FODEC: A Supplementary Parafiscal Tax 1. FODEC: A Supplementary Parafiscal Tax The FODEC (Fund for the Development of Competitiveness in the Industrial Sector) is a parafiscal tax applied in Tunisia to certain industrial products, whether produced or imported. Its objective is to finance projects aimed at improving industrial competitiveness. Although it is not a consumption tax like VAT, it is included in the VAT base. 2. Why FODEC is included in the VAT base VAT is calculated on a basis that includes not only the product's pre-tax price, but also other taxes such as consumption duty and FODEC. This means that the VAT amount is increased by these additional taxes. For example, if a product costs 500 D, with a 10% consumption tax and a 1% FODEC, the VAT base becomes 555 D, and the 19% VAT is calculated on this amount. 3. A cascading tax system This calculation method may seem complex, but it is based on a cascading tax system. Since the FODEC is a non-deductible tax, it is considered a charge integrated into the sales price. By including it in the VAT base, the government ensures that the end consumer pays VAT on all costs related to the product, including parafiscal taxes.