Law No. 2016-71 of September 30, 2016

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Law No. 2016-71 of September 30, 2016 on Investment (1)

In the name of the people, The Assembly of People's Representatives has adopted, The President of the Republic promulgates the law as follows:

TITLE ONE GENERAL PROVISIONS

Article 1 - This law aims to promote investment and encourage the creation and development of enterprises according to national economic priorities, notably through:

• increasing the value added, competitiveness, and export capacity of the national economy and its technological content at regional and international levels, as well as developing priority sectors;
• creating jobs and promoting human resource competence;
• achieving integrated and balanced regional development;
• achieving sustainable development.

Article 2 - This law establishes the legal regime for investments made by natural or legal persons, resident or non-resident, in all economic activities. The economic activities are classified according to the "Tunisian Activity Nomenclature," uniformly adopted by all public services involved in investment. The Tunisian Activity Nomenclature is established by government decree.

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(1) Preparatory work: Discussion and adoption by the Assembly of People's Representatives in its session on September 17, 2016.

Article 3 - For the purposes of this law:

• Investment: any durable deployment of capital by an investor to realize a project contributing to the development of the Tunisian economy while assuming its risks, in the form of direct investment operations or equity participation operations.

1. Direct investment operation: any creation of a new and autonomous project to produce goods or provide services, or any extension or renewal operation carried out by an existing enterprise within the same project to increase its productive, technological capacity, or competitiveness;
2. Equity participation operation: cash or in-kind contributions to the capital of companies established in Tunisia, upon their incorporation, increase of share capital, or acquisition of a stake.

• Investor: any natural or legal person, resident or non-resident, who makes an investment.
• Enterprise: any unit whose purpose is to produce goods or provide services and which takes the form of a company or sole proprietorship in accordance with Tunisian legislation.
• Regional Development Index: an index prepared by the ministry responsible for development, calculated according to economic, social, demographic, and environmental criteria to classify country zones based on their degree of development.
• Council: the Supreme Council for Investment.
• Agency: the Tunisian Investment Agency.
• Fund: the Tunisian Investment Fund.

TITLE TWO MARKET ACCESS

Article 4 - Investment is free. The investment operations must comply with legislation governing the exercise of economic activities.

By government decree, within a maximum period of one year from the publication of this law, are established: the list of activities subject to authorization and the list of administrative authorizations required to realize the project; the deadlines, procedures, and conditions for granting them, taking into account national security and defense requirements, rationalization of subsidies, preservation of natural resources and cultural heritage, environmental protection, and health. The decision to refuse an authorization must be reasoned and notified in writing (or by any means leaving a written record) to the applicant within legal deadlines. Silence after the expiration of the deadlines specified in paragraph 3 of this article constitutes authorization, provided that the application meets all required conditions. In such cases, the Agency grants the authorization after verifying compliance with these conditions and deadlines following the expiration of the time limits. Certain activities may be exempted from the provisions of the preceding paragraph by government decree.

Article 5 - The investor is free to acquire, lease, or exploit non-agricultural real estate to carry out or continue direct investment operations, subject to compliance with the provisions of the Land Use and Urban Planning Code and regional development plans.

Article 6 - Any enterprise may recruit foreign executives up to 30% of its total number of executives until the end of the third year from the date of legal incorporation or effective commencement of activity, at the enterprise's choice. This rate must be reduced to 10% from the fourth year onward. In all cases, an enterprise may recruit four foreign executives. Beyond the rates or limits specified in the preceding paragraph, the enterprise is subject to authorization from the ministry responsible for employment regarding foreign executive recruitment, in accordance with labor code provisions. The procedures for recruiting foreign executives are subject to the labor code, except for paragraphs 2, 3, 4, and 5 of its Article 258-2.

TITLE THREE INVESTOR GUARANTEES AND OBLIGATIONS

Article 7 - In comparable situations, foreign investors enjoy national treatment no less favorable than Tunisian investors regarding the rights and obligations provided by this law.

Article 8 - The protection of an investor's assets and intellectual property rights is guaranteed in accordance with prevailing legislation. The investor's assets may not be expropriated except for public utility, in accordance with legal procedures, without discrimination based on nationality and upon payment of just and equitable compensation. The provisions of this article do not prevent the enforcement of judicial judgments or arbitral awards.

Article 9 - The investor is free to transfer capital abroad in foreign currency in accordance with prevailing exchange control legislation. In cases where transfer abroad requires authorization from the Central Bank of Tunisia, the provisions of Article 4 of this law apply.

