Date of Submission to Coordination Unit:

6 November 2013
GENERAL INFORMATION
1. Activity Name
Enhancing Domestic Resource Mobilisation through Effective Tax System Design and Improved Transparency
and International Cooperation
2. Requestor Information
Name: Noureddine Kaabi
Title: Secretary of State
Organization and Address: Ministry of Development and International Cooperation, 98 avenue Mohamed V (Place Pasteur) Tunis Belvédère, Tunisia
Telephone: +216 71 796 213
Email: [email protected]
3. Recipient Entity
Name: Habiba Louati
Title: Director General
Organization and Address: Ministry of Finance, 15, Rue Abderrahman Jaziri, 1002 Tunis, Tunisia
Telephone: +216 71 783 786
Email: [email protected]
4. ISA SC Representatives
Name: Jacob Kolster
Title: Director North Africa Region 1
Organization and Address: African Development Bank, 13 rue de Ghana B.P. 323, Tunis - Belvedere, TUNISIA
Telephone: +216 71 10 20 65
Email: [email protected]
Name:Andreas Schaal
Title: Head of Sherpa Office
Organization and Address:Organisation for Economic Co-operation and Development “OECD”, 2 rue André Pascal, 75775
Paris Cedex 16, France
Telephone: +33 1 45 24 18 55
Email: [email protected]
5. Type of Execution (check the applicable box)
√
Type
Country-Execution
√
Joint Country/ISAExecution
Endorsements
Attach written endorsement
from designated ISA
Attach written endorsement
from designated ISA
1
Justification
The timeline of the project is 3 years. The nature of the
project requires some activities to be executed by the
Government of Tunisia (GoT), in close collaboration
with the participating ISAs, (OECD and AfDB) and other
activities directly by the OECD.
As recognized by the G8 and G20, the OECD is at the
forefront of efforts to help countries improve their
capacity to effectively tackle tax evasion and avoidance.
It also offers extensive expertise on tax policy design
and providing the relevant statistical underpinnings to
inform tax policy decisions. The proposed project aims
to use this expertise to support Tunisia’s efforts to
transform its tax system for the benefit of its citizens.
The OECD and AfDB will support the establishment of
three units to develop Tunisia’s capacity in the following
areas: 1) effective exchange of information; 2) criminal
tax investigation; and 3) fiscal analysis and budget
forecasting. In particular, AfBD and OECD will join
efforts to enhance domestic resource mobilisation by:
1)Assisting with the implementation of the international
standard on tax transparency and information
exchange;
2) Enabling Tunisia to address tax base erosion and
profit shifting, through assistance in making legislative
and treaty changes;
3) Assisting with the drafting of transfer pricing law and
its implementation;
4) Assisting with the design of tax policy, including
through improved statistical and analytical capacity and
reform of indirect tax structures;
5) Assisting with legislative and organisational changes
necessary to strengthen the government’s capacity to
fight tax crimes and other crimes;
6) Strengthening the government’s capacity to analyse
and effectively communicate reform measures.
These efforts will be coordinated with the work on tax
matters of the IMF (including in drawing on work
already undertaken) and any other active providers.
AfDB will be the only ISA responsible for the oversight
and management of the funds used for the countryexecuted portion.
ISA-Execution for
Country
ISA-Execution for
Parliaments
Attach written endorsement
from designated ISA
Attach written endorsements
from designated Ministry and
ISA
2
(Provide justification for ISA-Execution)
6. Geographic Focus
√
Individual country (name of country):Republic of Tunisia
7. Amount Requested (USD)
Amount Requested for direct Project Activities:
(of which Amount Requested for direct ISA-Executed Project Activities):
Amount Requested for ISA Indirect Costs: 1
USD 4,219,300 including:

OECD-executed project activities: USD
1,375,400

Government of Tunisia executed
activities: USD 2,843,900
AfDB: USD 100,000
OECD: USD 82,500


Total Amount Requested:
USD 4,401,800
8. Expected Project Start, Closing and Final Disbursement Dates
Start Date:
01/01/2014
Closing Date:
30/12/2016
End Disbursement Date:
30/06/2017
9. Pillar(s) to which Activity Responds
Pillar
Primary
(One only)
Secondary
Investing in Sustainable
Growth. This could include
√
such topics as innovation and
technology policy, enhancing
the business environment
(including for small and
medium-sized enterprises as
well as for local and foreign
investment
promotion),
competition policy, private
sector development strategies,
access to finance, addressing
urban congestion and energy
intensity.
Effective tax
system design and
improved
international
cooperation are
key to mobilise
domestic
resources to foster
sustainable
economic growth,
attract foreign
investment and
tackle inequality.
Inclusive
Development
and Job Creation. This
√
could include support of
policies for integrating lagging
An effective tax
Primary
Pillar
(All that apply)
Enhancing
Governance.
(One only)
Economic
This
could
include
areas
such
as
transparency,
anti-corruption
and accountability policies, asset
recovery,
public
financial
management and oversight,
public
sector
audit
and
evaluation,
integrity,
procurement reform, regulatory
quality
and
administrative
simplification,
investor
and
consumer protection, access to
economic data and information,
management of environmental
and social impacts, capacity
building for local government
and decentralization, support for
the
Open
Government
Partnership, creation of new and
innovative government agencies
related to new transitional
reforms, reform of public service
delivery in the social and
infrastructure sectors, and sound
banking systems.
Secondary
(All that apply)
√
Improving
transparency of the
tax system and
reform processes will
increase trust in the
government and
enhance compliance.
This includes the
transparency of their
revenue statistics,
which will also enable
more informed policy
choices. It will also
help the Tunisian
government to
improve their
accountability and get
social support to
make reforms
happen.
Competitiveness
and
Integration. This could include
√
such topics as logistics, behindthe-border
regulatory
A simple,
1
ISA indirect costs are for grant preparation, administration, management (implementation support/supervision) including staff time,
travel, consultant costs, etc.
3
regions, skills and labor market
policies,
increasing
youth
employability,
enhancing
female
labor
force
participation,
integrating
people
with
disabilities,
vocational training, pension
reform,
improving
job
conditions and regulations,
financial inclusion, promoting
equitable fiscal policies and
social safety net reform.
system design will
help provide the
right incentives to
boost regional
development,
create
employment, and
foster income
redistribution
convergence, trade strategy and
negotiations,
planning
and
facilitation
of
cross-border
infrastructure, and promoting
and facilitating infrastructure
projects, particularly in the areas
of
urban
infrastructure,
transport, trade facilitation and
private sector development.
4
transparent
and stable tax
system will
enhance the
competitivene
ss of the
country.

STRATEGIC CONTEXT
10. Country and Sector Issues
The challenges faced by Tunisia following the January 2011 revolution in terms of high unemployment and regional
disparities have called for a new vision of development and economic growth since 2011. Although some emergency
measures have been undertaken by the successive transitional governments to promote employment and regional
development, longer term, carefully thought-through reforms must be pursued to strengthen the confidence of domestic
and economic agents and give hope to Tunisia’s unemployed youth. Taxation is one of the key areas where a
comprehensive longer-term reform effort is needed. A comprehensive tax policy and tax administration reform will help
reduce barriers to investment, employment and growth, and mobilise the domestic resources needed to achieve broader
social objectives in Tunisia.
As in many countries in the MENA region, the tax system in Tunisia has often been perceived as having been imposed on
citizens with little in the way of consent. In this context, one of the top priorities of the new government is to increase
transparency and equity in the tax burden. The primary objectives of the proposed assistance are to help increase trust in
the government and enhance compliance by improving the transparency of the tax system and reform processes. These
reforms will also help the Tunisian government improve its accountability and get popular support for making reforms
happen.
