TANZANIA
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POLICY, PLANS AND PRIORITIES
Vision 2025
Tanzania’s Development Vision: Vision 2025 aspires on a high and shared growth,
high quality livelihood, peace, stability & unity, high quality education, good
governance and international competitiveness. The Vision 2025 was designed to
be implemented through a series of five year development plans. The first plan in
the series being National Five year Development Plan (2011/12-2015/16) which
aims at transforming Tanzania into a middle income country by 2025.
MKUKUTA
2010-2015
MKUKUTA II is the Second National Strategy for Growth and Reduction of Poverty
II (NSGRP II or MKUKUTA II in its Kiswahili acronym) is a continuation of the
government and national commitments to accelerating economic growth and
fighting poverty. It is a successor to the first National Strategy for Growth and
Reduction of Poverty implemented from 2005/06 to 2009/10 committed to achieve
the Millennium Development Goals (MGDs) and strives to create wider space for
country ownership and effective participation of the private sector, civil society and
fruitful local and external partnerships in development. It also commits to regional
and other international initiatives for social and economic development.
MKUKUTA II emphasizes on (i) focused and sharper prioritization of interventions projects and programmes - in key priority growth and poverty reduction sectors (ii)
strengthening evidence-based planning and resource allocation in the priority
interventions (iii) aligning strategic plans of MDAs and LGAs to this strategy (iv)
strengthening government’s and national implementation capacity (v) scaling up
the role and participation of the private sector in priority areas of growth and
poverty reduction, (vi) improving human resources capacity, in terms of skills,
knowledge, and efficient deployment (vii) fostering changes in mind-set toward
hard work, patriotism, and self-reliance; (viii) mainstreaming cross cutting issues in
MDAs and LGAs processes, (ix) strengthening the monitoring and reporting
systems; and (x) better implementation of core reforms, including paying strong
attention to further improvement of public finance management systems .
MKURABITA
MKURABITA aims to achieve a formalisation of what people possess by
registering the wealth of people leading to recognition of their assets. Almost 95%
of property in Tanzania is informal property. That means the broad majority of
Tanzanians face disadvantages applying for credits and loans as their assets are
not officially recognised. Registered assets, however, can be accounted for as
collateral assets when applying for micro-credits and loans.
Mini-Tiger Plan 2020
In addition, the government had launched a Mini-Tiger Plan 2020 aiming to
transform the country into a semi-industrialised economy with a minimum per
capita income of US$2,000 by the year 2025.
All relevant governmental policies, information on Thus MKUKUTA II emphasizes
on (i) focused and sharper prioritization of interventions - projects and programmes
- in key priority growth and poverty reduction sectors (ii) strengthening evidencebased planning and resource allocation in the priority interventions (iii) aligning
strategic plans of MDAs and LGAs to this strategy (iv) strengthening government’s
and national implementation capacity (v) scaling up the role and participation of the
private sector in priority areas of growth and poverty reduction, (vi) improving
human resources capacity, in terms of skills, knowledge, and efficient deployment
(vii) fostering changes in mind-set toward hard work, patriotism, and self-reliance;
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(viii) mainstreaming cross cutting issues in MDAs and LGAs processes, (ix)
strengthening the monitoring and reporting systems; and (x) better implementation
of core reforms, including paying strong attention to further improvement of public
finance management systems . strategies, plans, as well as diverse reports and
surveys on poverty reduction impact achieved is easily available on the website:
https://www.tanzania.go.tz.
Investment
Opportunity Sectors
The government has identified investment opportunities in Tanzania according to
sectors and sub-sectors. Priority sectors are:
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Roadmap on the
Improvement of the
Investment Climate
in Tanzania
Agriculture and livestock Development,
Natural Resources ,
Tourism
Manufacturing
Oil and Gas Exploration and Production
Mining
Real estate
Transportation
Air Transport
Services
Information and Communication Technology
Financial Institutions
Telecommunication
Energy
Broadcasting
Since July, 2010 the Government of the United Republic of Tanzania, in
collaboration with the private sector, is implementing reforms for the improvement
of the business environment through business related regulatory regime reforms
across the economy. Major reform objectives are Starting and closing business,
Dealing with Construction permit, Employing workers, Registering properties,
Paying Taxes, Trading across borders, Access to Credit, Enforcing Contracts and
protecting Investors.
Towards this end, the Government has been implementing various reform
programmes that include: Public Sector Reform Programme (PSRP); Local
Government Reform Programme (LGRP); Business Environment Strengthening
Programme (BEST); Legal Sector Reform Programme (LSRP); and the Property
and Business Formalisation Programme (MKURABITA). These reforms have not
resulted in the desired rapid pace of economic formalisation, income generation
and widening of the tax base.
Tanzania National
Business Council
In 2001, the government established a mean to conduct continuous dialogue with
the private businesses through the formation of the Tanzania National Business
Council (TNBC). Chairman is the President and the council consists of 20
government members and 20 members from the private sector. The council aims
to provide a forum for public-private dialogue that strives to reach consensus or
mutual understanding on strategic issues which relate to an efficient management
of development resources.
National Investment
Steering Committee
The National Investment Steering Committee was established in September 2000
and is chaired by the Prime Minister. Its mandate is to resolve investment issues
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that touch several sectors and require a fast track approach. The Steering
Committee is another forum for public private dialogue in Tanzania and is
comprised of cabinet ministers, senior officers of the Attorney General, the
Governor of the Central Bank and TIC.
Zanzibar National
Development Plans
Zanzibar’s national Development Plan is the Vision 2020 which was developed by
the Zanzibar Ministry of Finance and describes how Zanzibar wants to be in 2020.
The implementation strategy is the “Zanzibar Strategy for Growth and Reduction of
Poverty” which is a five-year plan from 2005-2010. It is better known under its
Kiswahili name MKUZA. The successor strategy MKUZA II has already been
drafted for the years 2010-2015.
Similar to the Tanzanian MKUKUTA, the main broad categories target:
(i) Growth and Reduction of Income Poverty;
(ii) Well Being and Social Services, and
(iii) Good Governance and National Unity.
