Nature of Sales tax in contractual relations

Sales tax is normally the responsibility of the purchaser, the selling company being legally liable for this Sales tax and not actually liable. However, the parties are free to set the price excluding Sales tax or Sales tax included.

When the price is stated inclusive of Sales tax, the tax is determined according to the formula:

(Price incl. Tax x Tax) / (100 + Tax) =   Sales tax collected

The same formula “also applies in the event that the seller or service provider believes that the transaction is not subject to Sales tax and declares it non-taxable”.

When the price is stated exclusive of Sales tax, the purchaser owes the price including all taxes. In the event of a rate change, in the case of a price stipulated excluding tax, the purchaser owes the price determined on the basis of the new rate applicable at the time of the occurrence of the chargeable event for Sales tax. Using the sales tax calculator is important there.

In the absence of any indication of the nature of the price or the amount invoiced, the price is then deemed to be tax included. The expert reports case law which indicates in substance that “Sales tax is an element of the price and not an accessory to the price. If the legal person liable for Sales tax, i.e. the seller or the service provider does not pay Sales tax, the validity of the sale is not affected in particular, however, the transfer of ownership is operates. It follows that if the taxpayer has omitted to include in the agreed price the amount of tax for which he is liable by reason of this transaction, he is not justified in requesting his customer to pay the amount of Sales tax since the latter is considered as an element of the price”.

Codification of Sales tax

Sales tax was codified when it was introduced by law n ° 88-61 of June 2, 1988, promulgating the Sales tax code with application from July 1, 1988 (article 1 of decree n ° 88-1109 of June 11 1988).

As of today, the texts governing Sales tax are those of the Sales tax code, texts not incorporated into the code and many other codes and laws (investment incentives code and application texts, code of the IRPP and the IS etc.). The dispersion is such that it is legitimate to wonder whether the name given to the Sales tax code is still appropriate.

Should Sales tax be a single tax?

The concept of a single tax can be interpreted in two ways:

  • The first that comes to mind is that of a single consumption tax. The system will then have the merit of great transparency of rates, of simplicity even if it does not exclude the existence of additional taxes for certain products which are likely to bear heavy taxation by nature.
  • The second concept limits the uniqueness to the objective of eliminating any overlapping of Sales tax within the product by the effective generalization of the recovery of input Sales tax borne.
  • In fact, Tunisian Sales tax is a tax that is accumulated for many products with professional tax and, for some, with registration fees or consumption rights.

The accumulation of Sales tax and the registration fee for the sale of real estate for professional or commercial use can raise the taxation of the real estate transaction to a cumulative taxation of up to 24% of the sale price, i.e. 18% on the Sales tax exclusive and 6% on the price including Sales tax.