In the tax area, recent steps to increase transparency include, for example, the recent ratification of the Multilateral
Convention on Mutual Administrative Assistance in Tax Matters (MAC) last April, and the membership of the Global Forum
on Transparency and Exchange of Information for Tax Purposes (Global Forum) acquired in 2012. The implementation of
both instruments of international cooperation will help Tunisia not only increase transparency, but also re-build trust in the
government and strengthen the capacity of the tax administration to mobilise domestic resources.
Tax revenues represented more than 60% the Tunisian budget over the past five years (62.1% for the 2013 budget) with
over 40% of direct and 58% of indirect taxes. Recent reports show a significant drop in tax collection since the revolution,
mainly because of the lack of trust in the tax system and its perceived unfairness. Tax morale has consequently been poor
and unequal tax treatment is an area where change is most urgently needed. Therefore, any tax reform proposal needs to
put special emphasis on fairness and political economy aspects, including increased transparency and accountability
through public consultations, reform packages with gains and pains intricately linked, well defined transition rules, and
taxpayer education and guidance reform packages.
The draft Finance Act 2014 contains a series of measures aimed at increasing the government’s tax revenues, reducing food
and fuel subsidies and mobilizing additional resources for the General Compensation Fund (CGC). The Ministry of Finance
also announced its intention to reform the corporate tax system in an attempt to reduce the gap between the off-shore and
on-shore sectors. Having benefitted from a full tax exemption under the old system, companies registered under the offshore regime will be subject to 10% corporate taxes, while on-shore companies will see their tax rate decreasing from 30%
to 25 %. Further tax policy reforms would benefit from improved statistical data and better budget forecasting tools, as well
as means to address tax base erosion and profit-shifting.
Other reforms, for example the development of a new investment code, will have tax implications that should be
considered in the context of the overall tax system. There is also significant scope for improved public procurement that
can turn tax revenue more efficiently into higher quality and more efficient public services.
11. Alignment with Transition Fund Objective
The project is fully aligned with the MENA Transition Fund (TF) objectives as it contributes to improving transparency,
efficiency and fairness of the tax system and the related reform processes which should increase trust in the government
and enhance compliance. Therefore, the project is fully consistent with the overall objective of the Transition Fund “to
improve the lives of citizens in transition countries, and to support the transformation currently underway in several
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countries in the region (the “Transition Countries”) by providing grants for technical cooperation to strengthen governance
and public institutions, and foster sustainable and inclusive economic growth by advancing country-led policy and
institutional reforms.”
The project will help Tunisia strengthen its governance, social and economic institutions through the development of its
capacity to make home-grown and country-owned tax reforms to enhance domestic resource mobilization and foster
sustainable growth. By fostering fairness, transparency and accountability, it will help re-build the trust of the citizens in the
government and public institutions in general, and in the tax system more specifically. By strengthening the government’s
capacity to analyse and effectively communicate reform measures, it will help obtain the social and political support to
make country-driven reforms happen.
The project is fully aligned with MENA TF cooperation modalities mostly through the provision of technical assistance and
transfer of knowledge on the areas covered by this project. The project is mainly aligned with the pillars of the MENA TF
focusing on (i) Enhancing Economic Governance and (ii) Investing in Sustainable Growth.
12. Alignment with Country’s National Strategy
Enhancing revenue mobilisation is one of the major priorities for the Tunisian Government. Tunisia is facing a fundamental
need to raise more revenue from its own tax bases to fund expenditure for development in a sustainable way.
Taxation is an instrument not only to collect revenue to finance the public services (education, health, infrastructure…) that
citizens need and demand in Tunisia, but also to strengthen the state-building process in the country. Taxation is an
important pillar in democratic societies for which citizens acquire the right to make their government accountable, and the
obligation to participate in the country’s finance necessities according to their capacities. However, this link between
government and citizens needs to be based on principles of efficiency, fairness and mutual trust to make it work. It is
therefore important for any fiscal (tax and expenditure) reform to constitute a central piece of the country’s national
strategy, and have a short, medium and long term horizon.
The Government of Tunisia (GoT) recently revived the National Board of Taxation (Conseil national de la fiscalité) and
started a national debate on a wide tax reform programme with the aim of simplifying the fiscal system, achieving a greater
efficiency and fairness and modernizing the tax administration. Six main areas have been identified for the reform process:
1. Direct taxes;
2. Indirect taxes;
3. Local taxes;
4. Transparency, fair competition rules and fighting tax fraud and evasion;
5. Tax administration;
6. Tax policy analysis and informal economy.
As part of its national strategy to improve transparency, Tunisia became a member of the Global Forum on Transparency
and Exchange of Information for Tax Purposes in 2012 and ratified the multilateral Convention on Mutual Administrative
Assistance in Tax Matters. The Global Forum membership, which implies implementation of the Global Forum’s
transparency and information exchange standards, will enable Tunisia to improve its ability to tackle tax fraud, tax evasion
and tax avoidance. By implementing the Global Forum standards, the Tunisian tax administration will be able to access the
information it needs to conduct its monitoring and auditing activities to ensure tax compliance. The Global Forum also
offers a unique environment for exchanging information to promote multilateral negotiations and regional instruments and
a unique platform for co-ordinating technical assistance in this area. The Global Forum can help developing countries to
achieve the Millennium Development Goals by maximising the financial resources available for their development.
The multilateral Convention on Mutual Administrative Assistance in Tax Matters will enter into force for Tunisia in February
2014, thereby providing Tunisia with a powerful new instrument to obtain co-operation from foreign tax authorities in
assessing its taxes. Tunisia now needs to explore how best to make use of this instrument to improve its audits and overall
6
tax compliance.
In addition to increasing transparency and re-building trust, tax policy and administration reforms can contribute to
improve the business climate and therefore, attract investment, create employment and boost growth. This is particularly
the case of reforms that simplify tax systems rules and procedures and that strengthen the tax administration capacity to
implement domestic and international tax rules. In 2012, the OECD carried out an initial review of tax incentives in Tunisia
to further these objectives.
These efforts to increase Tunisia’s capacity to mobilise domestic resources need to be reinforced by a comprehensive
reform of the Tunisian tax policy and administration that emphasizes fairness and transparency, and citizens’ involvement.
Tunisia has launched a National Anti-Corruption Strategy to further these objectives see www.anticor.tn.

PROJECT DESCRIPTION
13. Project Objective
The project aims at assisting Tunisia to mobilise domestic resources to foster sustainable economic growth and income
redistribution by improving the design of taxation policies and improving international cooperation.
This overall objective will be achieved by promoting the transparency, simplicity, efficiency and effectiveness of tax policy
and tax administration in Tunisia through three different types of assistance: a) economic assessments and
recommendations on tax reforms; b) assistance with the design and implementation of tax reform; and c) building in-house
capacity to make well-informed tax policy decisions and to tackle tax fraud, evasion and avoidance.
These activities will strengthen the capacity of the GoT to increase revenue collection and use the tax system as an
instrument to provide the right tax incentives to attract investment, create jobs and foster regional development. As a
consequence, policymakers will be in a better position to develop policies that boost sustainable growth and at the same
time tackle inequality and reduce poverty. In addition, any transparency improvement on the tax laws, process and
procedures will help re-build the trust in the public institutions and the government in general.
14. Project Components
This project will consist of the following five main components, each of them covering one or more activities.
Component 1: Assisting with the implementation of international tax standards on tax transparency and
information exchange
Exchange of information between tax administrations is the most effective way of combating international tax avoidance
and evasion. In April 2012, Tunisia joined the Global Forum on Transparency and Exchange of Information for Tax Purposes
(Global Forum). Tunisia will now participate in the work of the Global Forum, benefit from the peer-review process and
share the advantages of a fully transparent tax environment. Adherence to the Global Forum will also help Tunisia identify
areas to reform its legislation including in terms of financial information disclosure and the exchange of information,
including for its own tax administration purposes. Currently the tax administration cannot obtain much bank information
for auditing purposes, it can only obtain information on opening and closing of accounts. Fulfilment of the Global Forum
standards will ensure that Tunisia’s taxpayers are required to maintain adequate books and records for tax auditing
purposes, ensure the transparency of ownership of legal entities and that the GoT has the information gathering powers it
needs to obtain the information needed to carry out effective tax audits and to co-operate with other countries in exchange
of information.
