of priority sectors, Job creation and increasing human resources capacity, Achieve integrated and balanced regional development, Achieve sustainable development. Article 2. This law sets out the legal system for investment carried out by natural persons or legal entities, resident or non-resident in all economic activities. Economic activities are organized according to the "Tunisian Classification of Economic Activities", which is adopted in a unified manner by all the government entities involved in investment. The Tunisian Inventory of Activities will be defined by a government decree. Article 3. 1. In this law, the intended meaning of: 2. Investment: Any sustainable use of capital, carried out by an investor for the execution/realization of a project which will contribute to the development of the Tunisian economy, and for which he will carry the risk, it may be in the form
2 of direct investment or through the acquisition of equity. 3. Direct investment operation: any creation of a new autonomous project to produce goods or provide services or any expansion or renovation operations carried out by an existing enterprise within the same project to increase production capacity, technological capacity or its competitiveness, 4. Participation operations: participation in cash or in-kind contribution to the capital of companies in Tunisia, at the time of creation, capital increase, or acquisition of capital share/capital equity. 5. Investor: A natural or legal person, resident or non-resident, carrying out an investment. 6. Enterprise: A unit active in the production of goods or provision of services, set up as a company or sole-proprietorship in accordance with Tunisian legislation. 7. Regional development index: An index prepared by the Ministry in charge of development, calculated based on demographic, social, economic and environmental standards/indicators to rate/organize the regions of the country according to its rate of growth, 8. The Council: The High Investment Council. 9. The Authority: The Tunisian Investment Authority. 10. The Fund: The Tunisian Investment Fund. Title II. Market Access Article 4. Investment will be free. Investment operations shall comply with existing legislation on economic activities. A government decree shall set, at the latest, within one year from the publication of this law, the list of activities subject to an authorization and the list of administrative authorizations for the execution of a project. The deadlines, procedures and conditions for these, while taking into account national security and safety requirements, the streamlining of subsidies, preservation of natural resources and
3 cultural heritage, and the protection of health and environment. A decision to refuse an authorization must be justified, and shall be notified to the applicant within the legal deadlines in writing, or in another manner which leaves a written trace. The absence of a reply after expiry of the statutory deadlines set forth in the third paragraph of this Article is considered as an authorization, if the request/application meets all the conditions. In this case, the Authority shall grant the authorization after confirming compliance with the requirements and deadlines, in case of no response past the deadline. Certain activities may be exempted from the provisions of the previous paragraph through a government decree. Article 5. Investors are free to own, rent or operate non-agricultural real estate, to realize direct investment operations or continue existing ones, taking into account the Regional Development and Urban Planning Code and urban development plans. Article 6. Enterprises can recruit foreign national executives for up to 30% of the total number of executives, up until the end of the third year from the date of creation or the date of entry into operation. This ratio comes down to 10% starting the fourth year from this date. In all cases, enterprises have the right to recruit four foreign nationals as executives. Above the ratios or limits set forth in the previous paragraph, the enterprise shall be subject to an authorization from the Ministry in charge of employment, in accordance with the provisions of the Labor Code. The recruitment of foreign managers/executives is subject to the provisions of the Labor Code with the exception of paragraphs 2, 3, 4 and 5 of article 258-2. Title III. Investor guarantees and duties
4 Article 7. Foreign investors shall be treated in a manner no less than that of Tunisian investors when in a similar position in relation to the rights and duties stipulated by this law. Article 8. The protection of investor funds and ownership of intellectual rights are guaranteed according to existing legislation in effect. Investors funds cannot be seized, except for public interest, in accordance with the legal procedures, and without discrimination on the grounds of nationality and against fair and just compensation. The provisions of this article shall not prevent the application of court judgments or arbitral awards. Article 9. Investors are free to transfer their funds overseas in foreign currency, in accordance with current legislation on currency exchange. In the case where the overseas transfer requires an authorization from the Central Bank of Tunisia, the provisions of article 4 of this law shall apply. Article 10. Investors shall respect existing legislation especially on competition, transparency, health, employment, social security, environmental protection, the protection of natural resources, taxation, land planning and urban planning. They shall also provide all necessary information required under the provisions of this law while ensuring the accuracy and validity of the information provided. Title IV. Investment Governance Chapter 1. The High Council for Investment Article 11. A High Council for Investment" shall be created at the Presidency of the Government, which will be headed by the Prime Minister, and made up of ministers associated with investment. Its proceedings shall be/must be attended by the Ministers in charge of Investment, Finance and Employment.