Big Results Now
As part of its effort to transition the country from a low to a middle-income
economy, starting with the 2013/2014 Financial Year, Tanzania, with support from
Development Partners, is adopting a Big Results Now initiative,
This comprehensive system of development implementation, described as a “fasttrack people-centred growth ‘marathon’” focuses on six priority areas articulated in
the Tanzania National development Vision 2025: energy and natural gas,
agriculture, water, education, transport and mobilization of resources.
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INVESTMENT PROMOTION
2.1
Institutions
TIC
The Tanzania Investment Centre (TIC) a government institution established in
1997 by the Tanzania Investment Act as the one stop shop for investment related
matters to be the primary Agency of the Government to Coordinate, encourage,
promote and facilitate investment in Tanzania and to advise the Government on
investment policy and related matters. The one-stop shop provides that one
representative of each relevant ministry and/or public authority is placed in TIC. It
has offices, called desks, from the Lands Department, the Labour Division, the
Directorate of Trade and the Business Registration and Licensing Agency,
Immigration department and the Tanzanian Revenue Authority. Hence,
responsibilities of TIC include: registration of companies, registration and approval
of investments, investment promotion, investment facilitation, tax registration, land
issues, immigration issues, and After Care Services. TIC has three branches: one
in Moshi, one in Mbeya and one in Mwanza.
TRA
The Tanzania Revenue Authority (TRA) is in charge of all tax laws and related
issues and is a semi-autonomous government agency created by the Parliament
Act No. 11 in 1995. TRA revenue departments include: Domestic Revenue
Department, Customs and Excise Department, Large Taxpayers Department and
the Tax Investigation Department.
DSE
The Dar es Salaam Stock Exchange (DSE) was incorporated in 1996 as a
company limited by guarantee. Under the Capital Markets and Securities Act of
1994, it was then modified into the Capital Market and Securities Authority (CMSA)
which is the regulatory body of the industry. Its mandate is to promote the
conditions for the development of capital markets in Tanzania by licensing and
regulating investment intermediaries and deals involving the issuance of and trade
in securities. In April 1998, the first trading activities started on DSE and today,
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trading is conducted through an Automated Trading System and settlement
through the electronic Central Depository System. Foreign participation was initially
restricted but restrictions were relaxed in 2003. Today, foreigners can participate in
the secondary market for up to 60% of the issued share capital.
ZIPA
Zanzibar Investment Promotion Authority has been established by Act No. 11 of
2004, the Zanzibar Investment Promotion and Protection Act, 2004. The Act
regulates all investments that are undertaken on Zanzibar and the island of
Pemba. Responsibilities of ZIPA include:
 To be the focal point for promotion and facilitation of investments in Zanzibar;
 To maintain liaisons between investor, Government and other authorities
concerned with investment;
 Administration, control and management of Freeport and Free Economic Zones
including the creation of development plans, approval of respective projects and
to be in charge of all other issues concerning Freeports and Free Economic
Zones;
 To carry out all such other acts as may be incidental or conducive to the
attainment of the objectives of ZIPA or in the exercise of its powers
 To issue relevant licenses and permits.
2.2
Investment and Export Incentives
Investment incentives are dominantly tax incentives and can be found under
section 2.4. There are several tax incentives also relevant for the export promotion
that can also be found under the tax section.
Other incentives provided to the foreign investor are:
 Unrestricted right to international arbitration in case of disputes with the
Government
 Straight-line accelerated depreciation allowance on capital goods
 Fast track to obtain permits such as work/residence permits and industrial and
trading licenses with the assistance of TIC
 Permission to employ 5 foreign expatriates upon following the procedures laid
down by the Immigration Department for issuance of Resident’s Permits, and
 Recognition by the Government which helps to facilitate assistance when
needed from Government.
Zanzibar
For a list of investment incentives provided to investor on Zanzibar, please see the
Zanzibar Investment Promotion and Protection Act, 2004, for details.
Import Duty
Drawback
Import duty charged on imported inputs and which are used for producing goods
for export and goods sold to foreign institutions such as the UN in Tanzania, is
refunded.
Manufacturing
under bond
Businesses/ Factories manufacturing goods under bond for export purpose are
exempted from the import duty and other taxes on inputs which are used for
manufacture of such goods.
Other Export incentives are provided in EPZs and other Special Economic Zones
(SEZs). Please see section 2.3 below for more information.
2.3
EPZs
EPZs, Freeports and other Special
Economic Zones
Activities in Export Processing Zones are regulated under the Export Processing
Zones Act No. 11 of 2002 and its Amendments in 2006. The Act establishes the
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Export Processing Zones Authority as an autonomous government agency in
charge of initiating, developing and managing operations in the EPZs. The
emphasis of economic activity in an EPZ shall be the use of local materials such as
textiles and garments, leather goods, agro-processing, and the lapidary industry.
Businesses operating in the EPZ and exporting at least 80% of their products are
entitled to the following incentives:
 10 year tax holiday on corporate income tax and withholding tax (dividends,
interests, rent);
 No customs duty, VAT or other tax on raw materials and capital goods
employed in the EPZ, with exception of motor vehicles, spare parts and
consumables, and no VAT on utility and wharfage charges;
 No local authority taxes or levies for 10 years on products produced in the EPZ;
 No stamp duty;
 Exemption from pre-shipment or destination inspection requirements;
 On site customs inspection of goods in the EPZ;
 Exemptions from foreign exchange control restrictions;
 Provision of business visa to key technical, management and trainings staff for
a maximum of 2 months at the point of entry, before having to apply for a
residence permit according to the Immigration Act, 1995.
Special Economic
Zones (SEZ)
The Special Economic Zones Act (2006) outlines the creation of selected
geographical areas such as industrial parks, export processing zones, free trade
zones, free ports, tourist parks, science and technology parks, etc. SEZs also try to
attract light industry in specific regions such as Dar es Salaam, Tanga, Kigoma and
Mtwara. Activities in SEZs are aimed to accelerate domestic production, promote
export and create employment.
The Act established the Special Economic Zones Authority o be responsible for
overall policy formulation, coordination and implementation of activities related to
the establishment and development of SEZs. The Executive Director is in charge of
the administration, management and coordination of the SEZs on behalf of the
Authority and he can also sub-contract this responsibility to a zone management
company according article 32 of the Act.