On 1st April 2013, Tunisia ratified the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (MAC).
7
The Multilateral Convention is a global instrument to fight offshore tax avoidance and evasion. It allows access by the
network of partners, for information exchange and administrative co-operation. The amended Convention currently has 60
signatories, with many more jurisdictions expected to join in the near future. The Convention is the most powerful global
instrument to allow access to a wide network of information exchange partners, covering a broad range of taxes and
administrative co-operation, including automatic exchange of information. It provides for all possible forms of
administrative co-operation between jurisdictions in the assessment and collection of taxes, in particular with a view to
combating tax avoidance and evasion. This co-operation ranges from exchange of information, including automatic
exchanges, to the assistance in the recovery of foreign tax claims. The Convention also provides for the possibility of using
the information to fight other serious crimes if certain conditions are met. It will improve Tunisia’s ability to fight tax crimes
and other financial crimes more effectively by allowing tax and law enforcement agencies to cooperate more closely as
recommended by the OECD in the context of the ”Oslo Dialogue‟ to promote a whole of government approach to tackling
financial crimes and illicit flows.
The OECD will assist Tunisia with the implementation of the international tax transparency and information exchange
standards through the activities described below. In preparation for the Global Forum Phase II review, which assesses the
practical ability of Tunisia to exchange information (EoI), the OECD will assist the Government to establish an effective
exchange of information unit. Assistance will also be provided to Tunisia to maximize the benefits of effective
implementation of the Convention on Mutual Administrative Assistance in Tax Matters in the areas of exchange of
information, assistance in tax collection, exchange of tax intelligence, bilateral/multilateral simultaneous tax examinations
and joint audits covering both direct and indirect taxes etc. It will also discuss under what conditions the information
received may be shared with law enforcement and judicial authorities to fight money laundering and corruption.
Activity 1.1: Reviewing the current framework and practices, making recommendations and assisting with legislative and
process changes (OECD executed)
The OECD will work closely with the Government of Tunisia to prepare for its Global Forum Phase I peer review by
undertaking a preliminary review of Tunisia’s legal framework as regards the Global Forum’s transparency and information
exchange standards to identify any gaps before the Global Forum undertakes the Phase I review of Tunisia’s legal
framework. This would provide Tunisia with an opportunity to identify the gaps and address them through the necessary
legislative changes so as to facilitate the review and would give Tunisia the necessary tools to benefit from a greater
transparency. An OECD expert will carry out a review of the current situation, including 6 weeks in Tunisia.
Activity 1.2: Establishing an effective Exchange of Information Unit (GoT/OECD executed)
This activity will help Tunisian authorities establish the Exchange of Information (EoI) Unit and design its operating model. It
will be jointly executed by the GoT and the OECD.
EoI can only take place between competent authorities of the governments concerned or their authorized representatives.
This ensures that the rules applicable to EoI (and in particular the confidentiality of information received or exchanged) are
respected and consistently applied. The competent authority acts as a central point of contact point for the competent
authorities of treaty partners for EoI purposes. The EoI Unit implements and manages the EoI provisions of the tax treaties
in support of the competent authority. Information subject to EoI ranges from simple registered address of a taxpayer to
actual examination or audit of taxpayers with complex legal structures. To respond to a foreign request for information, the
EoI Unit will request the assistance of the Revenue District Offices (RDO – Centre des impôts) to obtain information about a
taxpayer or his transactions. Since most EoI requests are made pursuant to an on-going examination of cross-border
transactions, information sought by a foreign tax authority may not already be in the possession of the Unit or the RDO
concerned thereby requiring the RDO to conduct an audit or examination of the domestic taxpayer. Tunisia will also want to
use EOI instruments such as the MAC to request information from foreign competent authorities when information that is
foreseeably relevant to a particular audit is located in a foreign country. The examiner may request this information from
the other tax administration by channelling such request through the EoI Unit. An effective EoI unit will enable Tunisia’s tax
authorities to obtain the needed information in a timely and efficient manner.
8
All information exchanged by EoI unit must be subjected to strict controls and safeguards to ensure that the information is
used only in an authorized manner, consistent with national provisions on privacy and data protection. At a minimum,
exchanged information must be treated as protected by the same confidentiality provisions as apply to similar information
from domestic sources obtained by the receiving Unit.
The GoT executed activities will consist in the provision of resources for goods in the form of software and equipment,
training of EoI unit staff and advisory services supporting the authorities in establishing the EoI Unit. In particular, advisory
work shall:
•
•
•
•
Propose an organisation and management structure for the EoI Unit, staffing requirements, skills requirements
and job descriptions;
Assist the Government in the recruitment of staff for the EoI Unit;
Assist the Government in defining information system requirements for the purpose of establishing the EoI Unit;
Develop an indicative budget for the EoI Unit, and recommendations on how this budget is to be funded.
Given the complexity and sensitivity of EoI related issues and the longstanding expertise accumulated by the Global Forum
on tax transparency and information exchange, the OECD will assist GoT through:
•
•
Identifying the most suitable type of delegation of competent authority in the Tunisian context;
Providing advice on how to set-up an EoI Unit based on the various existing models, including advice on:
o Profile of staff working in the EoI Unit and training;
o End to end processing of incoming and outgoing requests (i.e how to make a request for information and
to respond to a request);
o Checklists and model templates for an efficient EoI programme;
o Best practices to ensure the confidentiality of exchange of information (exchange on paper or electronic
exchange);
o How to raise the awareness of tax examiners about the potential of exchange of information to improve
their audits;
o Setting-up a monitoring system of EoI;
o Building Statistics on EoI and evaluation reports.
Activity 1.3: Exploiting the Multilateral Convention on Mutual Administrative Assistance in Tax Matters (OECD executed)
Assistance would be provided to Tunisia to maximize the benefits of an effective implementation of the MAC. This activity
includes a 2-part workshop, which aims at identifying ways of improving the efficiency of the process of exchange of tax
information between competent authorities. One part will be held in the first year to present the EoI tools; the second part
will be held in the third year to discuss difficulties faced in implementing EoI and ways to address those difficulties. Case
studies will illustrate the key concepts of exchange of information highlighting the balance between the legal obligation to
exchange and the limitations that protect taxpayers‟ rights in exchange of information”. Besides exchange on request other
forms of exchange (spontaneous, automatic, simultaneous tax examinations) will also be presented.
Activity 1.4: Capacity building through staff assignmen and participation at multilateral events (GoT executed)
The OECD currently shares good practices, supports policy dialogue and builds capacity in the tax area in MENA through a
programme of multilateral technical events. This innovative programme, launched in 2013, is based on a Memorandum of
Understanding with Turkey. Events are held in the OECD Multilateral Tax Center in Ankara with Arabic interpretation.
This activity consists in providing GoT with the resources needed to facilitate the participation of two Tunisian officials
yearly to the following multilateral events:
 Negotiating Exchange of Information Agreements ;
 Exchange of Information for Tax Purposes.
This activity will also enable GoT to propose a Tunisian official to be assigned as Temporary Staff member to the secretariat
of the GF for 6 months. The Temporary Staff member will assist in preparing a tailored “Train the Trainer Pilot” course to
9
raise the awareness of Tunisian tax officials and train tax auditors on the benefits of all forms of EoI for both direct and
indirect tax purposes.
