Final Report of the Project "Building a Network on Taxation and Accounting" within the DAAD Program

Project "Building a Network on Taxation and Accounting" within the DAAD Program German-Arabic Short-term Measures with Partner Universities in Tunisia, Morocco, Libya, Jordan, Yemen, Lebanon, Iraq, Algeria, and Sudan

1. German-Arabic Transformation Measures: An Intercultural Dialogue

Between July 1, 2020, and December 31, 2020, various events, projects, experiments, and academic collaborations took place within the framework of the program funded by the German Academic Exchange Service (DAAD) "German-Arabic Short-term Measures with Partner Universities in Tunisia, Morocco, Libya, Jordan, Yemen, Lebanon, Iraq, Algeria, and Sudan". The focus was on intensifying the existing collaboration between the Chair of Business Taxation and Auditing led by Prof. Dr. Silke Hüsing (TU Chemnitz) and the Assistant Professorship of the Faculté des Sciences Économiques et de Gestion de Sfax led by Dr. Souhir Neifar (University of Sfax, Tunisia) as well as on building a German-Tunisian network for taxation and accounting topics. The project examined cultural influences on business practices and questions in accounting and tax planning. Due to the global COVID-19 pandemic, both project partners had to cancel originally planned trips and in-person events at short notice and convert the program to a digital format. This took place on the German side as a Summer School and on the Tunisian side as an Autumn School. Additionally, as part of a supplementary funding request, English-language teaching videos on relevant statistical software (R) were produced. During the summer and autumn schools, various topics, new scientific findings, and cross-disciplinary, culture-specific questions were presented and discussed. While the Summer School included a lecture on German cultural characteristics in business life, the Autumn School featured a psychological module where participants experienced performance differences between individual and team achievements with country-specific differences. Participants also gained insights into the life and work conditions as well as the university research, teaching, and organizational methods of the other partner. Following the two events, a PhD student employed in Tunisia collected data to investigate the influence of different countries' responses to the COVID-19 crisis on various corporate Key Performance Indicators. These data can be analyzed using the (free) statistical software R, for which teaching videos were created.

2. TU Chemnitz: Summer School

In the first part of the project, the Chair of Business Taxation and Auditing of Prof. Dr. Silke Hüsing led the project on the German side from September 8 to 12, 2020, and organized a digital Summer School for interested PhD students and Master students. Various topics in taxation and accounting were presented by both German and Tunisian lecturers to identify similarities and differences between the two countries.

The focus of the Summer School was the study of cultural influences on business practices and questions in accounting and tax planning. The program began with independent preparation of overview presentations on key areas, which were then presented from both German and Tunisian perspectives. The following topics were covered:

• Educational system in Tunisia and Germany / System of accounting education in Tunisia
• Overview on legal forms in Tunisia/Germany
• Taxing enterprises in Tunisia/Germany
• Taxing entrepreneurs in Tunisia/Germany
• Tax morale in Tunisia/Germany
• Accounting System in Tunisia/Germany
• The role of auditors and tax advisors
• Corporate Social Responsibility in Sub-Saharan Africa: improving CSR Reporting through the implementation of a CSR concept based on the international Standards
• Corporate governance in Tunisia/Germany

In addition to technical topics, Tunisian participants received an overview of the German political system and educational system. On a local level, they gained insights into university procedures and projects at TU Chemnitz, employment opportunities in Saxony, and support for business startups. At the end of the Summer School, a role-play on evaluating a provision for a land restoration obligation in mining allowed participants to experience the perspectives of actors involved in accounting and tax planning processes, such as managers, owners, external consultants, auditors, regulators, standard setters, and tax inspectors. Each actor could have different personality traits, e.g., risk aversion or tax honesty. Students chose different role constellations and played their roles. Combined with previously identified culture-based similarities and differences, this generated ideas for further research approaches, particularly for multivariate data analysis. The most intensive discussions revolved around "tax morale," which raised the majority of questions.

3. Results of the Summer School

After the presentations, participants met in small groups in breakout rooms to exchange ideas, identify similarities and differences, and solve further tasks. The following results were achieved:

A. Legal Forms in Tunisia/Germany

Both Tunisian and German legal systems differentiate between individuals, partnerships, and corporations, with liability extending to individual or corporate assets. Similar to Germany, partners and shareholders can contribute cash and assets to companies.

Differences exist regarding minimum capital for corporations: in Germany, an AG requires €50,000, a GmbH €25,000, and a UG €1. Partnerships have no legal minimum. In Tunisia, the minimum capital is 5,000 Tunisian Dinars. Furthermore, requirements exist for the minimum number of owners: while German law allows sole proprietorships with one person, partnerships from two, and corporations from one, Tunisian law requires at least seven shareholders for limited liability companies. German law allows broad freedom in profit distribution, while Tunisian law mandates dividend distribution.