5 The composition of the council and its organization shall be specified in a government decree. Article 12. The council shall set out the policy, strategy and programs of the State in the field of investment, and will specifically cover the following: Take the necessary decisions to promote investment and improve the business and investment climate, Monitor and evaluate government policies in the field of investment in a published annual report, Ratify the strategies, action plans and annual budgets of the Investment Council and Investment Fund, Approve the annual allocation of the state financial resources dedicated to the Fund, in accordance with the objectives of the government policy in terms of investment, in the framework of the preparation of finance law, Supervise, monitor and evaluate the work of the Council and the Fund, Adopt incentives for projects of national importance projects listed in article 20 of this law. The Authority will be in charge of the permanent secretariat of the Council, which shall meet regularly, at least once a quarter. Chapter II. Tunisian Investment Authority Article 13. A public body, endowed with legal personality, administrative and financial autonomy and called the "Tunisian Investment Authority", shall be created under the supervision of the ministry in charge of investment. The Authority s headquarters shall be in Tunis, it may have regional and overseas representations. This authority shall be subjected to the rules of commercial law, if they are not in conflict with the provisions of this law. The provisions of Law 9-1989 dated 1 st February 1989, on contributions, enterprises,
6 and public institutions, shall not apply to the Authority. The employees of the Authority shall be under a special system, which takes into account the fundamental rights and guarantees stipulated by Law 78-1985, dated August 5, 1985 and setting the general status of employees in government industrial and commercial agencies and institutions, and companies directly or indirectly held by the state or local communities. The resources of the Authority are made up of: Resources from the state budget, Donations granted to them locally and from abroad, All other resources. A government decree shall determine the administrative and financial organization of the Authority, as well as the specific statutes for its employees/staff. Article 14. The Authority shall propose to the Council policies and reforms related to investment in consultation with the structures representing the private sector. It will also be responsible for following up on the implementation, collect data on investment and their publication, and prepare monitoring and evaluation reports on investment policy. The Authority shall consider the requests for grants and decide on allocating them based on a technical report prepared by the concerned body, in charge of the follow up of the execution of the investment. Framework agreements approved by the Council shall govern the relationship between the Authority and the bodies involved in investment. Article 15. A Single Point of Contact shall be appointed, and will be in charge of: Greeting investors, guide them and inform them in coordination with the various bodies involved, Carry out the necessary administrative formalities for company creation or company extension, and to obtain the necessary authorizations required at the various stages of investment,
7 Receive investors queries and work to resolve them in coordination with the various concerned bodies, as well as setting up a database to compile all queries received, study them and propose adequate solutions, and publish any infractions/breaches and corrective actions in its monitoring and evaluation reports. The declaration of the investment operation and legal creation of the companies is carried out through a single file, for which the format, attached documents and procedures are set by government decree. The Single Point of Contact shall supply to the investor a certificate of submittal of an investment declaration and the documents for creation or expansion of the company within one working day from the date of submittal of the declaration supported by all the required documents. Part III. The Tunisian Investment Fund Article 16. A public body, endowed with legal personality, administrative and financial autonomy and called the "Tunisian Investment Fund" shall be created This authority shall be subjected to the rules of commercial law as well as prudential management rules provided that they are not in conflict/ inconsistent with the provisions of this law. The Fund shall carry out its duties under the supervision of a monitoring commission, chaired by the minister in charge of investment, and is mainly in charge of: Design the development strategy for the Fund activities and the general policy for its intervention, Adjust Development Activity Fund and policy interventions strategy, Draw up the annual investment and portfolio program of the Fund, Approve the financial statements and the annual report of the Fund, Draw up the estimated budget and follow-up its execution, Draw up the program contracts and follow-up their implementation, Approve the organizing of the Fund departments, i.e. specific regime of the
8 personnel and the compensation package, Designate the auditors in accordance with existing legislation. The Fund is not subject to the provisions of Law 9-1989 dated 1 st February 1989 on contributions, enterprises and public institutions. The employees of the Fund shall be under a special system, which takes into account the fundamental rights and guarantees stipulated by Law 78-1985, dated August 5, 1985 and setting the general status of employees in government industrial and commercial agencies and institutions, and companies directly or indirectly held by the state or local communities. A government decree shall set the administrative and financial organization, and operating rules of the Fund, as well as the specific statutes for its staff and the prudential management rules. Article 17. The Fund 's resources shall be made up: Resources from the state budget, Grants and loans granted domestically and from overseas, All other resources made available/provided. Article 18. The Fund shall manage its financial resources in accordance with the programs designed according to development priorities in the field of investment through: The disbursement of the grants listed in Chapter Five of this Law, Direct or indirect investment in IPO mutual funds, venture capital funds and seed funds A government decree shall set the rates and conditions of use of capital participations.