Component 2: Addressing Base Erosion and Profit Shifting
Base erosion and profit shifting (BEPS) refers to tax planning strategies that exploit gaps and mismatches in tax rules to
make profits ‘disappear’ for tax purposes or to shift profits to locations where there is little or no real activity but the taxes
are low resulting in little or no overall corporate tax being paid. BEPS strategies take advantage of a combination of features
of home and host countries’ tax systems. Corporation tax is levied at a domestic level. The interaction of domestic tax
systems means that an item of income can be taxed by more than one jurisdiction, thus resulting in double taxation. The
interaction can also leave gaps, which result in income not being taxed anywhere. Some of the schemes used are illegal and
tax administrations are fighting them.
These strategies distort competition: businesses that operate cross-border may profit from BEPS opportunities, giving them
a competitive advantage over enterprises that operate at the domestic level. They lead to inefficient allocation of resources
by distorting investment decisions towards activities that have lower pre-tax rates of return, but higher after-tax returns.
Finally, there is an issue of fairness: when taxpayers (including ordinary individuals) see multinational corporations legally
avoiding income tax, it undermines voluntary compliance by all taxpayers.
The OECD has recently launched a project to put an end to BEPS, which is strongly supported by the G8 and G20. Many
BEPS strategies take advantage of the interaction between the tax rules of different countries, making it difficult for any
single country, acting alone, to fully address the issue. Activities below are rooted in this experience. This component will
enable Tunisia to benefit from the solutions developed to address BEPS.
Activity 2.1: Reviewing Tunisia’s current laws, treaties and practices(OECD executed)
The overall aim is to identify where changes could be made, consistent with the BEPS Action Plan, to improve Tunisia’s
ability to address base erosion and profit shifting. OECD experts will examine common techniques used by multinational
enterprises in Tunisia to reduce their tax burden, with a particular emphasis on tax avoidance in international transactions,
and how the different techniques to erode the taxable base and/or to shift profits to where they are subject to a more
favorable treatment can be combined. They will focus on common planning techniques used in relation to financing
activities, holding activities and supply chain management. They will also review existing responses enacted by Tunisian
authorities in their domestic laws and international tax treaties, such as general and specific anti-avoidance measures and
propose other possible responses.
This activity will strengthen the Tunisian tax authority’s capacity to protect the tax base against aggressive tax planning of
multinationals as well as profit shifting through transfer pricing or other means, while avoiding double taxation that would
be detrimental to the overall business climate.
Activity 2.2: Assistance to develop and implement a strategy on Transfer Pricing Rules(OECD executed)
At the request of certain governments (such as Ghana, Kenya, Rwanda, Vietnam, Colombia), the OECD has provided
assistance in the application of the OECD’s norms and standards, particularly in the area of transfer pricing. Similar
assistance will be provided to Tunisia. Specifically, the OECD will assist Tunisia with the policy and administrative issues that
the government faces in introducing or extending transfer pricing legislation or increasing their transfer pricing audit
capacity; e.g. what is needed in country legislation, the relationship with tax treaties, etc. The OECD will also help Tunisia to
develop and implement a strategy from an administrative perspective – where to start from and how to build the
administrative capacity on transfer pricing issues effectively, especially with scarce resources. The Programme has the
following key features:
•
Adoption of a risk and needs assessment approach to diagnose Tunisia’s capacity-building needs and its capacity to
adopt an effective transfer pricing regime. This is supported by a “Transfer Pricing Needs Assessment Tool”;
10
•
•
•
Assistance and advice on drafting transfer pricing legislation and guidance encompassing policy, regulatory and
administrative issues i.e. drafting new or revised transfer pricing legislation, introduce transfer pricing
simplification measures (such as safe harbours for low value transactions) and measures designed to assist
taxpayers comply with transfer pricing rules (such as Advance Pricing Arrangements);
Ad-hoc assistance in support of transfer pricing capacity building built on the extensive training material that has
been developed, based on practical case-studies on issues of particular relevance to developing countries;
In-house training strengthened by a “Train the Trainer” programme.
Activity 2.3: Auditing multinationals (OECD executed)
The OECD will assist with building the capacity of Tunisian tax officials on the most significant legal and practical issues to be
taken into account when auditing multinationals including those related to the creation and legal significance of a
multinational enterprise (MNE), the tax principles underlying the operation of an MNE, tax avoidance and anti-avoidance
strategies, the operation of tax treaties, an introduction to transfer pricing and thin capitalisation issues, the relevant
administrative provisions, information requirements and the audit process itself in order to facilitate the work of tax
examiners who may have only limited expertise. It will also familiarise Tunisian government officials with the “best
practice” audit approaches that are adopted to deal with these entities and to discuss strategies for auditing the
international aspects of multinational enterprises, with a particular focus on transfer pricing.
Activity 2.4: Capacity building through participation at multilateral events (GoT executed)
This activity will enable GoT to facilitate the participation of 2 officials yearly to the following events:
• International Tax Avoidance;
• Auditing Multinational Enterprises – basics;
• Auditing Multinational Enterprises – advanced;
• Tax Treaties : Special issues;
• Advanced Application of Tax Treaties – advanced ;
• Implementing Transfer Pricing;
• Transfer Pricing Guidelines – basics;
• Transfer Pricing Guidelines – Intermediate;
• Transfer Pricing Guidelines – Advanced;
• Case Studies in Transfer Pricing ;
• Transfer Pricing Dispute Resolution;
• Transfer Pricing and Customs Valuation;
• Taxation of Non-Residents;
• Global Forum on Tax Treaties;
• Global Forum on Transfer Pricing;
Component 3: Tax policy analysis and planning
Accurate, complete, current, consistent and reliable data is crucial in enhancing the effectiveness and efficiency of a policy.
The lack of sufficient and well-organised data limits the ability of the Tunisian authorities to quantify both the performance
of the existing system and the implications of introducing new policies. Analytical complexities, coupled with limited
institutional and human capacity to undertake advanced analysis, limit the Tunisian government in assessing the
consequences of changes in the tax system.
This component will help Tunisia develop the necessary skills to effectively analyse their current and proposed tax reforms.
Developing databases and analytical capabilities and systems for tax policy analysis will ensure that policy decisions are
based on full information about their likely impacts. Tunisian policymakers will better understand the impact of the
changes, taking effective strategic decisions in addressing broad macroeconomic goals. Furthermore, it is essential to
institutionalise a mechanism for disclosing the cost and intended benefit of the current and/or proposed regimes to the key
stakeholder groups, to seek feedback and allow for stakeholders’ involvement in the design of measures prior to their
adoption. Moreover, making the results of these analyses publicly available will help increase government transparency and
11
accountability, as well as obtain public and political support for reform measures.
As part of the assistance on data collection, the OECD and the AfDB will work closely with the Ministry of Finance to
improve the consistency, quality and accessibility of revenue statistics data. This will be part of a regional initiative that
aims at providing African countries with the same statistical indicators available to OECD tax policymakers so as to better
inform their tax policy decisions, improve their ability to mobilize domestic resources to support sustainable economic
growth and address inequality.
Clear understanding and assessment of the impact of various tax design scenarios is especially critical at the present time.
Tunisia can draw on the OECD’s extensive experience in collecting data and modelling to improve its tax policy analysis and
design capabilities.
Activity 3.1: Establishing a Fiscal Analysis Unit (GoT/OECD executed)
This activity will help Tunisian authorities establish a Fiscal Analysis Unit (FAU) and design its operating model. This
component will be jointly executed by the GoT and the OECD.
Tunisia wishes to establish, at the highest level, within the Ministry of Finance, a well-staffed Fiscal Analysis Unit (FAU) with
staff trained in the techniques of modern fiscal analysis and equipped with the necessary tools for putting those techniques
to practical use. The role of an FAU in tax policy analysis can be critical to both supporting sound tax policies and exposing
the deficiencies in flawed tax reform proposals.