B. The Role of Tax Advisors and Auditors in Tunisia/Germany

Similar to German law (§316, §267 HGB), Tunisian companies must have audits if size thresholds are exceeded. Corporations in Tunisia must be audited based on legal form alone. Both German and Tunisian companies can receive tax advice voluntarily. In Germany, the auditor is responsible for audits; Tunisia has a concept of joint audits. Differences exist in reporting periods, auditor rotation intervals, and the role of tax advisors: advisory in Germany, auditing in Tunisia.

C. Corporate Taxation in Tunisia/Germany

Like the German territorial principle, Tunisian residents are taxed on worldwide income. Both systems tax individuals and corporate groups, including fiscal unity models. VAT systems are similar (Germany: 19%/7%, Tunisia: 19%/13%/7%). Fundamental differences exist in loss treatment (Germany: flexible offset, Tunisia: minimum tax) and corporate tax rates (Germany: fixed/progressive, Tunisia: sector-dependent: 25% standard, 10%/20%/35% for specific industries). Tunisia has no municipal tax or separation/transparency principle.

D. Individual Taxation in Tunisia/Germany

Tunisian taxation follows a worldwide income principle, distinguishing income types, similar to Germany. Both follow the ability-to-pay principle, with tax-free minimums. Differences exist in deductions (Germany: unlimited, Tunisia: 10% max 2,000 TND; pensions: max 25% of income) and progressive taxation (Germany: cumulative progressive, Tunisia: flat). Annex taxes differ: Germany imposes solidarity surcharge and church tax; Tunisia levies a 1.1% flat annex tax.

E. Accounting Systems in Tunisia/Germany

Both systems apply accounting standards with similar valuation rules. Tunisian standards differentiate general, technical, and industry-specific rules, largely based on French standards. Germany applies commercial law with optional IFRS. A fundamental difference is in tax reporting: Tunisia uses a single balance sheet; Germany distinguishes tax and commercial balance sheets.

F. Corporate Governance in Tunisia/Germany

Similarities exist in mandatory disclosures and company management structures. For listed companies, decision-making and supervisory functions are separated. In Germany, the board manages operations; in Tunisia, a single person may manage, with supervisory board oversight. For SMEs, management and control functions are often unified.

G. Influencing Factors on Tax Morale in Tunisia/Germany

Participants assessed tax morale in their country and the partner country. Tunisia has a large shadow economy and low tax morale; Germany shows higher tax morale and low shadow economy activity. Causes were linked to citizen-state relations: German citizens perceive strong state support, whereas Tunisian citizens experience unreliable governance, influencing tax compliance. Other factors affecting corporate accounting behavior included:

• Accounting system design
• Options for legal accounting measures
• Auditor independence
• Managerial incentive systems
• CSR systems
• Use of established standards to curb earnings management
• Corporate governance level
• Gender composition of boards
• Demographics of management
• Detection risk
• Penalty levels

Identified questions for future research included:

• Strategies to reduce earnings management, tax avoidance, and evasion comparing industrial and developing countries.
• Methods to quantify tax avoidance in shadow economies.
• How tax authorities can influence accounting measures.
• Effect of tax system complexity on accounting behaviors.
• Impact of managers’ and advisors’ risk attitudes on tax morale.

Participants also gained insights into teaching strategies and structures of the partner university, including modular programs, startup support, and PhD options. German side highlighted professional vs. research master programs.

4. University of Sfax: Autumn School

The second part of the project was led by the Assistant Professorship of SFEG Sfax (Dr. Souhir Neifar) with a digital Autumn School from October 20–23, 2020. Besides presentations of the university and organizational structures, the focus was on Tunisian research presentations:

• The early impact of COVID-19 on German risk reporting
• The application of IAS/IFRS in central Africa accounting system
• Goodwill accounting in Europe - an empirical analysis
• Research in accounting and taxation
• How does the individual auditor gender affect the audit report lag?
• The impact of corporate governance on financial performance in UK companies
• Engagement partner name and tax avoidance: Evidence from Canadian firms crosslisted on US markets
• Current research on Audit
• Tax Advantages in Germany/Tunisia
• Current research on taxation
• Evaluation of agricultural and forestry land after the land tax reform
• The Association Between Book-Tax Conformity and Earnings Management: Study of Some Countries of The European Union
• The reinvestment incentive in the corporate income tax option model for partnerships

Two German students also presented their work to an international audience. A soft skills training on personal presence, behavior, and cross-cultural interaction rounded out the Autumn School.

5. Results of the Autumn School

While the Summer School focused on presenting German and Tunisian research and situations, the Autumn School focused on Tunisian research. Presentations are documented in the annex in program order.

6. Summary and Outlook

The project provided participants with both academic and intercultural exchange. Participants gained insight into each country’s tax system and identified similarities and differences. Country- and culture-specific factors influencing corporate and individual tax behavior were discussed and experienced in role-play. This enabled the development of new research approaches on cause-effect relationships. The simulation served as a basis for experimental research on tax morale. The differing strategies adopted during the pandemic allowed analysis of the impact of government COVID-19 policies on corporate Key Performance Indicators. Data collection and statistical software preparation support future publications. Beyond technical topics, both partners exchanged insights on education and student support, which may inform future institutional practices.