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How to register a foreign association in Tunisia: Which obligations must be met

Foreign associations operating in Tunisia must adhere to a comprehensive set of legal, accounting, tax, and social obligations to ensure compliance and operational efficiency. Failure to comply may result in the suspension of the association’s activities. These requirements are designed to promote transparency, accountability, and good governance. The Ecovis experts know the details.

Legal obligations

To operate legally, foreign associations must:

• Register with Tunisian authorities, submitting a declaration to the Secretary General of the Government with details of the parent organisation and objectives.
• Publish their establishment in the Official Gazette of the Republic of Tunisia (JORT).
• Register with the National Register of Enterprises (RNE) within one month of publication.

Additional legal requirements include:

• Compliance with personal data management regulations.
• Setting a fixed date for the Annual General Meeting (AGM) to approve financial statements.
• Publishing audited financial statements and the auditor’s report in local media. Foreign donations and funds must be reported to the Central Bank of Tunisia (BCT) and the Secretary General of the Government.

We help you meet the legal, accounting, tax and social obligations to ensure effective operations.

Khalil Sabbagh, Managing Partner, ECOVIS KDH Partners, Tunis, Tunisia

Accounting obligations

Foreign associations must maintain accurate and up-to-date accounting records in compliance with Tunisian Accounting Standard 45 (NCT 45), which is tailored for non-profit organisations. Key practices include:

• Tracking income and expenses by project using an analytical chart of accounts.
• Properly accounting for restricted and unrestricted grants, as well as in-kind donations, ensuring alignment with contractual terms.
• Maintaining physical and digital accounting records for at least 10 years.
• Implementing clear procedures for travel expenses, including mission orders and supporting documentation.
• Regular reconciliation of accounting records with declarations (e.g., employer declarations, activity registers).

Tax obligations

Foreign associations must meet several tax-related requirements:

• Register with the tax authorities after publication in Tunisia’s Official Journal (JORT).
• File monthly returns for withholding tax, VAT, and other applicable taxes.
• Submit annual employer declarations and withhold taxes on payments to contractors or temporary staff.
• Notify tax authorities of any changes to the association’s statutes or secondary establishments.

Social obligations

Foreign associations must comply with social security regulations:

• Register with the National Social Security Fund (CNSS) upon hiring the first employee.
• Declare all employees, including temporary staff, and pay social security contributions.
• Notify the CNSS of any changes to the association’s address or secondary establishments.

For further information please contact:

Khalil Sabbagh, Managing Partner, ECOVIS KDH Partners, Tunis, Tunisia
Email: khalil.sabbagh@ecovis.tn

EU Omnibus Package: Significant Rollback of Corporate Sustainability Reporting Rules

The European Commission has announced its first EU Omnibus package to significantly reduce sustainability reporting requirements under the Corporate Sustainability Reporting Directive (CSRD) and other key ESG regulations. The proposal aims to streamline compliance, cutting annual administrative costs by an estimated €6.4 billion.

In addition to removing most companies from the CSRD, the Commission plans to revise the ESRS to substantially reduce the number of data points required by the sustainability reporting standards. It will not introduce planned sector-specific standards or require reasonable assurance under the CSRD.

Key Changes

• CSRD Scope Reduction: Only companies with more than 1,000 employees and €50 million in revenue or €25 million in assets will be required to report, exempting 80% of companies from the regulation. The second wave of CSRD reporting is postponed by two years.
• Simplification of reporting standards: The European Sustainability Reporting Standards (ESRS) will be revised to reduce data points, remove sector-specific requirements, and eliminate the need for reasonable assurance.
• Voluntary SME Reporting: Smaller companies can follow the newly introduced Voluntary SME (VSME) standards, which limit the sustainability data requests from larger companies and banks.

Implications for Financial Market Participants

• Regulatory compliance: Financial institutions must align their sustainability disclosures with the revised requirements.
• Supply chain adjustments: Banks and investors should adapt due diligence processes for SMEs, considering the shift to voluntary reporting.
• Strategic planning: ESG-driven investment strategies and risk assessments should account for these regulatory changes.

These reforms mark a significant shift in the EU sustainability reporting landscape, reducing the regulatory burden on companies while maintaining ESG transparency at a more targeted level. Companies should assess how the changes affect their reporting obligations and prepare accordingly.