The GoT executed activities will consist in the provision of resources for goods in the form of software and equipment,
training of FAU unit staff and advisory services supporting the Tunisian authorities in establishing the FAU. In particular,
such support shall include:
•
•
•
•
•
Preparing an organisation structure for the FAU, staffing requirements, skills requirements and job descriptions in
accordance to its main tasks, which shall include :
o Collect and manage data to provide a basis for revenue estimates of proposed changes to tax law;
o Conduct analytical studies of tax policies including estimates of revenue gained or lost through specific tax
reforms, as well as their impact on income distribution and efficiency (economic distortions);
o Develop and implement tax expenditure reporting to measure revenue foregone by targeted tax
incentives;
o Use and analyse the relevant data to inform tax policy decisions, making conclusions or recommendations
based on tax expenditures reports;
o Develop a standardized set of analytical skills to measure the different effects of reform proposals;
Assisting the Ministry of Finance in the recruitment of staff for the FAU;
Advising the Tunisian authorities on the most efficient relationship between the FAU, other Ministerial
departments, including customs and local authorities;
Developing an indicative budget for the FAU, and recommendations on how this budget is to be funded;
Assisting the Ministry of Finance in defining information system requirements, which will comprise software,
intelligent databases and data-room applications in order to efficiently estimate revenues gained or lost through
specific tax reforms, as well as their impact on income distribution and collect data to measure key performance
indicators and keep an institutional memory and build on lessons learnt on each specific reform.
The OECD executed activities will support the establishment of the FAU by providing capacity building, including:
•
•
•
Implementing systems to gather historic macro-level data, and compile micro-level data (e.g. drawn from tax
returns of resident multinational companies) used for revenue forecasting and estimating revenue impacts of tax
reform;
Developing statistical and econometric models for forecasting tax revenues from the main tax bases;
Developing micro-simulation models to estimate the revenue impact of reform of the taxation of corporate profits
and to simulate the cost of the system of tax incentives under consideration and to evaluate the burden of various
12
•
•
tax incentives proposals;
Reporting on tax expenditures to allow the Ministry of Finance of calculating the cost of its budgetary tax
incentives;
Training officials in forecasting and micro-simulation tax modelling techniques.
Activity 3.2: Developing internationally comparable revenue statistics data(OECD executed)
Tunisia expressed its interest in participating in a new project that OECD and the AfDB are launching with African countries
aimed at providing countries in the region with the same statistical indicators available to OECD tax policy makers so as to
better inform their tax policy decisions, improve their ability to mobilise domestic resources to support sustainable
economic growth and address inequality. The project involves the publication of their government revenues in accordance
with the methodology used for OECD countries. The advantage of using this methodology is that it would allow comparison
between African countries participating in the project, as well as with OECD countries, Latin American countries and, in the
near future, Asian countries. The objective is to provide these statistics in a regional publication and database, as the OECD
has already done for Latin America.
These statistics will enable Tunisia to identify and compare the relative importance of various sources of government
revenue and provide a basis for tax policy analysis. One of the main advantages of the OECD Revenue Statistics
methodology is that it has been developed by and for tax policymakers, which makes it a tailor-made tool for decisions on
tax policy. The international data comparisons in the database will provide a detailed information base for Tunisia’s fiscal
performance from both a static and a dynamic (over time) perspective, as well as comparisons with other countries from
other regions. As a result, it will provide Tunisian tax policy officials with a foundation for informed dialogue about better
policy making in respect of the overall size of the tax burden, the share of different taxes in the tax mix, setting tax rates
and thresholds for individual taxes, and the attribution of taxes by level of government.
The Revenue Statistics database will contain comparative statistics identifying the following indicators:
• Overall tax burdens as measured by tax to GDP ratios;
• The tax mix; i.e. the distribution of the total tax take by the main types of tax – e.g. income taxes, social security
contributions, taxes on general and specific consumption, property taxes and tax revenues related to natural
resources;
• The share of tax revenues attributed to the different levels of government i.e. federal or central, state, local and
social security.
Tunisia will be expected to: i) facilitate the collection of tax and other government revenue data for the period 1990-2012 in
accordance with the OECD classification and with the support of the OECD Secretariat; ii) co-operate in the resolution of
classification problems; iii) verify and validate the final data before the publication of the database. Following completion of
the provision of the data for this period, future efforts will focus on maintaining this database.
Activity 3.3: Review of indirect tax structures and assisting in implementation of necessary reforms(OECD executed)
The OECD will provide assistance to the government of Tunisia in its efforts to reform its VAT system. In developing options
for VAT reform, the project will draw on various sources, including the bi-annual publications of Consumption Tax Trends,
and the OECD study, Tax Policy Reform and Economic Growth (2010).The proposed assistance in VAT reform includes, data
permitting, the following elements of work:





Review the current VAT system and identify design complexities. This may include a review of the effectiveness of
reduced VAT rates and exemptions;
Assess effects of the current VAT system on VAT revenues, income distribution, and business competitiveness;
Assess effects of the current VAT system on tax compliance and administration costs;
Identify scope for VAT reform to reduce market distortions, increase VAT compliance and VAT revenues;
Identify possible reforms to personal income tax or benefit systems to address equity concerns linked to potential
VAT reform.
13
Activity 3.4 Consensus-Building and Communication(GoT executed)
This activity should help the government benefit from advisory services, workshops and goods in the form of software and
web content to provide technical assistance for consensus-building and communication, including: (i) monitoring of political
economy considerations; (ii) improving access to information on tax expenditure analyses through traditional and social
media in advance of reforms for internal (including governmental agencies, Council of Ministers and Parliament) and
external (public) stakeholders; (iii) developing a public consultation mechanism on reform options in advance of reforms,
including through the National board of Taxation; and (iv) refining communication and existing grievance redress
mechanisms after the launch of reforms.
On the basis of the data and analysis provided by the above activities, the GOT will organise, with assistance from the OECD
and in cooperation with the National Board of Taxation an annual conference to discuss the key tax policy issues in Tunisia
and other countries in the region so as to improve its taxation and policies to support economic growth and income
redistribution. This annual dialogue would enable senior tax policy officials of Tunisia to engage in dialogue with experts
from the OECD and its member countries, as well as tax officials from the region and academics and experts from other
international organisations such as the IMF and regional organizations. This dialogue would be supported by the
development of internationally comparable data (e.g. the Revenue Statistics in Africa publication), capacity building
workshops and analytical papers that complement tax policy discussions. The dialogue will be organized on the basis of a 3
day annual meeting over the 3 years.
Activity 3.5: Capacity building through staff assignment and participation at multilateral events (GoT executed)
This activity will consist in providing GoT with the resources needed to propose two Tunisian officials to be assigned as
Temporary Staff members for 6 months each to the OECD. The “Temporary Staff members” will be working on developing
the revenue statistics database and will be assisting in the review of Tunisia’s indirect tax structure.
This activity will also enable GoT to facilitate the participation of two Tunisian officials yearly at the following events :
•
•
•
Tax Incentives and Investment: Monitoring, Estimating and Reporting Tax Expenditures;
Tax Expenditures and Effect Analysis;
Forum on VAT.
Component 4: Tax Administration Reform, Managing and Improving Tax Compliance
In today’s rapidly changing environment revenue bodies are being asked to do more with less, to take on new tasks, and at
the same time ensure that governments have the revenues they need to finance important programmes that benefit their
citizens. The recent economic crisis has accentuated these pressures. There are a wide range of strategies that revenue
administration can adopt to strengthen tax compliance, including risk assessment and risk management, preventative
techniques, strengthening audit capabilities, pursuing tax crimes.
Tunisia participated in the OECD’s pilot programme to establish an international academy on criminal tax investigations,
which involved a month long capacity building programme at the Italian Guardia di Finanza Tax Police Training School.
