Breakthrough Attorneys - Business In Tanzania By A Foreign Investor about:reader?url=https://breakthroughattorneys.com/registering-a-busi...

breakthroughattorneys.com

Breakthrough Attorneys - Business In

Tanzania By A Foreign Investor
12-15 minutes

Forms of businesses that may be established in Tanzania by

foreigners

Pre-establishment compliance matters that should be complied

with before establishing a business

Post Compliance issues to be adhered to, after starting a

business

1.0  Introduction

In establishing a business in the United Republic of Tanzania by a

foreign investor, one needs to keep in mind, which forms of
business entity (vehicle) to establish. Also prior to establishing the
business vehicle one needs to be aware of the requirements for
establishing that business vehicle. Upon that business vehicle
being successfully established and operational, one will also need
to be aware of the compliance matters that follows registration of
the company.

This article from our Corporate Secretarial department at

Breakthrough Attorneys, gives a general practical overview of
the common business vehicles capable of being established by
foreigners in Tanzania as well as making a prospective foreign

1 of 9 20/04/2020, 21:27
Breakthrough Attorneys - Business In Tanzania By A Foreign Investor about:reader?url=https://breakthroughattorneys.com/registering-a-busi...

investor aware of the procedure to be followed to establish

various forms of business. Such an investor, through this article
will be aware of the general post-compliance matters upon the
business being operative.

2.0  Forms of businesses that may be established in

Tanzania

Generally, one can establish a business in Tanzania in form of an

individual (Sole Proprietorship), a partnership (or Firm), trust
or a limited company. This article focuses on establishing of
companies limited by shares and compliance matters emanating
from establishing a company limited by shares’ business in
Tanzania.

3.0 Pre-establishment compliance matters that

should be complied with before commencing
business

3.1 Establishing a local company

A foreign investor may opt to register a new limited liability

company (local company) or seek business existence of a foreign
company in Tanzania by establishing foreign company. Under the
Tanzanian Companies Act, Act. No. 12 of 2002 establishing a
new company in Tanzania requires making an application to the
Registrar of Companies at the Business Registration and
Licensing Authority (BRELA) to acquire a Certificate of
Incorporation. The company incorporated will be considered as
a local company. This company may be a company limited by

2 of 9 20/04/2020, 21:27
Breakthrough Attorneys - Business In Tanzania By A Foreign Investor about:reader?url=https://breakthroughattorneys.com/registering-a-busi...

shares or limited by guarantee with a share capital.

If the prospective investor does not wish to register a local

company but he or she or it has an already registered company
outside Tanzania but needs do business in Tanzania (to have
business existence) it may opt to apply for registration of a foreign
company in Tanzania. This registered foreign company can
operate as a branch of the foreign company which exists outside
Tanzania.

In order to be able to open up that foreign company branch, an

application for registration of a foreign company shall be made to
the Registrar of Companies at BRELA. If the Registrar approves
the application, a Certificate of Compliance will be issued to the
foreign company’s branch in Tanzania. (See more under item 3.3
below.)

3.2 Pre-establishment matters to consider for a local

company:

Prior to establishing a local entity in Tanzania one must have

ready the following matters;

3.2.1. Memorandum and Articles of association with company

objects and rules respectively

3.2.2. Total authorized capital, nominal share value, and initial

share allotment

3.2.3. Names of at least two directors that may act as first

directors of the company

3.2.4. Names of at least two shareholders

3.2.5. Local content consideration. There are certain

businesses which require Tanzanian shareholders like mining,
Broadcasting business, Telecommunication business

3 of 9 20/04/2020, 21:27
Breakthrough Attorneys - Business In Tanzania By A Foreign Investor about:reader?url=https://breakthroughattorneys.com/registering-a-busi...

3.2.6. At least 3 options of prospective company names for

clearance as most names may be unavailable and having options
in place may save a lot of time

3.2.7. Statutory declarations forms (14a and 14b) that are filed
parallel with the MEMARTs.

3.3 Pre-establishment matters for a foreign company (A

foreign company’s branch):

Prior to triggering an application to the Registrar of Companies for

a Certificate of Compliance, one should make the following
matters in order;

3.3.1 Should have one local (Tanzanian) representative of the

foreign company.
This local representative is mandatory for purpose of receiving
documents on behalf of the foreign company.

3.3.2 Translated Charter or Statute or Memorandum and

Articles of Association of the Foreign Company.
One of these documents are part of the requirements for an
application for a certificate of compliance. If at all any of these
documents are not in English the same must be translated into
English by a certified translator

3.3.3 Preparation of the latest Accounts or financial report

document regarding the foreign company.
The prospective investor who is desirous of acquiring a certificate
of compliance must make sure that the foreign company that
needs existence in Tanzania must have latest Accounts indicating
the financial status or condition of the company. If the same are
not in place, then the same must be prepared by certified auditors
of the company.

