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Viewing cable 09TUNIS196, GOT CONDITIONS CEMETERY VAT EXEMPTION ON LES

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Reference ID Created Released Classification Origin
09TUNIS196 2009-04-01 17:48 2011-08-30 01:44 CONFIDENTIAL Embassy Tunis
VZCZCXYZ0015
OO RUEHWEB

DE RUEHTU #0196 0911748
ZNY CCCCC ZZH
O 011748Z APR 09
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6146
INFO RUEHFR/AMEMBASSY PARIS IMMEDIATE 1952
RUEHRO/AMEMBASSY ROME IMMEDIATE 0800
C O N F I D E N T I A L TUNIS 000196 
 
SIPDIS 
 
DEPT FOR NEA AND L 
ROME AND PARIS FOR ABMC 
 
E.O. 12958: DECL: 04/01/2019 
TAGS: PREL OFDP ODIP ABMC TS
SUBJECT: GOT CONDITIONS CEMETERY VAT EXEMPTION ON LES 
EMPLOYEE LIST 
 
REF: TUNIS 184 
 
Classified By: Ambassador Robert F. Godec, Reason 1.5 (b) 
 
1.  (SBU) This is an action request.  See paragraph 6. 
 
2.  (SBU) On March 31, the Ministry of Foreign Affairs (MFA) 
informed us that the Value Added Tax (VAT) exemption for the 
North Africa American Cemetery and Memorial had been granted. 
 When the Mission actually received a copy of the letter from 
the Ministry of Finance (MOF) to the MFA, the MOF had 
withdrawn the condition for the withholding and reporting of 
Tunisian employee income taxes but replaced it with a 
requirement that the Embassy provide a list of all of its 
Tunisian employees.  We have verified that the exemption will 
not be issued until the MOF receives the list. 
 
3.  (SBU) We are aware that the Ambassador has the authority 
(3 FAM 7361) to provide the host government such a list 
unless the "chief of mission deems it undesirable or 
disadvantageous to cooperate for administrative, political or 
security reasons."  Nevertheless, we note that the MOF is 
imposing a condition for the Mission to receive a right to 
which it is entitled under the Vienna Convention on 
Diplomatic Relations.  Such VAT exemptions have been 
previously granted without any such pre-conditions. 
Moreover, we note that the Embassy has been asked on at least 
one previous occasion, in 1999, to provide an employee list 
to the MOF.  At that time, the Embassy declined, according to 
an Embassy internal memo, because it concluded that as the 
result of "bureaucratic complexities here" it would "not be 
desirable or advantageous" to do so. 
 
4.  (C) The condition being imposed by the MOF is somewhat 
odd, however, since in fact we submit social security 
payments for all but three of our employees (the three being 
covered by Civil Service Retirement with the full knowledge 
and agreement of the GOT).  Those payments, a fixed 
percentage of LES salaries established by local law, 
effectively inform the GOT social security agency (which 
operates under the Ministry of Social Affairs) of who works 
at the Embassy and their salaries. 
 
5.  (C) Nonetheless, word of the text of the MOF letter has 
sent a visible shock wave through our LES community.  Despite 
a variety of reminders to all LES that they must pay their 
taxes, it is apparent that many are not doing so.  The 
Embassy handbook for LES clearly states the obligation to pay 
all local taxes and all newly-hired employees are required to 
sign a salary document that states the approximate tax rate 
that they will owe to the Tunisian government.  Regardless of 
the legalities of the matter, a systematic focus on the LES 
by the MOF is likely to cause a major disruption to Embassy 
operations. 
 
6.  (SBU) Action request: We do not believe it is appropriate 
for the GOT to condition the VAT exemption on the provision 
of a list of Embassy employees.  Nevertheless, we would 
appreciate Department guidance on whether we should accede to 
the conditionality being imposed by the Ministry of Finance 
or whether it is an unacceptable infringement on our rights 
under the Vienna Convention on Diplomatic Relations.  End 
Action Request. 
Godec