OECD’s Integrity Scan of Tunisia covered relevant tax elements to help the government assess the strengths and
weaknesses of its legal, administrative and economic framework to tackle tax fraud, tax evasion and other forms of noncompliance. Tunisia was also invited to participate in the comparative survey the results of which are included in the 2013
report on Effective Inter-Agency Co-operation in Fighting Tax Crimes and Other Financial Crimes to be published in
November. Due to resource constraints, Tunisia was unable to participate.
Activity 4.1: Establishing a Criminal Tax Investigation Unit(GoT/OECD executed)
A country’s tax administration is responsible for the assessment and collection of taxes on behalf of the government. This
14
involves gathering and processing information on individuals and corporations subject to tax, including personal details,
property ownership, investments, financial transactions and business operations. Tax administrations employ large
numbers of trained specialists and investigators with experience in auditing and analysing financial data and investigating
suspicious or anomalous transactions. Tax administrations often have extensive powers to access information and
documentation from taxpayers and third parties. They typically play a central role in preventing and detecting tax crime.
Once the suspicion of a tax crime exists, countries apply different models to determine the extent to which a tax
administration may be involved in a subsequent investigation and prosecution. The latest edition of the Comparative
Information Series (Tax Administration 2013) illustrates that tackling tax fraud and tax crime is usually integral to the tax
administration. Handling criminal prosecutions is often a specialist function within the tax administration and the
associated powers and responsibilities (right to enter premises and seize books and records and the right to conduct a
prosecution, for example) are exercised by criminal investigations unit. The latest edition of the OECD’s report on Effective
Inter-Agency Co-operation in Fighting Tax Crimes and Other Financial Crimes (to be published on 7 November 2013) sets out
the different models used in 48 developed and developing countries.
This activity aims at assisting the Tunisian authorities to establish a Criminal Tax Investigation Unit (CTI Unit) within the Tax
Administration and design its operating model. It will be jointly executed by the GoT and the OECD. The GoT executed
activities will consist in the provision of resources for goods in the form of software and equipment, training of CTI unit staff
and advisory services supporting the authorities in establishing the Unit. In particular, such support shall include:
•
•
•
•
•
Preparing an organisation and management structure for the CTI Unit, staffing requirements, skills requirements
and job descriptions in accordance to its main tasks;
Developing an indicative budget for the CTI Unit, and recommendations on how this budget is to be funded;
Assisting the Ministry of Finance in the recruitment of staff for the CTI Unit;
Advising the Tunisian authorities on the most efficient relationship between the CTI Unit and the key government
agencies involved in combating financial crimes: e.g. the customs administration; the Anti-Corruption Authority
(l’Instance Nationale de Lutte contre la Corruption), the Anti-money Laundering Authority; the police and
specialised law enforcement agencies; the public prosecutor’s office and financial regulators as well as local
authorities and civil society;
Developing the strategy of the CTI Unit: e.g., splitting of responsibilities, systems for information sharing,
mechanisms of co-operation, reporting rules and procedures, etc.
The OECD executed activities will support the establishment of the CTI Unit through a capacity building programme,
separate from, but based on, the pilot programme referred to above that has resulted from the “Oslo Dialogue”, which
involves a whole of government approach to tackling tax crimes and other illicit flows. The objective of the capacity building
activity would be to identify Tunisia’s needs, beginning with understanding of what kind of capability Tunisia needs to
develop an effective model for detecting and investigating tax offences. This programme will focus on:
•
•
•
•
•
Creating an awareness of the wide range of issues that are faced by criminal tax investigators;
Overviewing the current responses and the tools available to tackle the problem;
Linking this with other law enforcement activity;
Understanding of the specific skills and methodologies that will need to be developed;
Providing advice on how to set-up (structure) and supporting the implementation of the strategy, etc.
Activity 4.2 : Designing a strategy and assisting with the implementation of a risk management process(GoT/OECD
executed)
All revenue authorities are generally required to achieve as good a compliance outcome as possible (i.e. to maximise the
overall level of compliance with the tax laws). For this purpose, they are allocated a finite level of resources, and
consequently careful decisions need to be made about how and in what ways those resources are to be applied to achieve
the best possible outcome in terms of improved compliance with the tax laws. It is critical that there is a robust process for
deciding the priorities for compliance action and the specific actions to be taken. In short:
•
•
What are the major compliance risks to be addressed?
Which taxpayers do they relate to?
15
•
How should these risks be treated to achieve the best possible outcome?
In practice, there are many factors that make the answers to these important questions complex (e.g., the diversity of
taxpayers’ compliance behaviours, a lack of knowledge concerning the nature and incidence of non-compliance across the
different segments of taxpayers, and the complexity of many taxpayers’ tax affairs). For these sorts of reasons, revenue
bodies require a systematic process for deciding what is important in a tax compliance context and how major compliance
risks will be addressed. Indeed, the compliance risk management is a structured process of well-defined steps to support
improved decision-making for the systematic identification, assessment, ranking, and treatment of tax compliance risks
(e.g., failure to register, failure to properly report tax liabilities etc).
This activity will help Tunisian authorities design and implement a risk management process. It will be jointly executed by
the GoT and the OECD. The GoT executed activities will consist in the provision of resources and advisory services
supporting the revenue authority in designing the risk management process. In particular, such support shall include:
•
•
•
Advising the Tunisian authorities on the most efficient way to build a structured basis for strategic planning with:
o a focus on the underlying drivers (not symptoms) of non-compliance, and promotion of diversity in the
treatment of major tax compliance risks, rather than the adoption of a ‘one size fits all’ approach;
o better outcomes in terms of programme efficiency and effectiveness(e.g. improved compliance with tax
laws leading to increased tax collections and improved taxpayer service);
o a defensible approach that can withstand external scrutiny (e.g. by external audit officials); and
o a stronger foundation for evidence-based evaluation.
Developing an indicative budget and recommendations on how this budget is to be funded;
Assisting the revenue authority in defining information system requirements.
The OECD would provide risk assessment capacity building programme with a focus on :
•
•
•
Ways for the tax administration to find a balance between service and enforcement activities;
Organisation and management of tax administration, general principles and practises of compliance risk
management, including risk identification, risk analysis, risk assessment, risk treatment and evaluation,
understanding taxpayer behaviour and developing strategies to influence taxpayer behaviour, improving
taxpayers‟ compliance, the need for a strategic approach and compliance measurement;
Mission, vision, goals and values of taxpayer service, taxpayer rights and service delivery standards, market
segmentation in service delivery, the use of modern technology, the design of tax awareness programmes,
taxpayer assistance programmes and outreach activities, channel strategies and the usage of call centres,
government wide programmes to reduce administrative compliance costs for taxpayers, standardisation and
evaluation of taxpayer service programmes and measurement of performance of tax administrations.
Activity 4.3Designing a Taxpayer Education Programme (OECD executed)
The tax system is often perceived as having been imposed on citizens with little in the way of consent. Tax morale is
consequently poor. Unequal treatment is seen a big issue and the area where change is most urgently needed. Taxpayer
education covers a wide range of activities and actors – from government programmes to encourage tax-compliant
behaviour, to efforts by business organisations to mobilise and represent the interests of their members on tax issues, to
civil society initiatives to bring citizens into policy debates on tax collection and redistribution. Tax evasion is a complex
phenomenon reflecting a low fear of punishment; limited enforcement; and a lack of awareness of, or confidence that, the
state collects taxes in a fair and efficient manner or uses the revenue to benefit most citizens. Countries have developed a
myriad of ways to raise the public’s awareness of new tax laws and methods of filing, to answer the public’s inquiries and to
make life easier for taxpayers. Comparative experience demonstrates that for taxpayer education programmes to have
lasting impact they must work through partnerships – domestically, regionally and even internationally.