Article 10 - The investor must comply with prevailing legislation, particularly regarding competition, transparency, health, labor, social security, environmental protection, natural resource protection, taxation, and land use and urban planning. The investor must also provide all requested information regarding the application of this law, ensuring the reliability, accuracy, and completeness of the provided information.

TITLE FOUR INVESTMENT GOVERNANCE

CHAPTER I The Supreme Council for Investment

Article 11 - A "Supreme Council for Investment" is established under the Office of the Prime Minister, presided over by the Prime Minister and composed of ministers responsible for investment-related matters. The ministers in charge of investment, finance, and employment must attend the Council's deliberations. The composition of the Council and its organizational procedures are established by government decree.

Article 12 - The Council determines the State's policy, strategy, and programs in the investment sector. It is specifically responsible for:

• taking necessary decisions to promote investment and improve the business and investment climate;
• evaluating State policy in the investment sector through an annual report to be published;
• approving the strategies, action plans, and annual budgets of the Agency and the Fund;
• approving the annual allocation of public financial resources allocated to the Fund in accordance with State policy objectives in investment, within the framework of finance laws;
• supervising, controlling, and evaluating the work of the Agency and the Fund;
• adopting incentives for projects of national interest as provided in Article 20 of this law. The Agency provides the permanent secretariat for the Council, which meets periodically at least once every three months.

CHAPTER II The Tunisian Investment Agency

Article 13 - A public body with legal personality and administrative and financial autonomy, named the "Tunisian Investment Agency," is established under the supervision of the ministry responsible for investment. The Agency's headquarters are in Tunis and may have regional and foreign representations. The Agency is subject to commercial legislation rules, insofar as not derogated by this law. The Agency is not subject to the provisions of Law No. 89-9 of February 1, 1989, on participations, enterprises, and public establishments. The Agency's personnel are governed by a special statute that considers the fundamental rights and guarantees provided by Law No. 85-78 of August 5, 1985, on the general statute for agents of offices, industrial and commercial public establishments, and companies whose capital belongs directly and entirely to the State or local authorities. The Agency's resources consist of:

• State budget resources;
• grants received domestically and internationally;
• all other resources. The Agency's administrative and financial organization, as well as its personnel's special statute, are established by government decree.

Article 14 - The Agency proposes policies and reforms related to investment to the Council, in consultation with private sector representative bodies. It also ensures their implementation monitoring, collects and publishes investment-related information, and prepares evaluation reports on investment policy. The Agency examines requests for bounty benefits and decides on their granting based on a technical report prepared by the relevant monitoring body. The relationship between the Agency and investment-related bodies is established through framework agreements approved by the Council.

Article 15 - A "Single Investor Interlocutor" is created within the Agency, responsible for:

• receiving, guiding, and informing investors in coordination with relevant bodies;
• carrying out administrative procedures on behalf of the investor regarding legal incorporation or extension and obtaining required authorizations for different investment stages;
• receiving investor petitions, working to resolve them in coordination with relevant bodies, and establishing a database for collecting received petitions, studying them, and proposing appropriate solutions, while publishing recorded shortcomings and corrective actions in its evaluation reports. The declaration of direct investment operations and legal incorporation of enterprises is submitted using a single form, whose model, list of supporting documents, and procedures are established by government decree.

The Single Investor Interlocutor provides the investor with a deposit certificate for the investment declaration and enterprise creation or extension documents within one working day from the date of submission accompanied by all required documents.

CHAPTER III The Tunisian Investment Fund

Article 16 - A public body named the "Tunisian Investment Fund" with legal personality and administrative and financial autonomy is established. The Fund is subject to commercial legislation rules and prudent management rules, insofar as not derogated by this law. The Fund exercises its missions under the control of a supervisory commission, presided over by the minister responsible for investment, specifically tasked with:

• establishing the Fund's development strategy and general intervention policy;
• establishing the Fund's annual investment and placement program;
• approving the Fund's financial statements and annual activity report;
• establishing the forecast budget and monitoring its implementation;
• establishing program contracts and monitoring their implementation;
• approving the Fund's service organization, special statute, and remuneration system for its personnel;
• appointing statutory auditors in accordance with prevailing legislation. The Fund is not subject to the provisions of Law No. 89-9 of February 1, 1989, on participations, enterprises, and public establishments. The Fund's personnel are governed by a special statute that considers the fundamental rights and guarantees provided by Law No. 85-78 of August 5, 1985. The Fund's administrative and financial organization, operational rules, personnel special statute, and prudent management rules are established by government decree.

Article 17 - The Fund's resources consist of:

• State budget resources;
• loans and grants received domestically and internationally;
• all other resources made available to it.