To be licensed within an SEZ, the new investment requires a minimum capital of
US$5 million for foreign owned investments, or an equivalent of US$1 million for
locally owned investments. Investment incentives are then categorised into three
groups of investors:
(1) Incentives for developers of infrastructure;
(2) Incentives for investors selling within the customs territory, and
(3) Incentives for investors selling in export markets (those exporting at least 80%
of production receive the same incentives as described under the EPZ
regulation).
Please see the Special Economic Zones Act (2006) articles 38-41 for the different
incentives.
Zanzibar
The first law on EPZs on Zanzibar was passed in 1992, and the first EPZ project
started in 1995. Zanzibar has established Free Economic Zones within the Fumba
Area, Amaan Industrial Park in Unguja and Micheweni Area in Pemba and their
demarcations shall be. The President has the right to declare FEZs. Initially, many
textile manufacturers settled in the EPZs as garment was the driving industry but
most of them collapsed in 2002. Today, manufacturers of cassettes, plastic,
packaging and a coconut oil extraction company operate in Zanzibar’s FEZs.
A Freeport Zone is established in the Maruhubi Area in Unguja.
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The Freeport and Free Economic Zones Areas are considered as Custom Area
according to the Act and Customs Laws and Regulations do not apply. All
Incentives and regulations can be found in the Act.
2.4
Tax Incentives
The Tanzania Investment Act, 1997 provides a variety of incentives for both
national and international investors. Tax incentives granted are in the form of
enhances capital deductions and allowances.
Economic
Infrastructure
Tax incentives in the economic infrastructure sector for the road, railways, air and
sea transport, port facilities, telecommunication, banking & insurance are the
following:
All capital goods
Corporate tax
Listed company to DSE
Withholding tax on dividends
Withholding tax on interest
Duty
0%
30%
25%
10%
10%
VAT
Relieved
Losses can be carried forward indefinitely. However Companies with a perpetual
tax loss for 3 consecutive years as a result of tax incentives on its investment are
in such case charged 0.3% of the annual turnover.
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Mineral Sector
The general tax incentives in the mineral sector are:
Item
All capital goods
Fuel
Duty
Duty
0%
0%
Corporate tax
Listed company to DSE
Capital allowance
Withholding tax on technical services
Withholding tax on dividends
Withholding tax on interest
30%
25%
100%
5%
10%
10%
VAT
VAT
Relieved
Relieved
Losses can be carried forward indefinitely. However Companies with a perpetual
tax loss for 3 consecutive years as a result of tax incentives on its investment are
in such case charged 0.3% of the annual turnover.
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Agriculture
Royalty of 4% is charged on gold and other metallic minerals
Royalty of 5% on diamond, uranium and gemstone
Royalty of 1% on gem(cut and polished)
Royalty of 3% for other minerals(e.g coal, industrial minerals and building
minerals)
General tax incentives in the agricultural sector are:
Item
All capital goods
Agricultural machinery/ equipment
Fertilizers and pesticides
Farm implements & inputs
Corporate tax
Capital allowance
Withholding tax on interest
Withholding tax on dividends
Duty
0%
0%
0%
0%
30%
100%
10%
10%
VAT
Relieved
Exempt
Exempt
Exempt
Losses are carried forward indefinitely. However companies with a perpetual tax
loss for 3 consecutive years as a result of tax incentives on its investments are in
such case charged 0.3% of the annual turnover.
Tourism
General tax incentives in the agricultural sector are:
All capital goods
Corporate tax
Capital allowance
Withholding tax on interest
Withholding tax on dividends
Duty
0%
30%
50%
10%
10%
VAT
Relieved
Losses are carried forward indefinitely. However companies with a perpetual tax
loss for 3 consecutive years as a result of tax incentives on its investments are in
such case charged 0.3% of the annual turnover.
Exempt on Import Duty are:
 Imported four wheel drives designed and built for tourist purposes. They are
subject to satisfying criteria set by the East African Community Secretariat;
 Hotel equipment which were engraved or printed or marked with the hotel logo
imported by a licensed hotel for its use.
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Manufacturing and
Fish Farming Sector
The law allows for a 50% capital allowance for plant and machinery that is used in
the manufacturing and fish farming sectors. The rest will follow the depreciable
chart o the Income Tax Act, 2004.
Petroleum and Gas
In the Petroleum and Gas sector, there are:
 tax exemptions for equipment and material used for exploration;
 negotiated levels of cost oil or gas split after the discovery of oil or gas for the
purposes of recovering costs for exploration, development and production;
 negotiated levels of profit oil or profit gas split;
 importation by or supply to a registered licensed exploration, prospecting,
mineral assaying, drilling or mining company, of goods which if imported will
then be eligible from duty under customs law, and service for exclusive use in
exploration, prospecting, drilling and mining activities.
Exceptions for
major investments
According to the Tanzanian Investment Act, the National Investment Steering
Committee can offer additional incentives and benefits that are not yet provided by
the act, or are above it for strategic or major investment projects.
2.5
International Trade & Export
Promotion
Tanzania’s trade policy of 2001 has been liberalizing internal as well as foreign
trade regimes. Licensing procedures were streamlined to accelerate time and
reduce costs. The simple average tariff fell from almost 30% in 1988 to about 14%
in 2001.
In 2003, Tanzania adopted the new National Trade Policy for a competitive
economy and export-led growth which specifies objectives and trade instruments
employed to lead a better business environment for trading.
AGOA
ATI
Tanzania enjoys preferential market access to the US market via the African
Growth and Opportunity Act (AGOA) as signed in 2000 and the AGOA
Acceleration Act (known as AGOA III) signed in 2004. AGOA III extends the
preferential access until 2015 for some 6,400 items covered under the Act.
Tanzania is founding member of the African Trade Insurance Agency (ATI). ATI is
a multilateral institution engaged in the provision of financial instruments, insurance
and reinsurance for trade, project and investment transactions. It works as inwards
investment guarantee agency as well as an import and export credit agency.
Taxes on
International Trade
The Customs and Excise Department of TRA is in charge of all taxes and duties on
international trade in Tanzania.