The OECD would assist the Tunisian authorities to institute a consultation process involving stakeholders (a Stakeholder
Consultative Committee) where the private, public, civil society and academic sectors work together to enhance the
country’s competitiveness. Broader stakeholder participation validates the relevance of the reforms, conveys ownership
and ensures that reform activities are sustained. In addition, the stakeholders become change agents as they participate in
16
a consultative process contributing to the government’s priorities and supporting implementation.
Based on the collection of best practices around the world and analytical work carried out of them, the OECD will organise a
dialogue to discuss the issues in Tunisia to enable senior staff in charge of departments involved in relations with taxpayers
to engage in dialogue with experts from OECD and from other countries. The dialogue will be organised on the basis of oneweek annual workshop over the 3 years.
Activity 4.4: Capacity building through participation at multilateral events (GoT executed)
This activity will enable GoT to facilitate the participation of 2 officials yearly at the following multilateral events :
•
•
•
•
Tax Administration: Risk Management and Taxpayer Service;
Effectiveness and Efficiency in Tax Administration: Organisation, Management, Technology
Instruments to Strengthen Tax Compliance;
A “Train the Trainer” course to strengthen the capacity of criminal tax investigators to fight financial crimes and
recover the proceeds of those crimes.
Component 5: Project management and monitoring (GoT executed)
A project coordination team (PCT) will be set up within the Ministry of Finance. The team will be composed of a
coordinator, an alternate coordinator, a financial management specialist, a procurement specialist and an assistant. The
costs covered by government co-financing will include: fees for the project team, operating costs, communication budget,
the project launching etc. The MENA TF will provide funding for the project annual audits, the elaboration of the
procedures manual for the project management, and equipment for the PCT. This component would also entail support to
ensuring all project activities and tasks are executed, coordination among all actors involved in project implementation,
fulfilling and monitoring procurement and fiduciary requirements and audits, and monitoring and evaluation of project
outcomes and intermediary results.
15. Key Indicators Linked to Objectives
The activities of this project aim mainly at: 1) strengthening the capacity of the GoT to increase revenue collection; 2)
improving transparency of the tax system, and consequently helping re-build the trust in the public institutions and the
government in general.
Key indicators linked to these objectives will include:
1. Tax reform proposals reflecting equity, efficiency and simplicity considerations;
2. Changes in the tax laws and procedures to establish transparency and effective exchange of information;
3. Legislative changes and changes to treaty policy and transfer pricing rules to address tax base erosion and profit shifting.
4. Increased number of evidence based economic analysis on alternative tax measures produced and made public, included
the elaboration and publication of a tax expenditure report;
5. Changes in the structure of the tax administration reflecting good international practices;
6. More effective approach to tackling tax crimes;
7. Better targeted inspections: e.g. increased tax collection per audit, reduced percentage of tax audits per segment
8. Programme adopted to support taxpayers (taxpayer service improvements);
9. Increased number of consultations with civil society and private sector on changes of tax measures;
10. Establishment of a communication strategy on new tax measures.
17
IMPLEMENTATION
16. Partnership Arrangements (if applicable)
A. The Government of Tunisia:
The Tunisian Government will be in charge of the overall coordination of the Project, which will be implemented based on
the principle of multi-stakeholder consensus-building, involving a broad partnership of various Government agencies and
civil society representatives, laying the foundation for a stronger institutional framework for building consensus and
communication and for involving concerned ministries and taxpayers at large in the evaluation, design and implementation
of tax reforms.
B. The National Board of Taxation:
The project will be implemented in consultation with the National Board of Taxation. Created by Article 4 of the Code of Tax
Rules and Procedures, the Board is responsible for the assessment of the tax system and its compliance with a set of
objectives, particularly in terms of sound public finance, economic efficiency and tax equity. The board is chaired by the
Minister of Finance and includes representatives of 10 Government agencies, labor union (UGTT), employers’ union(UTICA)
and professional unions (Association Professionnelle des Banques et des Etablissements Financiers, Ordre des Experts
Comptables de Tunisie, Ordre National des Avocats, Organisation Professionnelle des Comptables, Organisation
Professionnelle des Conseillers Fiscaux)as well as independent experts and academics.
C. Private Sector, Parliament and Civil society
The project will build on the on-going consultation process in the framework of the National Tax Reform Programme. The
project will facilitate dialogue between private and public sector from the outset as this is an essential ingredient of a
successful reform of the tax system. The various workshops planned will be organised with private sector actors and
between public and private sector actors for that purpose. Members of the National Constituent Assembly and
representatives of civil society (labour union, think tanks, fiscal and auditing experts associations, etc.) will be invited to
contribute to the project as stakeholders in the on-going dialogue on the fiscal reform.
D. Other donors:
Coordination between members of the donor community involved in tax reform programmes and initiatives will be key to
ensure complementarity between the different projects currently developed or planed by the donors. Being the main
interlocutor of bilateral and multilateral donors in this field, the Ministry of Finance will ensure that coordination is handled
effectively. The OECD/AfDB team will also ensure regular and routine coordination during implementation to enhance
project impact.
17. Coordination with Country-led Mechanism/Donor Implemented Activities
The proposed project is complementary to broader AfDB engagement and financing package in Tunisia and directly
supports the Bank’s interim country strategy for Tunisia during the transition period 2012-2013.
The proposed operation also supports the World Bank’s on-going programmatic Governance, Opportunity and Jobs (GOJ)
Development Policy Loan (DPL) series (2011-2014), in partnership with the African Development Bank and the European
Union. The project is fully consistent with the DPL series and technical assistance by supporting measures to address
inequalities and enhance economic governance.
This proposal has also been discussed with the Fiscal Affairs Department of the IMF, which undertook a diagnostic
assessment of both tax policy and tax administration in Tunisia in December 2012.The project is considering the
recommendations of this diagnostic, in particular in the areas of tax incentives and VAT reform. All parties are committed to
ensuring that their efforts are complementary, mutually reinforcing and effective. The IMF has expressed interest, for
instance—and subject to resource availability—in selective participation in workshops and potentially organising joint
events. The IMF may also carry out complimentary work on tax administration issues under a proposal currently with the
18
Swiss State Secretariat for Economic Affairs (SECO).
The Project is also complementary to the objectives set under the agreed US$ 1.7 billion stand-by arrangement between
the IMF and the Tunisian Government signed in June 2013, particularly in the area of mobilising tax revenues through tax
policy reforms and a modernisation programme for the tax administration.
18. Institutional and Implementation Arrangements
The Ministry of Finance through the Direction Générale des Études et de la Législation Fiscales (DGELF), the Direction
Générale des Impôts (DGI) as well as other departments along with the Ministry of Governance and the Fight against
Corruption will form a National Project Coordination Team (PCT).The PCT will include a project coordinator, an alternate
coordinator, a procurement specialist and a financial management specialist.
The MENA TF resources will be both GoTand OECD executed. For the GoT executed activities financed under the MENA TF,
the resources will be used to directly support GoT’s capacity in taking the lead on activities 1.2 ,1.4, 2.4, 3.1, 3.5, 4.1, 4.2
and 4.4. The OECD executed activities financed under the MENA TF will cover activities 1.1-3, 2.1-3, 3.1-4 and 4.1-3.
19. Monitoring and Evaluation of Results
The monitoring and evaluation of the project and its expected results will be based on regular monitoring and evaluation
activities consistent with the Results Framework of this project. Quarterly monitoring tables and progress reports will be
provided. A mid-term review will be carried out to assess and draw lessons from the project and provide an opportunity to
adopt any actions that may be required to ensure that the project meets its development objectives. A final report will be
prepared at the end of the project.