9 Title V. Grants and Incentives Article 19. Grants are assigned for the purpose of direct investment operations as follows: 1. Bonus/incentive for increasing value-added and competitiveness: For direct investment operations in: Priority sectors, Value chains. For economic performance in the fields of: Physical investment in new technologies and to improve productivity, Intangible investments, Research and development, Personnel training which leads to the certification of skills. 2. Bonus for the development of employability with State support:: Employers contribution to the statutory social security system for salaries paid to Tunisian employees for a period no longer than the first ten years from the actual date of start of operations, A share of the wages paid to Tunisian employees, according to the level of management. 3. Regional development grants on the base of regional development index, in certain activities for: The implementation of direct investment operations, Spending for infrastructure works. 4. Sustainable development grants for investment in pollution fighting and environmental protection. The grants set out in this law or in the context of other legislative texts, can be combined but their total should not exceed one-third of the cost of investment, excluding the contribution of the state in infrastructure expenses and the grant for the
10 development of operational capacity. A government decree shall set the rates and conditions for these grants, as well as the activities concerned. Article 20. Investment of a national interest shall benefit from the following incentives: A deduction of profits from the taxable profits of the tax base for corporate tax within the ten-year period, An investment grant within the limits of the one third of the cost of investment rule, including intramural infrastructure costs, The contribution of the state for infrastructure costs. The files for projects of national interest shall be submitted to the Authority, which will study them, evaluate them and present them to the Board. A government decree shall set: Project of national interest based on the size of the investment or the employability capacity, meeting/fulfilling at least one of the goals set out in Article 1 of this Law. The limit for the investment grant set forth in first paragraph of this Article. The incentives set forth in the first paragraph of this article are given for any project of national interest via a government decree following the Council s advice. Article 21. The recipient enterprises benefitting from the incentives set forth in this law shall be subject to monitoring and evaluation by the relevant administrative departments. The investment declaration will be deemed void in case the implementation of the project does not start within one year from the date of approval. The recipients of the incentives will lose their benefits in the following cases: Failure to comply with the provisions of this law or implementation texts,
11 Non-implementation of the investment program within four years from the date of the investment declaration, which may be extended on an exceptional basis and for one time only for a maximum period of two years, by a reasoned decision of the Authority, An illegal diversion of the initial purpose of the investment. Article 22. The amounts due in accordance with the provisions of Article 21 of this Law are subject to late fees at a rate of 0.75% per month or part thereof starting from the date of enactment of incentives. The Authority shall directly hear or upon proposal of the concerned services, the beneficiaries of financial incentives and issue an opinion on the removal or reimbursement of incentives. The cancellation and the reimbursement of incentives is carried out through a reasoned order of the Minister in charge of Finance, in accordance with the procedures of the Public Accounting Code. The removal and reimbursement does not include incentives granted for operations during the period where operations did actually take place, in accordance with the purpose under which the incentives were granted. The incentives granted for the investment phase shall be reimbursed after deduction of 1/10 th per year of effective operation in accordance with the purpose for which the incentives were granted. Enterprises may change from one incentive regime to any of the other ones set out in this law. Provided that they submit a declaration in accordance with the provisions of Article 15 of this law and carry out the necessary procedures and pay the difference between the values of the granted incentives under the two systems, in addition to the late fees in accordance with the provisions of this article. Title VI. Dispute Settlement Article 23. Any dispute occurring between the Tunisian State and the investor on the interpretation or application of the provisions of this law shall be settled in accordance with the conciliation procedures unless one of the parties renounces in writing.
12 The parties are free to agree on the procedures and rules that govern the conciliation. Failing that, the United Nations Commission on International Trade Law (UNCITRAL) Rules on Conciliation shall apply. Once the parties enter into a compromise agreement, said agreement shall serve as law for the parties who agree to execute it in good faith and within the best timeframe. Article 24. If a dispute between the Tunisian state and an investor cannot be settled through conciliation, the dispute can be submitted to arbitration in compliance with a specific agreement between the parties. If the dispute between the Tunisian state and the Tunisian investor cannot be settled through conciliation, and when the dispute clearly has an international dimension, the parties can, under an arbitration agreement, submit it to arbitration. In this case, the provisions of the arbitration code shall govern arbitration procedures. In all other cases, the dispute shall fall under the jurisdiction of Tunisian courts. Article 25. The application of a party to a judicial or arbitration authority is considered as a renunciation to any later recourse in front of any other arbitral tribunal or court. Article 26. Title VII. Transitional and definitive provisions The provisions of this law shall enters into force as of 1 st January 2017. Article 27. Taking into account the provisions of Articles 28 to 32 of this law, the Code for the Promotion of Investment published by Law No. 120-1993 dated December 27, 1993, shall be repealed with the exception of its articles 14 and 36 from the date of entry into force of the Investment Law. Article 28.