Agreement on
Customs Value
(ACV)
Tanzania follows the implementation of WTO article VII’ ACV which prohibits the
use of arbitrary or fictitious customs values.
Import Duty
A Common External Tariff (CET) has been adopted by EAC members from 1
January 2005. It is rated at 0% for raw materials, capital goods, agricultural inputs,
pure-bred animals and medicines; 10% for semi-finished goods, and 25% for
finished final consumer goods. The tariff is levied at an ad valorem rate on the CIF
value of the goods imported.
Regional
Agreements
Goods traded between EAC countries only qualify for preferential treatment if they
meet the criteria of the rules of origin.
In case of goods subject to a lower rate of duty from other trade blocks such as
SADC and COMESA, the CET will continue until trading arrangements between
the three blocs are harmonised.
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Excise duty
Excise duty is charged on specific or ad valorem tax rate on certain imported as
well as locally manufactured consumer goods. There are 5 ad valorem rates of 7%,
10%, 20%, 30% and 120% currently effective. Most of the locally manufactured
goods are charged excise duty.
Stamp duty
A stamp duty applies to certain legal instruments, affidavits, conveyances and
lease agreements. The rate for conveyance and agricultural land is 1% and 500
TZS. The maximum stamp duty is due for registration of property, for security or
mortgage and is 10,000 TZS.
Importation
procedures
Imports, exports and transit procedures are all handled by the Customs Service
Centre (CSC).
The procedure is the following:
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6.
2.6
TISCAN: Classification, valuation and identification of goods by TISCAN – a
private company that is contracted by TRA to provide destination inspection
services. TISCAN will issue a control number.
Direct Trader Input (DTI): data input, self-assessment in asycuda system
either by their remote DTI from the office or licensed remote DTO bureau.
Bank: Payment of Taxes/ Processing Fee, reception of a receipt.
Asyscan: documents attached must be the invoice, Bill of lading, packing list,
CVR etc.
Customs Clearance Office: examination and release order
Landing Contractors: Tanzania Port Authority, TICTS, Swissport (airport)
Other Issues
Zanzibar is governed independently from Tanzania and its investment processes
and regulations are, hence, also based on laws and regulations of the
Revolutionary Government of Zanzibar.
3.
PUBLIC PRIVATE PARTNERSHIP FRAMEWORK
The Government of Tanzania has put in place
a legal Framework for PPP in
Tanzania. The PPP Policy, 2009 states government ambitions in enhancing the
collaboration between the Public and Private Sector. The PPP Act has been
established in 2010 and the PPP Regulations in 2011.The PPP Act 2010 has
established two major units that deals with PPP which are PPP Coordination unit
at Tanzania Investment Centre and PPP Finance Unit at the Ministry of Finance
that deals with Fiscal issues involved in PPP’S.
Investment
Legislation
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ACCESS AND ADMISSION OF
FOREIGN INVESTORS
4.1
Foreign Investment & Capital
Mobility
In the mid-1990s, Tanzania was conducting major economic reforms aiming to
liberalise the economy and make it more business-friendly. Investments and their
operations are regulated under the Tanzania Investment Act (1997), the Export
Processing Zones Act No. 11 of 2002, the Capital Markets and Securities Act No. 5
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of 1994, and related amendments. Since 1997, government made amendments to
the laws in an effort to attract investors and/ or rectify deficiencies in the existing
legislation.
Mining Sector
Legislation
Investments in Mining and petroleum exploration are guided by two pieces of
legislation, the Mining Act No. 5 of 1998 and the Petroleum (Exploration and
Development) Act of 1980. The Mining Act grants investors the right to trade in
mineral rights and provides special incentives (see 2.2) for companies operating in
this sector. The Act brought more clarity and transparency at the same time of
ensuring greater environmental care. A Mining Advisory Committee was also
introduced that advises on the one side the Minister on diverse relevant issues and
on the other side the government on concerns of investors in this area.
Investment
requirements
An investor who likes to be granted incentives has to acquire a certificate of
incentives from TIC. The minimum requirement is an investment above
US$300,000 for foreign investors and US$100,000 for local investors.
4.2
Registration
Requirement
Foreign Investment Establishment,
Registering and Licensing
Processes
All enterprises operating in Tanzania have to register with the Business
Registration and Licensing Agency (BRELA) that is under the Ministry of Industries,
Trade and Marketing. Every business is required to have a business license for
operation under the Business Activities Registration Act 2007. For investors who
pass through TIC facilitation registration will be processed by TIC.
To start operating a company in Tanzania, the investor is required to have the
following documents:
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Certificate of Incorporation
Memorandum and Articles of Association
Business License
Income Tax Clearance Certificate
Residence Permit Class A or B
TIN (Tax identification number)
Lease Agreement or Title Deed
Business Plan or Feasibility Study
Certificate of Incentives for projects approved by TIC
A general requirement for registration is that every private company has to have at
least two Directors.
Company
Registration
Investors wishing to set up a limited liability company have first to clear the name
of the company before filing for registration with BRELA. Filing for registration at
BRELA, the investor must provide the proposed name of the company, certified
copies of the Memorandum and Articles of Association, a notice of the situation of
the registered office in the country of domicile, a list of the directors of the company
and all persons resident in the country who are representatives of the company,
and pay the registration fee. If the company has not been registered before,
BRELA will then issue the Certificate of Compliance.Company Registration takes
about 3 days. For detailed information on types of fees payable and processes
please visit tic website at www.tic.co.tz
Types of Companies
Investors can register as a Private Limited Company, a Public limited company, or
a branch of an overseas company. Details on the requirements of each type,
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regulations and control of companies and associations can be found in the
Companies Act, 2002 and TIC guide which can be found at TIC website.
Certificate of
Incentives
After registering and granting of the Certificate of Incorporation, the investor can
apply for a certificate of incentives at TIC. Requirements for a certificate include:
 3 copies of the projects business plan/ feasibility study;
 One copy of the Memorandum of Association;
 One Copy of the Certificate of Incorporation;
 Covering letter and 3 copies of TIC application forms;
 One copy of the company board resolution;
 One copy of the evidence of land ownership;
 One copy of the evidence of financing.
