Regulatory Alerts2005-07-18
Law No. 2005-56 of July 18, 2005 on the Spin-off of Economic Enterprises
Issued by the President of Tunisia on July 18, 2005, Law No. 2005-56 establishes the legal framework for corporate spin-offs by defining them as financial and technical assistance provided to internal or external promoters launching independent ventures. The legislation mandates that sponsoring enterprises guide these promoters through project development, financing, and initial operations while recording related expenses in detailed financial annexes. Furthermore, it introduces a new tax provision allowing enterprises to deduct spin-off-related expenditures from their taxable income within decree-prescribed limits, while granting promoters access to existing leave, delegation, and patent income regimes.
1 LAW NO. 2005-56 OF JULY 18, 2005 ON THE SPIN-OFF OF ECONOMIC ENTERPRISES1 In the name of the people, Having been adopted by the Chamber of Deputies, The President of the Republic promulgates the law as follows:
Article 1. – Spin-off is any encouragement or assistance that an economic enterprise provides to promoters from its own staff or from outside, in order to induce them to create independent enterprises or to continue an activity that it previously carried out itself.
Article 2. – The enterprise adopting the spin-off technique undertakes to guide promoters in materializing project ideas, preparing related studies, finalizing the financing scheme, obtaining grants and benefits, and implementing the project, all during its initial years of launch. The monitoring of the spin-off operation is ensured by one of the structures of the enterprise utilizing spin-off, which provides any form of technical and logistical assistance for project implementation and post-launch monitoring. The expenses necessary for the spin-off operation are recorded in a detailed statement, which shall be attached to the enterprise's financial statements.
Article 3. – Projects are implemented under an agreement concluded between the enterprise and the promoter, defining the project's content and the obligations of both parties in accordance with a standard agreement approved by decree of the minister responsible for small and medium-sized enterprises.
Article 4. – The project promoter may benefit from the leave regime for creating an enterprise, or the delegation and mobilization regime, as well as the income distribution regime for patents of discovery or invention, in accordance with prevailing legislation.
Article 5. – An article 48-ter is added to the Personal Income Tax Code and the Corporate Tax Code, worded as follows:
Article 48-ter. – Enterprises utilizing the spin-off technique, as defined by prevailing legislation, may deduct expenses incurred for implementing the spin-off operation from their tax base in the year the expenses were incurred, within limits and under conditions to be set by decree.
Tunis, July 18, 2005 Zine El Abidine Ben Ali
1 Preliminary proceedings: discussion and adoption by the Chamber of Deputies in its session on July 12, 2005