Tax Treaties Between the U.S. and Tunisia

Tax Treaties Between the U.S. and Tunisia

The United States has income tax treaties with many foreign countries. Under these treaties, residents (not necessarily citizens) of foreign countries are taxed at a reduced rate or are exempt from U.S. income taxes on certain items of income they receive from sources within the United States. These reduced rates and exemptions vary among countries and spe­cific items of income.

If there is no treaty between your country and the United States, you must pay tax on the income in the same way and at the same rates shown in the instructions for Form 1040NR.  Also, see Publication 519.

Many of the individual states in the United States have a tax in addition to the federal taxes. There­fore, you should consult the tax authorities of the state in which you live to find out if that state taxes the income of individuals.  Once you have determined the state’s general taxation, you should decide if the tax applies to any of your income.

Tax treaties reduce the U.S. taxes of resi­dents of foreign countries. With certain excep­tions, they do not reduce the U.S. taxes of U.S. citizens or residents. U.S. citizens and residents are subject to U.S. income tax on their world­wide income.

Treaty provisions generally are reciprocal (apply to both treaty countries); therefore, a U.S. citizen or resident who receives income from a treaty country may refer to the tables in this publication to see if a tax treaty might affect the tax to be paid to that foreign country. For­eign taxing authorities sometimes require certifi­cation from the U.S. Government that an appli­cant filed an income tax return as a U.S. citizen or resident as part of the proof of entitlement to the treaty benefits. See Form 8802, Application for United States Residency Certification, to re­quest a certification.

Disclosure of a treaty-based position that reduces your tax. If you take the position that any U.S. tax is overruled or otherwise reduced by a U.S. treaty (a treaty­ based position), you generally must disclose that position on Form 8833 and attach it to your return. If you are not required to file a return because of your
treaty-­based position, you must file a return anyway to report your status. The filing of Form 8833 does not apply to a reduced rate of withholding tax on non-effectively connected in­come, such as dividends, interest, rents or roy­alties, or to a reduced rate of tax on pay re­ceived for services performed as an employee, including pensions, annuities, and social secur­ity. For more information, see Publication 519 and the Form 8833 instructions.

If you fail to file Form 8833, you may have to pay a $1,000 penalty. Corporations are subject to a $10,000 fine for each failure.

Tax Exemptions Provided by Treaties

This publication contains discussions of the ex­emptions from tax and specific other effects of the tax treaties on the following types of in­come.

• Pay for certain personal services per­ formed in the United States.
• Pay a professor, teacher, or researcher who teaches or performs research in the United States for a limited time.
• Amounts received for maintenance and studies by an international student or apprentice here for study or experience.
• A foreign government pays Wages, salaries, and pensions.
  
  

Personal Services Income

Pay for certain personal services performed in the United States is exempt from U.S. income tax if you are a resident of one of the countries discussed below if you are in the United States for a limited number of days and meet certain other conditions. For this purpose, the word “day” means a day during any part of which you are physically present in the United States.

Terms defined. Several terms appear in many of the discussions that follow. The particu­lar tax treaty determines the exact mean­ings of the terms under discussion; thus, the mean­ings vary among treaties. Therefore, the following definitions are general definitions that may not give the precise meaning intended by a particular treaty.

The terms fixed base and permanent estab­lishment generally means a fixed place of busi­ness, such as a place of management, a branch, an office, a factory, a warehouse, or a mining site, through which an enterprise carries on its business.

The term borne generally means having ultimate financial accounting responsibility for, or providing the monetary resources for, an ex­penditure or payment, even if another entity in another location made the expenditure or payment.

Students and Apprentices

Residents of specific countries who are in the United States to study or acquire technical experience are exempt from U.S. income tax, under certain conditions, on amounts received from abroad for their maintenance and studies.

This exemption does not apply to the salary paid by a foreign corporation to one of its exec­utives, a citizen and resident of a foreign coun­try who is temporarily in the United States to study a particular industry for an employer. That amount is a continuation of salary and is not re­ceived to learn or acquire experience.

There is a statement of the conditions under which the exemption applies to students and apprentices from that country for each country listed.

Amounts received from the National Insti­tutes of Health (N.I.H.) under provisions of the Visiting Fellows Program are generally treated as a grant, allowance, or award for purposes of whether the treaty provides an exemption.  Amounts received from N.I.H. under the Visiting Associate Program and Visiting Scientist Pro­gram are not exempt from U.S. tax as a grant, allowance, or award.

Overview of the Treaties Between the U.S. and Tunisia

Income that residents of Tunisia receive for per­forming personal services as independent con­tractors or self­-employed individuals (independ­ent personal services) in the United States is exempt from U.S. income tax if:

• They are in the United States for no more than 183 days during the tax year,
• They do not have a fixed base regularly available in the United States for performing the services, and
• The gross income for the tax year from U.S. residents for services performed in the United States is no more than $7,500.
  
  

If they do not meet condition (2), they are taxed on the income attributable to the fixed base.

Income that residents of Tunisia receive for personal services performed in the United States as employees (dependent personal services) is exempt from U.S. income tax if:

• The residents are in the U.S. for no more than 183 days during the tax year,
• Their income is paid by, or on behalf of, an employer who is not a resident of the Uni­ted States, and
• Their income is not borne by a permanent establishment or fixed base the employer has in the United States.
  
  

Pay received by employees who are mem­bers of the regular complement of a ship or air­craft operated by an enterprise in international traffic is exempt from U.S. tax if the place of management of the enterprise is in Tunisia.  However, if the enterprise is created under the laws of the United States (or a U.S. state), the pay is subject to U.S. tax.

These exemptions do not apply to income residents of Tunisia receive as public entertain­ers (such as theater, motion picture, radio, or television artists, and musicians) or athletes if their gross receipts, including reimbursed expenses, are more than $7,500 during the tax year.

These exemptions do not apply to fees re­ceived by a resident of Tunisia for services per­formed as a director of a U.S. corporation if the fees are treated as a distribution of profits and cannot be taken as a deduction by the corpora­tion.

Students and Apprentices

An individual who is a resident of Tunisia imme­diately before visiting the United States and who is in the United States for full­time study or training is exempt from U.S. income tax on the following amounts.

• Payments from abroad for full­time study or training.
• A grant, allowance, or award from a gov­ernmental, religious, charitable, scientific, literary, or educational organization to study or engage in research.
• Income from personal services performed in the United States of up to $4,000 in any tax year.
  
  

The individual is entitled to this exemption for a maximum of 5 years.