Article 18 - The Fund manages its financial resources in accordance with programs established based on investment development priorities. These interventions include:

• releasing bounties mentioned in Title V of this law;
• subscribing to venture capital funds, private equity funds, and seed funds directly or indirectly. The rates, ceilings, and conditions for benefiting from capital participation are established by government decree.

TITLE FIVE BOUNTIES AND INCENTIVES

Article 19 - Bounties for direct investment operations are granted as follows:

1. Bounty on increased value added and competitiveness:
   • For direct investment operations in priority sectors and economic chains;
   • For economic performance regarding:  material investments for mastering new technologies and improving productivity;  intangible investments;  research and development;  employee training leading to competency certification.
2. Bounty on employability capacity development, funded by the State:  employer contributions to the statutory social security regime for salaries paid to Tunisian employees during a period not exceeding the first ten years from effective commencement;  a percentage of salaries paid to Tunisian employees based on the management level.
3. Regional development bounty, based on the regional development index for certain activities:  realization of direct investment operations;  infrastructure works expenditures.
4. Sustainable development bounty for investments in pollution control and environmental protection. Bounties provided by this law or other legislative texts may be cumulative, provided their total does not exceed one-third of the investment cost, excluding State participation in infrastructure expenses and the employability capacity bounty. The rates, ceilings, conditions for benefiting from these bounties, and concerned activities are established by government decree.

Article 20 - Projects of national interest benefit from the following incentives:

• a deduction of profits from corporate income tax base for up to ten years;
• an investment bounty capped at one-third of the investment cost, including intra-muros infrastructure works;
• State participation in covering infrastructure expenses. The files for projects of national interest are mandatorily submitted to the Agency, which studies, evaluates, and submits them to the Council. Established by government decree:
• projects of national interest based on investment size or employability capacity and satisfaction of at least one objective in Article 1;
• the ceiling for the investment bounty specified in paragraph 1. The incentives specified in paragraph 1 are granted to any project of national interest by government decree after the Council's opinion.

Article 21 - Enterprises benefiting from incentives under this law are subject to monitoring and control by competent administrative services. The investment declaration is considered null if the investment execution has not commenced within one year from its grant date. Incentives are withdrawn from beneficiaries in the following cases:

• non-compliance with this law or its implementing texts;
• failure to realize the investment program during the first four years from the declaration date, exceptionally extendable once for a maximum of two years by reasoned Agency decision;
• illegal diversion from the initial investment purpose.

Article 22 - Amounts due under Article 21 are subject to late payment penalties at a rate of 0.75% per month or partial month from the date incentives were granted. The Agency conducts hearings directly or upon proposal by relevant services of incentive beneficiaries and issues its opinion on the withdrawal and refund of incentives. Withdrawal and refunds are effected by a reasoned order from the minister responsible for finance, in accordance with public accounting code procedures. Withdrawal and refunds do not concern incentives granted for exploitation during the period in which exploitation actually occurred, consistent with the purpose for which they were granted. Incentives granted for the investment phase are refunded after deducting one-tenth per year of effective operation, consistent with the purpose for which they were granted. Enterprises may switch between incentive regimes under this law, provided they submit a declaration to that effect per Article 15, carry out necessary procedures, and pay the balance between the total value of incentives granted under both regimes, plus late penalties. The amounts due for this balance and late penalties are calculated per this article.

TITLE SIX DISPUTE RESOLUTION

Article 23 - Any dispute between the Tunisian State and an investor arising from interpreting or applying this law shall be resolved by conciliation, unless one party waives it in writing. The parties are free to agree on procedures and rules governing conciliation. Failing agreement, the UNCITRAL Conciliation Rules apply. When parties conclude a settlement agreement, it serves as law between them and is executed in good faith and within the shortest time.

Article 24 - If conciliation fails to resolve a dispute between the Tunisian State and a foreign investor, the dispute may be submitted to arbitration under a specific agreement between both parties. If conciliation fails for a dispute between the Tunisian State and a Tunisian investor, and it has an objectively international character, the dispute may be submitted to arbitration under an arbitral agreement. In this case, arbitration procedures are governed by the Arbitration Code. In other cases, disputes fall under Tunisian court jurisdiction.

Article 25 - Seizing one of the arbitral or judicial bodies is considered a definitive waiver of any subsequent appeal before any other arbitral or judicial body.

TITLE SEVEN TRANSITIONAL AND FINAL PROVISIONS

Article 26 - The provisions of this law enter into force as of January 1, 2017.

Article 27 - Subject to Articles 28 to 32 of this law, the Investment Incentive Code promulgated by Law No. 93-120 of December 27, 1993, is repealed, except for its Articles 14 and 36, as of the effective date of this Investment Law.

Article 28 - Continues to benefit from State coverage by