Evaluation of the documents will take at least 1 week and after two weeks a
response shall be provided by the Management Team for approval or rejection.
The Certificate of Incentives will then entail the Implementation Schedule of the
investment which is taken from the Business plan provided, and the incentives
granted. Costs for the application are US$100 for the application form and US$750
for the certificate of incentives itself.
Investments in the mining and petroleum sector are required to follow the Mining
Act 1998 and Petroleum (Exploration and Production) Act, 1980, for obtaining
authorisations for operation. TIC can provide help to acquire them.
Tax Registration
Registration with the Tanzania Revenue Authority can also be done via TIC. The
following documents are required:
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VAT Registration
Memorandum and Articles of Association;
Certificate of Registration or Certificate of Incorporation;
Investment Feasibility Study;
Certificate of Incentives in the case project was approved by TIC;
Partnership Agreement (deed), in case of a partnership;
Lease Agreement;
Photographs of directors;
Filled Business Inquiry Forms;
Filled IT 21 forms for companies;
Filled IT 20 forms for individuals;
TIN (Tax Identification Number) forms.
All business entities with a turnover of more than 40 million TZS per annum have to
register for VAT by completing form No. VAT 101. VAT has to be paid on a monthly
basis to the nearest regional VAT office by the last working day of the month.
There is special VAT relief for capital goods for investment in order to allow the
investor a relief of tax up front.
VAT refunds can be made within 30 days or 6 months from the due date
depending on the taxpayer type. Exporters are classified as regular repayment
traders and can claim their funds within 30 days.
The standard VAT rate is 20%. Zero VAT rates apply to health supplies and tourist
services. Furthermore some exports and VAT exempts exist. A list of all goods and
services falling under special relief category can be collected from the TRA desk at
TIC.
Business Licensing
At TIC’s business licensing desk investors receive help with acquiring necessary
other business licenses and receive temporary business permits. The application
for the business license has to include:
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 Photocopy of the Certificate of Incorporation
 Memorandum and Articles of Association
 Proof of Tanzanian Citizenship – in case of non-citizen, the Residence Permit
Class A showing the shareholders
 Lease agreements, title deeds
 Tin (Tax Identification Number)
 If shareholders are not in Tanzania, a Power of Attorney
 In case the shareholders of the company are non-residents and are not living in
Tanzania, attach Power of Attorney.
For certain businesses and sectors, additional licenses are required such as the
Custom Agents License (CAL) for clearing and forwarding, the Tourist Agents
license (TALA) for tourist hotels, travels agents, hunting and tour operators.
Professional certificates are compulsory for lawyers, pilots, mining and hospital.
Under the Business Activities Registration Act, 2007, business registration is
required and done permanent with the Business Activities Registrar. The Business
Activities Registrar has the right to suspend certain business activity if:
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The business premises ceases to be useful for the intended purposes;
The owner is convicted of any offence;
Bankruptcy;
Failure to comply with conditions of the certificate.
4.3
Foreign Employment & Residence
The Immigration Act, 1995 regulates the control of immigration in Tanzania. There
are 3 classes of Residence Permits for foreigners.
Residence Permit
Class A
Residence Permit Class A may be granted to a person other than a prohibited
immigrant, who intend to enter or remain in Tanzania and engage in in trade,
business, profession, agriculture, animal husbandry, prospecting of minerals, or
manufacturing. Application for Residence Permit Class A may be lodged at
Immigration Department’s Headquarters or the Tanzania Investment Centre (TIC)
or Zanzibar Investment Promotion Authority (ZIPA) for Zanzibar (depending on
whether the business or project has been registered with either TIC or ZIPA).
Residence Permit
Class B
The Residence Permit Class B is issued to employed foreigners (expatriates) who
have been offered employment in Tanzania and the principal Commissioner of
Immigration Services is satisfied that he possesses qualifications or skills
necessary for that employment and that his employment will be of benefit to
Tanzania. Applications should be lodged at the office of the Director of
Employment, Ministry of Labour and Employment or the Tanzania Investment
Centre.
Residence Permit
Class C
The Residence Permit Class C is for foreigners such as students, researchers,
missionaries, doctors, persons attending cases in Court of Laws, volunteers. And
persons attending medical treatments. Requirements for Residence permit class C
differs depending on the categories of activities that a foreigner intends to engage
in. Applications are directly addressed to the Director of Immigration Services or
through Regional Immigration Offices close to the place of residence. For the fees
and full list of required documents to process these permits please see the
Tanzania Investment Guide (2013) or the relevant website: www.tic.co.tz.
12
4.4
Land Rights &
Ownership
Foreign Investor Access to Land
and Property Rights
Land in Tanzania is categorised either as general land, village land or reserved
land. The Land Act, Cap .113(R.E. 2002) clarified that all land in Tanzania belongs
to the State. Ownership can be received by 3 possibilities:
(1) The Government grants the right of occupancy;
(2) Derivative rights granted through TIC;
(3) Via sub-leases out of granted right of occupancy by the private sector.
The rights of occupancy and Derivative Rights are granted for a long term, ranging
from 33 to 99 years and the term is renewable.
The legal framework for land issues mainly consists of the Land Act, 1999, and the
Land (Amendment) Act from 2004 which provides the basic law for land except
village land, management of land, settlement of disputes and related matters, and
the Village Land Act, 1999, governing all matters of land in villages.
Non-citizens are restricted to land occupation for investment purposes under the
Tanzania Investment Act, 1997. The Land Act, 1999, allows a foreigner to occupy
land through:
 Derivative rights under section 20(2) of the Land Act, 1999;
 Application to the Commissioner for Lands for a grant of right of occupancy
under section 25(1)(h) and (i) of the Land Act, 1999, and section 3 of the Land
(Amendment) Act, 2004;
 Sub-leases from a private owner;
 Licenses from the Government;
 Purchase from other holders of granted right of occupancy.
Acquiring Urban
Land
For acquiring urban land, the following procedures have to be completed. It shall
be noticed that TIC can undertake all procedure on behalf of the investor.
Below please find graphs taken from the Tanzania Investment Guide (2013) which
show the different processes and entities involved in the respective process.
