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FEATURE STORY

Ease of Business Helps Tunisian Entrepreneurs Go Formal

September 5, 2014


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STORY HIGHLIGHTS
  • A Tunisian web designer kept his business informal to avoid paying taxes, like many of the much larger firms that he dealt with.
  • A higher paying job for a Turkish firm that required full legal compliance made him reconsider the status of his company.
  • One-stop shops and a new streamlined process has made the registering of companies and joining the formal economy much easier.

When his parents are at work—and his sisters at school—Samir spreads his web designs out on the dining-room table. When they’re at home, he takes it into the part of his bedroom he has designated an enterprise zone.

For Samir (not his real name), web design started as a way to cover his fees to become a commercial pilot. He teamed up with three fellow students he had met at a college where they had been studying marketing and web design.

The three now offer web-marketing advice and design for advertising. They keep their prices competitive in a crowded field and all work from home. Earlier this year, they were pricing their jobs at between 600 and 1,200 Tunisian dinars (US$350 to US$710).

At first, their business went undeclared—or “underground” as Samir put it. “But we worked with proper companies,” he said proudly. “We did some good work income-wise.” 



" Anyway, there are companies who make millions and they don't pay taxes. "


Tunisia’s relatively relaxed attitude toward taxation helped start-ups like theirs, he added. “It gives you more freedom. You say, ‘I’m a small company, no one will notice me.’ Anyway, there are companies who make millions and they don't pay taxes.”

Many of his Tunisian clients appeared not to be paying tax either; they certainly didn't ask for formal invoices. But a job for a Turkish airport operator gave them the push they needed to establish a legal company. With the Turkish client, “Everything was legal from A to Z.”

Samir decided it was time to crank his business up a level. “As an official company you have a logo, you can price more expensively,” he said. It would also make it easier to take on work from more clients.

He was pleasantly surprised by how easy it was to register the company at the one-stop office (guichet unique) of a Tunis branch of the agency, Agence de Promotion de l'Industrie et de l'Innovation (agency for promoting industry and innovation), in early 2014. 

“I had friends who started companies three or four years ago before the revolution, and they said it was very complicated,” he said. “That's one of the reasons I had delayed starting my own company. I had this idea about the Tunisian administration.” 

This is the first in a series of stories focused on the forthcoming Development Policy Review, The Unfinished Revolution: Bringing Opportunity, Good Jobs and Shared Prosperity that offers the first comprehensive analysis of the Tunisian economy after the 2011 revolution.



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