13 Shall continue to benefit from the state contribution on behalf of employers to the social security system, as provided for under Articles 25 and 25 bis, 43 and 45 of the Code for the Promotion of Investment, up until the expiry of the granted duration: Companies which hold a certificate for submitting a declaration of investment before the date of entry into force of the Investment Law, and who obtained a decision granting financial privileges, within a maximum of two years from afore mentioned date, and who have actually started operations. Companies that were in active before the date of entry into force of the Investment Law. Article 29. The privileges borne from the provisions of articles 24, 29, 31, 32, 33, 34, 35, 36, 42 and 42 bis, 45, 46 and 46 bis and 47 of the Code for the Promotion of Investment, shall remain valid for enterprises which meet the following conditions: To hold a certificate for submitting a declaration of investment before the date of entry into force of the Investment Law, To hold a decision granting financial privileges, and the actual start of operations at the latest within two years from the entry into force of the Investment Law. Article 30. 1. The provisions of Articles 63, 64 and 65 of the Code for the Promotion of Investment shall continue to apply for the privileges granted under said code. 2. The provisions of Articles 3, 5, 6, 7 and 8 of Law No. 21-1990 dated March 19, 1990, related to the Code for Tourism Investment, shall remain valid/applicable. Article 31. The functions entrusted to the Tunisian Investment Authorities by public structures in charge of investment, each within their jurisdiction until the above-mentioned Authority commences its activities.
14 Article 32. 1. The High Committee for Investment stipulated in Article 52 of the code for investment incentives, shall continue to carry out the tasks entrusted to it under the legislation in force, until the High Investment Council starts to carry out its tasks thus leading to the dissolution of the Committee. 2. The incentives/privileges set forth in Articles 51b and 51c, 52 and 52b and 52c and 52e of the code for the promotion of investment, shall continue to apply to companies which acquired the approval of the High Committee for Investment before the entry into force of the Investment Law. 3. Wherever the expression the High Committee for Investment" is found in the existing legislation it shall be replaced with "High Investment Council" while taking into account the difference of expression/text. Article 33. Shall be repealed the provisions of the last paragraph of Article 2 (new) of law No 91-37 dated 8 June 1991 on the creation of the Industrial Real Estate Agency, such as subsequently modified and consolidated, especially Law No 2009-34 dated 23 June 2009, which are replaced by the following: "Local communities and real estate developers shall benefit from the same incentives set forth in Article 19 of the Code of Investment, granted to industrial entrepreneurs in the field of infrastructure in the regional development areas. Article 34. 1. The provisions of Article 6 of the investment code shall apply to companies created in the three years before the publication of this law, as if these companies were created at the date of application of said law. 2. The provisions of Article 6 of the investment law shall apply to on health institutions providing their services exclusively to non-residents such as set out in Law No 94-2001 dated 7 August 2001, on health institutions providing their services exclusively to non-residents, and the economic activities areas such as
15 stipulated by Law No 81-1992 dated August 3, 1992 on economic activities areas. Article 35. The production of weapons, ammunition and explosives and their parts and spare parts is subject to the necessary authorizations by the competent administration departments and in compliance with existing legislation. Article 36. Shall be repealed, from the date of entry into effect of the investment code, all previous provisions contrary to this law, mainly: Article 9 of Law 81-1992, dated August 3, 1992 on the creation of free trade economic areas, such as subsequently amended and consolidated, Article 465 of the Code of Commerce, Article 16 of the Framework Law No 6-1996 dated 31 January 1996, on scientific research and technology development, Article 26 of Law No 65-1998 dated 20 July 1998 on lawyers professional firms/ partnerships, Article 5 of Law No 94-2001, dated August 7, 2001, on health institutions providing their services exclusively to non-residents, Article 11 of Framework Law No 13-2007 dated 19 February 2007 on establishing the digital economy. Law No 18-2010 dated 20 April 2010, on the creation of the incentive system for creativity and innovation, in the field of information and communication technologies, Decree No 2819-2000, dated November 27, 2000 providing for the establishment of the Supreme Council for Export and Investment, and setting its prerogatives, composition and organization, with the exception of the provisions of its Article 7.