13
Source: Tanzania Investment Guide (2013)
Applicable fees are: survey fee, registration fee, preparation fee and stamp duty.
Land rent charges on industrial plots within urban areas range between 75 to 150
TZS (US $ 0.05-US$ 0.93) per square metre per year in addition to other charges.
Acquiring Farmland
For acquisition of farmland, the following procedures have to be completed. Again,
TIC can undertake all procedure on behalf of the investor.
:
Source: Tanzania Investment Guide (2013),
Legislation
5
FOREIGN INVESTMENT
OPERATIONS
5.1
Employment
The labour legislation consists of the Employment and Labour Relations Act No. 6
of 2004, and repealed several previous laws when coming into force in 2006. This
14
Act sets minimum employment standards and covers fundamental rights and
protection of labour, no discrimination, and the freedom of association such as the
right to form and join a labour union. Other relevant legislation are the Labour
Institutions Act No. 7 of 2004, the Public Service Act, 2002, the Employment of non
citizen in Tanzania Policy, as well as Occupation and Safety Legislation.
Foreign Workers
Investors that qualify for the Certificate of Incentives with TIC are allowed to
employ up to 5 foreign workers.
National Social
Security Fund
(NSSF)
The National Social Security Fund Act no. 28 of 1997 states the state social
security scheme called NSSF. Contributions are 20% of the employee’s
remuneration which can be shared by employee and employee to equal parts,
otherwise, the employer has to pay the full contribution. An alternative fund is the
Parastatal Pension Fund (PPF) to which the employer contributes 15% and the
employee 5%. Foreign employees can be exempted from NSSF against proof of
enrolment in another scheme.
Minimum wages
The minimum wage rates are determined by the Wage Boards. Special overtime
work rates of at least 150% of the basic salary and extra allowances for night work
are compulsory.
Workmen’s
Compensation
The Workmen’s Compensation Act (R.L Cao 263) regulates the compensation to
workers who suffered injuries in the course of their employment. Employers are
obliged to purchase workmen’s compensation insurance for all employees.
Working Hours &
Leave
The standard working time is 45 hours a week. The law provides for at least 28
consecutive days annual leave within one leave circle. Public holidays falling in the
period of leave are included. Employees are entitled to 126 days of sick leave in
any leave cycle of which the first 63 days shall be paid full wages, and afterwards
50% of the wage. When a worker has been sick for 6 consecutive months, his
employment can be terminated on medical grounds. Female employees have the
right to 84 calendar days maternity leave, or 100 days in case of giving birth to
more than one child.
15
Other Benefits
Termination of
Employment
Other benefits such as rent allowances, transport allowance, etc. can be provided
by the employer. Employers shall also pay the skills development levy set at 6% of
the gross wage bill.
To terminate a work contract, the employer has to ensure that it is no “unfair
termination” as defined in the legislation. The employer has to bring the proof.
Before dismissing an employee, the employer has to give a series of warnings.
Final benefits include notice pay, accrued pay and leave pay, severance pay and
transport to the place of recruitment. The minimum period of notice of termination
is 4 days for daily workers and 28 days for monthly workers. Severance pay is 7
days for every year of service completed for a maximum of 10 years. In case of
misconduct or unreasonable refusal to accept alternative employment from the
side of the employee, no severance pay is required. In case of unfair termination of
the employment, the respective compensation is capped at 12 month’s wages.
5.2
Business Taxation
The authority in charge of central government taxes and several non-tax revenues
is the Tanzania Revenue Authority (TRA). Parliamentary statutes and case law
govern the tax law. Every year, the new Budget is decided in June and a Finance
Act is subsequently passed with new provisions amending the existing law.
The main taxes are the corporate income tax, withholding tax on dividends,
interest, royalties and natural resource payments and rent, and personal income
tax as direct taxes, and the VAT and duties as indirect taxes. The respective
legislation is the Income Tax Act, 2004, the Value Added Tax Act, 1997 and the
Customs Tariff (Amendment) Act No. 1 of 1979.
Corporate Income
Tax
Income tax is applied to profits of Tanzanian resident companies and foreign
companies trading in Tanzania through a branch or agency. Tax for a resident
company is paid on the worldwide income. A foreign incorporated company is
treated as resident if the management and control of the entity’s affairs is exercised
in Tanzania. The general corporate income tax is 30%. Several exceptions apply to
investors according to the sector of investment (see section 2.4 for more details).
VAT
Value added Tax is at 20% with certain goods and services for export being eligible
to zero tax rate. Claims for VAT refund must be supported by an auditor’s
certificate. Businesses that are constantly in a refund position such as exporters
can apply for lodging their refund on a monthly basis.
Customs Duty
The different customs duties are described in section 2.5.
Local Taxes
There are property taxes paid to local governments on the value of the premise.
Rates depend on the value and location of the premises. Local governments can
charge a 0.3% service levy that is based on the turnover generated in the
respective district. A cess tax applies to agricultural produce and livestock which
cannot exceed 5% of the producer price.
5.3
Environmental
concerns
Environment, Physical Planning,
Health & Safety, Consumer
Protection
The Environmental Management Act No. 20 of 2004 provides a comprehensive
policy framework for environmental conservation and an emphasis on sustainable
development. Government objectives in environmental conservation are to combat
desertification, preserving biodiversity, to ensure environment-friendly production
practices and pollution reduction. Campaigns to create public awareness,
sensitising communities and promoting participation in environmental conservation
16
and management have been undertaken. Environmental conservation is of highest
important to the government and the responsibility for it falls under the office of the
Vice President of the Republic. The National Environmental Council (NEMC) is
advising and legislation will empower NEMC further to enable it to enforce the
national environmental policy.
Labour Laws
Besides the legislation and benefits described in section 4.1, the Occupational
Health and Safety Act, 2003, provides for health and security issues at the
workplace.
Consumer
Protection
No specific policy addressing consumer protection exclusively could be identified.
The aspect of consumer protection is covered by sector-specific regulatory bodies
and fragmented legislation which is described in section 4.4.
5.4
Competition Policy & Law
Tanzania has no competition policy per se but there are some major laws guiding
competition and the regulation of economic activities. These laws are the Fair
Trade Practices Act of 1994, the Energy and Water Regulations, and the Surface
and Maritime Regulation Act of 2001.