PROJECT BUDGETING AND FINANCING
20. Project Financing (including ISA Direct Costs2)
Costs in Thousands $US
Transition Fund
Country
OECD as
AfDB as
CoISA
ISA
financing
Costs by Component
Component 1: Assisting with the implementation of
international tax standards on tax transparency and
information exchange
Total
180.7
447.5
0.0
33.4
0.0
0.0
(b) Sub-component 1.2: Establishing an effective Exchange
of Information Unit; (OECD and AfDB as ISAs)
33.4
223.2
0.0
256.6
(c) Sub-component 1.3: Exploiting the Multilateral
Convention (MAC); (OECD as ISA)
113.9
0.0
0.0
113.9
(a) Sub-component 1.1: Reviewing the current framework
and practices, making recommendations and assisting with
legislative and process changes; (OECD as ISA)
2
33.4
ISA direct costs are those costs related to the ISA’s direct provision of technical assistance within the project.
19
628.2
(d) Sub-component 1.4: Capacity building through staff
assignment and participation at multilateral events. (AfDB
as ISA)
Component 2: Addressing Base Erosion and Profit
Shifting
0.0
224.3
224.3
0.0
370.4
764.9
0.0
1,135.3
75.9
0.0
0.0
75.9
75.9
0.0
0.0
218.6
0.0
0.0
218.6
0.0
764.9
0.0
764.9
529.8
945.9
0.0
1,475.7
(a) Sub-component 3.1: Establishing a Fiscal Analysis Unit;
(OECD and AfDB as ISAs)
139.7
182.9
0.0
322.6
(b) Sub-component 3.2: Developing internationally
comparable revenue statistics data; (OECD as ISA)
209.5
0.0
0.0
209.5
180.6
0.0
0.0
0.0
376.3
0.0
0.0
386.7
0.0
294.5
606.3
0.0
900.8
119.9
284.7
0.0
404.6
69.8
115.5
0.0
104.7
0.0
0.0
104.7
0.0
206.1
0.0
206.1
0.0
79.3
288.2
367.6
1,375.4
2,843.9
288.2
4,507.5
(a) Sub-component 2.1: Reviewing Tunisia’s current laws,
treaties and practices; (OECD as ISA)
(b) Sub-component 2.2: Assistance to develop and
implement a strategy on Transfer Pricing Rules; (OECD as
ISA)
(c) Sub-component 2.3: Auditing multinationals; (OECD as
ISA)
(d) Sub-component 2.4: Capacity building through
participation at multilateral events. (AfDB as ISA)
Component 3: Tax policy analysis and planning
(c) Sub-component 3.3: Review of indirect tax structures
and assisting in implementation of necessary reforms;
(OECD as ISA)
(d) Sub-component 3.4: Consensus-Building and
Communication (AfDB as ISA)
(e) Sub-component 3.5: Capacity building through staff
assignment and participation at multilateral events. (AfDB
as ISA)
Component 4: Tax Administration Reform, Managing
and Improving Tax Compliance
(a) Sub-component 4.1: Establishing a Criminal Tax
Investigation Unit; (OECD and AfDB as ISAs)
(a) Sub-component 4.2: Designing a strategy and assisting
with the implementation of a risk management process;
(OECD and AfDB as ISAs)
(a) Sub-component 4.3: Designing a Taxpayer Education
Programme; (OECD as ISA)
(a) Sub-component 4.4: Capacity building through
participation at multilateral events. (AfDB as ISA)
Component 5: Project management and monitoring
(AfDB as ISA)
Total base project costs
20
75.9
180.6
376.3
386.7
185.4
21. Budget Breakdown of Indirect Costs Requested (USD)
Description
Amount (USD)
African Development Bank
For grant preparation, administration and implementation
support:
Staff time
Staff travel
Organisation for Economic Co-operation and Development*
For grant preparation and administration
Staff time
Total Indirect Costs
USD 80,000
USD 20,000
USD 82,500
USD 182,500
* Indirect cost for OECD is a charge applicable to all voluntary contributions accepted by the Organisation since 1 March 2005 further to a Council
Resolution. A new cost recovery policy was adopted by Council in November 2009. The current rate applicable is 7.3% as of 1 January 2012.
21

Results Framework and Monitoring
Project Development Objective (PDO): The proposed project development objective is to strengthen institutional capacity to enhancedomestic resource mobilisationand improve
transparency and international cooperation.
Description
Cumulative Target Values**
Unit of
Data Source/ Responsibility for
PDO Level Results Indicators*
Baseline
Frequency
(indicator
Measure
Methodology
Data Collection
2014
2015
2016
definition etc.)
Indicator 1:Improved domestic
Quantitativ 20.8%
n/a
n/a
21.5%
Yearly
DGI Reports
PCU
Tax revenues
revenue mobilization
e
(2012)
and
increased and
Tax revenue as % of GDP
IMF Report
tax collection
rates
improved
Global Forum
Indicator 2:Improved tax
Qualitative
None
Yes
n/a
Once
Global Forum
PCU and Global
Phase I Peer
determines
transparency and international
Phase I Peer
Forum
ReviewReport
that Tunisia
co-operation
Review
disseminated
Global Forum Phase I peer review
can move to
Report
and Phase II
Phase II
launched
Indicator 3:Direct project
beneficiaries of:

EoIUnti staff trained

FA Unit staff trained

CTI Unit staff trained

MoF staff participated
at multilateral tax
events

MoF staff seconded to
the OECD
Indicator 4: Tax reform plan
prepared and disseminated
Cumulative
Number
Number
Number
Number
0
0
0
0
20
10
30
20
20
20
60
40
40
30
90
60
0
1
3
3
None
n/a
Yes
n/a
Quarterly
Project
Monitoring
and
Evaluation
Database
PCU
Total number
of
beneficiaries
from all
components of
the project
combined
Once
Project
Coordination
Reports
PCU
Report
disseminated
Number
Qualitative
22
INTERMEDIATE RESULTS
Component 1: Assisting with the implementation of international tax standards on tax transparency and information exchange
Reviewing the current framework
and practices, making
recommendations and assisting
with legislative and process
changes
Qualitativ
e
Current
framework
and
practices
not
reviewed
Yes
Qualitativ
e
EoI Unit
not
established
One (1) EoI
Unit
established
(2014)
Legal and institutional reforms
adopted
Exchange of Information (EOI)
unit established
n/a
Legal and
institutional
reforms are
adopted
Once
Project
Implementati
on Reports
PCT
Report
disseminated
n/a
Once
Project
Implementati
on Reports
PCT
Report
disseminated
Component 2:Addressing Base Erosion and Profit Shifting
Strategy on Transfer pricing rules
elaborated
Qualitativ
e
Strategy on
Transfer
pricing
rules not
elaborated
n/a
One (1)
Strategy on
Transfer
pricing
rules is
validated
n/a
Once
Project
Implementati
on Reports
PCT
Report
disseminated
Capacity built on auditing tax
affairs of multinationals
Number
0
6
20
20
Quarterly
Project
Monitoring
and
Evaluation
Database
PCU
Total number
of
beneficiaries
Component 3:Tax policy analysis and planning
Fiscal Analysis Unit established
Qualitativ
e
FAU not
established
n/a
One (1)
FAU
established
n/a
Once
Internationally comparable
revenue statistics data developed
Qualitativ
e
Statistics
database
not
developed
n/a
One (1)
Statistics
database
developed
n/a
Once
Component 4:Tax Administration Reform, Managing and Improving Tax Compliance
23
Project
Implementati
on Reports
Project
Implementati
on Reports
PCT
Report
disseminated
PCT
Report
disseminated
A risk-based approach for tax
collection and effective resource
mobilization developed
Quantitati
ve
n/a
n/a
n/a
50
Once
Project
Implementati
on Reports
PCT
Report
disseminated
Quantitati
ve
n/a
n/a
Yes
(10) Private
sector, (10)
public sector,
(5) civil
society and
(5) academic
sectors
Once
Project
Implementati
on Reports
PCT
Report
disseminated
Number of risk-based inspection
actions
Taxpayer Education Program in
place
Number of persons trained
24