Legal Aspects of High-Yield Real Estate Investment in India: REITs and GIFT City

Introduction

India’s real estate sector is undergoing a significant transformation, driven by the convergence of Real Estate Investment Trusts (REITs) and Gujarat International Finance Tec-City (GIFT City). This combination is reshaping investment opportunities, offering both domestic and international investors access to India’s growing real estate market, projected to reach $1 trillion by 2030. However, while these opportunities are promising, understanding the legal framework governing these investments is crucial for ensuring compliance and minimizing risks.

The Legal Framework for REITs in India

REITs in India have matured significantly since their introduction in 2019, with a current market capitalization exceeding ₹2 trillion. The Securities and Exchange Board of India (SEBI) has established a robust regulatory framework to ensure investor protection, transparency, and governance.

Key legal provisions under the SEBI (Real Estate Investment Trusts) Regulations, 2014 include:

• Mandatory Registration: All REITs must be registered with SEBI to operate legally.
• Investment Rules: At least 80% of REIT assets must be invested in completed and income-generating properties, with a maximum of 20% in under-construction projects.
• Distribution Requirements: REITs must distribute at least 90% of their net distributable cash flows to investors, ensuring steady returns.
• Governance Standards: Independent trustees and regular property valuations help maintain transparency and prevent asset mispricing.

These regulations have positioned REITs as a secure and lucrative investment avenue, offering investors exposure to India’s commercial real estate sector with lower entry barriers.

GIFT City: Legal and Regulatory Framework

GIFT City, India’s first operational smart city and International Financial Services Centre (IFSC), offers a distinct legal and regulatory environment designed to attract foreign and domestic investments. Governed by the International Financial  Services Centres Authority (IFSCA), GIFT City provides:

• Tax Incentives: Investors benefit from tax holidays for up to 10 years, exemptions on capital gains, and reduced GST and stamp duties.
• Simplified Foreign Investment: Foreign Exchange Management Act (FEMA) regulations allow seamless foreign investments, making it easier for global investors to participate.
• Single-Window Clearance: Business operations enjoy faster approvals and fewer regulatory hurdles under the Special economic Zone (SEZ) Act, 2005.
• Streamlined Dispute Resolution: A dedicated arbitration framework within the IFSC provides a predictable legal environment for resolving disputes efficiently.

These advantages make GIFT City an ideal destination for REITs looking to optimize tax structures and attract global capital.

Why the Convergence of REITs and GIFT City Matters?

The integration of REITs within GIFT City’s regulatory ecosystem offers a unique investment proposition. Investors stand to gain from:

• Lower tax burdens and enhanced returns due to GIFT City’s special tax regime.
• Easier access to global capital markets with international investors benefiting from a regulatory framework aligned with global standards.
• Better liquidity and risk management with streamlined regulatory processes and legal protections.

This convergence not only enhances the potential for high-yield returns but also provides a more secure and transparent investment structure.

Key Legal Considerations for Investors

While the legal framework is investor-friendly, it is crucial to remain aware of certain risks and obligations:

• Due Diligence: Investors should verify land titles, zoning laws, and environmental clearances before investing.
• Regulatory Compliance: REITs and property transactions must adhere to SEBI and RERA (Real Estate Regulatory Authority) norms.
• Contractual Safeguards: Lease agreements, property acquisitions, and tenant arrangements should be legally sound and in line with Indian real estate laws.
• Market Risks: While regulatory frameworks help mitigate risks, factors like property value fluctuations, interest rate changes, and occupancy levels must be considered.

Risk Mitigation Strategies

To navigate the legal complexities of real estate investments in India, investors should:

• Engage legal experts to ensure compliance with evolving real estate regulations.
• Diversify their portfolios across different REITs and asset classes to manage risk.
• Monitor regulatory updates to stay informed about changes in SEBI, IFSCA, and RERA regulations.
• Structure investments strategically to optimize tax benefits under GIFT City’s framework.

Conclusion

The combination of REITs and GIFT City presents a well-regulated, high-yield investment opportunity in India’s evolving real estate sector. With the right legal knowledge and strategic approach, investors can maximize their returns while ensuring full compliance with regulatory mandates. As India continues its rapid economic expansion, this synergy is expected to remain a significant driver of real estate investment growth.