A Fair Competition Commission (FCC) and a number of sector-specific regulatory
bodies were established. The regulatory bodies are independent regulators that
aim to assure consumer protection from unjustified rate increases. Regulatory
bodies include the Energy and Water Regulatory Authority (EWRA), the Surface
and Maritime Transport Regulatory Authority (SUMATRA), the Telecommunication
Regulatory Authority and the Tanzania Air Civil Aviation Authority.
5.5
Monetary Policy, Foreign Exchange
and Foreign Investors
Financial Sector &
Monetary Policy
The Financial Sector is regulated by the Bank of Tanzania (BoT) which is
responsible for the formulation and implementation of monetary policy. Prior to
1991, the banking sector was highly regulated and a monopoly of the Government.
Reforms in the 1990s liberalized the banking sector such as the Banking and
Financial Institutions Act 1991. Banks and Financial institutions are free to set their
own interest rate policy. BoT regulates the financial sector under the Banking and
Financial Institutions Act 2006, which superseded the 1991 Act, as well as the
Bank of Tanzania Act 2006.
Foreign Currency
Regulations
Foreign exchange controls have been liberalised with the enactment of the Foreign
Exchange Act 1992. It liberalised external trade and payments in order to provide
an enabling environment for efficient allocation of foreign exchange and marketdetermined exchange rates. To demonstrate this aspect even further, the Interbank Foreign Exchange Market (IFEM) was introduced in 1993 by the
Government.
Repatriation
The Investment Act 1997 guarantees in article 21 the following:
Subject to this section, a business enterprise to which this Act applies shall be
guaranteed unconditional transferability 'through any authorised dealer bank in
freely convertible currency ofa) net profits or dividends attributable to the investment;
b) payments in respect of loan servicing where a foreign loan has been obtained
c) royalties, fees and charges in respect of any technology transfer agreement
registered under this Act;
17
d) the remittance of proceeds (net of all taxes and other obligations) in the event of
sale or liquidation of the business enterprise or any interest attributable to the
investment;
e) payments of emoluments and other benefits to foreign personnel employed in
Tanzania in connection with the business enterprise.
Even though there are no restrictions, certain foreign exchange transactions
require approval of the Bank of Tanzania such as investments outside the country
and foreign lending operations in favour of non-residents.
5.6
Public Procurement
The Public Procurement Act No. 21, 2004, the Public Procurement Regulations
2005 (Goods, Works, Non-Consultant and Disposal of Public assets by Tender)
and the Public Procurement Regulations 2005 (Selection and Employment of
Consultant) are the respective legislation in place. The Public Procurement Act has
been reviewed and the new Public Procurement Act is in the process of being
developed.
5.7
Intellectual Property
Intellectual property rights are secured by the following legislation:
The Patents Act No. 1 of 1987 protects intellectual property rights for interventions,
innovation and other patentable works through the granting and regulation of
patents, utility certificates and innovation certificates. When registering for a patent,
the following 6 procedures have to be followed:






Filling of Patent form No. 2 accompanied by patent document;
Remittance of application fee 12,000 TZS;
Formal examination;
Advertisement of granted application;
Invitation to pay certificate fee 10,000 TZS; and
Assurance of Certificate of grant of Patent.
The Trade and Service Marks Act No. 12 of 1986 protects exclusive rights to the
use of distinctive registered trade and service marks. Registering for a Trade Mark
application has to be done with 4 selected Advocate firms specified in the Tanzania
Investment Guide. For acceptance of a trade or service mark, the application fee of
50,000 TZS and 15,000 TZS for advertisements for 60 days have to be paid. If
there is an objection, the investor can enquire to the registrar the reasons for the
objection or apply for a hearing based on grounds for appeal.
Literary and artistic works are protected under the Copyright and Neighbouring
Rights Act of 1999.
WIPO
Tanzania is also member of the World Intellectual Property Organisation (WIPO)
and is bound to its treaty obligations.
5.8
Constitution of
Tanzania
Investment Protection and Dispute
Settlement
The constitution of Tanzania as fundamental law overriding all other legislation
guarantees in chapter 24 the right to own property and to protect it in accordance
with the law:
1) “Every person is entitled to own property, and has a right to the protection of his
property held in accordance with the law.
18
2) Subject to the provisions of sub-article (1), it shall be unlawful for any person to
be deprived of his property for the purposes of nationalisation or any other
purposes without the authority of law which makes provision for fair and
adequate compensation.”
19
Investment Act 1997
The Investment Act 1997 has also addressed this issue in Article 22 securing the
right to property and forbidding expropriation by the State unless acquisition is
effected with due process of law and with adequate and prompt compensation:
1) “Subject to subsection (2) and (3) of this sectiona) no business enterprise shall be nationalised or expropriated by the
Government, and
b) no person who owns, whether wholly or in part, the capital of any
business enterprise shall be compelled by law to cede his interest in
the capital to any other person.
2) There shall not be any acquisition, whether wholly or in part of a business
enterprise to which this Act applies by the State unless the acquisition is under
the due process of law which makes provision fora) payment of fair, adequate and prompt compensation, and
b) a right of access to the Court or a right to arbitration for the
determination of the investor's interest or right and the amount of
compensation to which he is entitled.
3) Any compensation payable under this section shall be paid promptly and
authorisation for its repatriation in convertible currency, where applicable, shall
be issued.”
International
standards for
expropriation
The four conditions for expropriation according to international best practices are
public interest, due process, non-discrimination and prompt, adequate and
effective compensation. Comparing them to the Tanzanian legislation, the
condition that compulsory acquisition will serve the public interest and the
guarantee of non-discrimination are absent. These two aspects could be added to
complete investment protection according to international standards.
Dispute Resolution
Section 23 of the Investment Act (1997) contains provisions for the settlement of
disputes between a foreign investor and the TIC or Government in respect of a
business enterprise. Disputes shall primarily tried to be settled through negotiation
for an amicable settlement. If that is not possible, any of the following approaches
shall be selected (Zanzibar has similar provisions):
 in accordance with arbitration laws of Tanzania for investors;
 in accordance with the rules of procedure for arbitration of the International
Centre for the Settlement of Investment Disputes;
 within the framework of any bilateral or multilateral agreement on investment
protection agreed to by the Government of the United Republic and the
Government of the Country the Investor originates.
