Tunisia to increase taxes on corporations and high-income earners to address budget shortfall

Tunisia is set to raise taxes on corporations and high-income earners next year, while also doubling its domestic debt to bridge its budget gap, according to budget details obtained by Reuters.

The 2025 budget is projected at $20.45 billion, a decrease from this year’s $25.2 billion. The fiscal deficit is expected to grow to $3.18 billion.

To fill the financial gap, Tunisia plans to double its domestic borrowing to over $7 billion in 2025. The country has faced challenges in securing foreign funding since negotiations with the International Monetary Fund (IMF) broke down in 2022. Tunisia’s economic difficulties have led to shortages of essential goods such as sugar, coffee, rice, and tea.

While the government aims to reduce taxes for low-income earners, taxes will increase for those earning over 30,000 dinars ($9,000) annually. Individuals making more than 50,000 dinars per year will see their tax rate rise from 35% to 40%.

Corporations earning 20 million dinars ($6.4 million) or more will be taxed at 25%, up from the current 15%. Taxes on banks and insurance companies will also increase to 40%, despite these institutions being major lenders to the government, Reuters reports.

Earlier this year, the government requested $2.25 billion in direct funding from the central bank to cover a deficit in the 2024 budget. Additionally, the 2025 budget indicates that Tunisia is considering issuing Islamic bonds for the first time, although no specific amount has been disclosed.