Courts
A division of the High Court of Tanzania is dealing with mediation and arbitration of
disputes of a commercial nature. The Lands division is dealing with land matters,
and the Industrial Court of Tanzania, established as an independent court under
the Permanent Tribunal Act No. 41 of 1967, and amended by Act No. 3 of 1990, is
in charge of labour disputes.
In 2002, the courts were widely considered as being slow, inefficient and
influenced according to UNCTAD (2002). Since then, government had engaged
into several constitutional and legal reforms, also to upgrade and revitalize the
institutions at the basis of the legal system. Commercial courts have been
established to speed up commercial cases and the respective laws have been
reviewed to facilitate the costs of doing business. Improvements can be seen when
looking at the perception for enforcing contracts according to the World Bank Doing
Business Report 2010 which ranks Tanzania on position 31 out of 183 countries
and ahead of any other SADC country. An average of 462 days and 38 procedures
are required to enforce contracts.
20
Zanzibar Court
System
Zanzibar has its own legal system with the High Court of Zanzibar, Kadhi’s Court
(mainly dealing with Islamic religious matters), the Attorney General’s Chamber of
Zanzibar and the Magistrate’s Courts.
International
Conventions and
Agreements
Tanzania is member of the International Centre for the Settlement of Investment
Disputes (ICSID), and the Multilateral Investment Guarantee Agency (MIGA). It is,
furthermore, signatory to the Convention on the Recognition and Enforcement of
Foreign Arbitral Awards of 1958, entered into force in June 1959, and the Paris
Convention for the Protection of Industrial Property 1883, revised and amended in
1979 and signed by Tanzania in 1994.
5.9
International Agreements and
Obligations – Trade and other
Agreements, BITs, DTTs
EBA, AGOA
As LDC, Tanzania has EU market access under the Everything But Arms (EBA)
initiative and preferred access to the US market through the African Growth
Opportunities Act (AGOA).
Regional
Communities
Besides the membership in the SADC community, Tanzania is member of the East
African Community (EAC) together with Kenya, Uganda, Rwanda and Burundi.
EAC provides a market access to more than 120 million people only in that region.
MIE
Tanzania is furthermore signatory to the Charter on a Regime of Multinational
Industrial Enterprises MIEs) in the Preferential Trade Area for Eastern and
Southern African States.
Intellectual Property
and Investment
Protection
Agreements
As described before, Tanzania is a member of ICSID and MIGA, signatory to the
Convention on the Recognition and Enforcement of Foreign Arbitral Awards of
1958, the Paris Convention for the Protection of Industrial Property 1883, as well
as WIPO.
A list of Bilateral Investment Agreements and Double Taxation Treaties is provided
below.
6
SADC RELATED ISSUES
Tanzania is the only country of the EAC that is also member of SADC. Uganda and
Kenya are members of COMESA as well, but Tanzania withdrew officially from
COMESA in 2001. According to the Economist Intelligence Unit Ltd (2006),
Tanzania’s membership in SADC results from the fact that Tanzania feels to have
better trading opportunities in SADC.
Bilateral Investment
Treaties concluded
Bilateral Investment Treaties as of 1 June 2013
Partner Country
Date of signature
1
1
2
3
4
5
6
7
8
Canada
Denmark
Egypt
Finland
Germany
Italy
Jordan
Korea, Republic of
Mauritius
17-May-2013
22-Apr-99
30-Apr-97
19-Jun-01
30-Jan-65
21-Aug-01
08-Oct-09
18-Dec-98
04-May-09
Date of Entry into
force
21-Oct-05
30-Oct-02
12-Jul-68
25-Apr-03
-
21
9
10
11
12
13
14
Double Taxation
Agreements
Netherlands
South Africa
Sweden
Switzerland
United Kingdom
Zimbabwe
31-Jul-01
22-Sep-05
01-Sep-99
08-Apr-04
07-Jan-94
03-Jul-03
01-Apr-04
01-Mar-02
06-Apr-06
02-Aug-96
-
Double Taxation Agreements as of 1 June 2011
Partner Country
Type of Agreement
1
Canada
Income and Capital
2
Denmark
Income and Capital
3
Finland
Income and Capital
4
India
Income and Capital
5
Italy
Income and Capital
6
Norway
Income and Capital
7
South Africa
Income
8
South Africa
Income and Capital
9
Sweden
Income and Capital
10
Zambia
Income and Capital
Date of Signature
15-Dec-95
06-May-76
12-May-76
05-Sep-79
07-Mar-73
28-Apr-76
22-Sep-05
07-Dec-59
02-May-76
02-Mar-68
Sources included
EIU (2006) Tanzania Country Profile 2006
Government of Tanzania (2003) Trade Policy, National Trade Policy for a
competitive economy and export-led growth
Government of Tanzania (2013), Tanzania Investment Guide 2013.
Government of Tanzania (2005), National Strategy for Growth and Reduction of
Poverty (NSGRP), www.tanzania.go.tz
Government of Tanzania (2007) “National Strategy for the Formalisation of
Informal Businesses, MKURABITA, www.mkurabita.go.tz/index.php
Government of Tanzania,
www.tanzania.go.tz
The
Tanzania
Development
Vision
2025,
Government of Tanzania, Different legislation and regulations
Tanzania Investment Centre (2013), Information available on the website.
ICC (2005) An Investment Guide to Tanzania, opportunities and conditions, June
2005
PWC(2008) Tanzania, Doing Business Guide, January 2008
The revolutionary Government of Zanzibar, Different legislation
UNCTAD (2013), Investment Policy Review, The United Republic of Tanzania
UNCTAD (2005), Blue Book on Best Practice in Investment Promotion and
Facilitation, Tanzania
UNCTAD (2013), Bilateral Investment Treaties and Double Taxation Treaties,
http://www.unctad.org/Templates/Page.asp?intItemID=4505&lang=1
World Bank (2010, 2013),
www.doingbusiness.org/
Doing
Business
Report
2010
and
2013,
22