3.3.4 Place of business in Tanzania:

4 of 9 20/04/2020, 21:27
Breakthrough Attorneys - Business In Tanzania By A Foreign Investor about:reader?url=https://breakthroughattorneys.com/registering-a-busi...

The prospective investor should have detailed information of the

place at which the branch will be situated in Tanzania once the
Certificate of Compliance is acquired

4.0  General Post Compliance issues to be adhered

to after starting a business

This segment, will generally discuss on matters that must be

adhered to when the company (be it a local company or Foreign
company). These matters include (unexhaustively) the following:

4.1 Registration for Tax Identification Number (TIN)

certificate:

After registration of a local company or foreign company one

must make an application for TIN at the Tanzania Revenue
Authority (TRA). TIN is crucial for every type of business as
named in Clause 2.0 above. TIN certificate must be applied for an
entity and the individual who form part of the company such as
the shareholders or directors residing in Tanzania. If the
shareholder or director was already registered for TIN then there
is no need for registration for TIN again.

4.2 Acquiring a Tax Clearance Certificate:

It is mandatory that once a company is registered for TIN

certificate it should request for Tax Clearance Certificate from the
TRA offices where the TIN certificate was issued. This certificate
is of the essence as the same indicates that the Company do not
have any tax liability to TRA. This means that, one cannot be
issued with a Tax clearance certificate if they have not paid any
tax owed to TRA. The taxes which usually a newly established
company faces is the Stamp Duty and Withholding tax arising out
of a Lease Agreement for the Company’s new offices in Tanzania.

5 of 9 20/04/2020, 21:27
Breakthrough Attorneys - Business In Tanzania By A Foreign Investor about:reader?url=https://breakthroughattorneys.com/registering-a-busi...

The tax clearance is also crucial during the stage of an

application for a business license of a company as the license will
not be issued unless the company do not have tax liabilities to
TRA.

4.3 Application for Business license:

After obtaining TIN certificate one will be required to apply for

business license from the Trade office Municipal and the Ministry
of Trade and Industry depending on the type of business.
Business licenses of different varieties depending on the line of
business the company or investor needs to engage in. It is crucial
to identify the line of business one needs to venture as the same
will give a leeway on which Authority should one present the
application. There are certain kinds of business whose business
licenses are issued by the Ministry of Industries and Trade and
others issued by the Municipal Council of the District in which the
business office is situated.

It should also be noted that, there are business licenses that

require prior special licenses from other Ministries or government
Authorities for them to be issued. For example; manufacturing
license requires an industrial license before being issued, Import
or Exportation of oil lubricants needs a license from Energy and
Water Utilities Regulatory Authority (EWURA), Exportation of
canned fish or raw fish requires a license from the Tanzanian
Fishing Authority prior to its issuance; consultancy licenses which
require professional bodies recognition certificates first such as
Lawyers, Engineers etc.

Further, prior to issuance of a business license to an entity in

which a foreigner majority owns it the work and residence permits
are usually required. Short of that one may submit a Power of
Attorney and a temporary license may be issued instead. Thus, it

6 of 9 20/04/2020, 21:27
Breakthrough Attorneys - Business In Tanzania By A Foreign Investor about:reader?url=https://breakthroughattorneys.com/registering-a-busi...

is important to acquire a license for each line of business that one

needs to engage in.

4.4 Registration with Social Security Fund and Workers

Compensation Fund (WCF)

It should be noted that, it is mandatory for an entity to be

registered with a Social Security Fund in Tanzania. There are only
two Social Security Funds existing in Tanzania which are National
Social Security Fund (NSSF) and Public Service Social Security
Fund (PSSSF). Further, it is a mandatory requirement that the
investor with a business in Tanzania must register for Workers’
Compensation Fund (WCF). These registration are very crucial
as the same will need to be proved during applications for Work
permit for foreign employees or an investor and during other
matters like seeking business deals in expression of interest for
tenders and so forth.

4.5 Submission of Returns on employment of non-citizens at

the Ministry of Labour

If a company existing in Tanzania has employed foreign

employees (expats) then it is mandatorily required that the same
shall submit a Return of Non-Citizen employees to the Labour
Commissioner after every six months. This requirement is
pursuant to be submitted every 30th June and 31st December of
every year.

4.6 Submission of Tax Returns to the Tanzania Revenue

Authority (TRA)

A business entity doing business in Tanzania must file Income

Tax Returns within six months of every year of income. It should
be noted that, Income Tax Returns can only be accepted at TRA
if the entity has cleared the income tax assessed by TRA during
registration for TIN. This assessed tax is required to be paid

7 of 9 20/04/2020, 21:27
Breakthrough Attorneys - Business In Tanzania By A Foreign Investor about:reader?url=https://breakthroughattorneys.com/registering-a-busi...

every four months of the year (quarterly).

5.0  Conclusion:

The process of registration of a business in Tanzania, be it a

company, or Sole Proprietor business (business name) is
conducted via an Online Registration System (ORS). The
Corporate Secretarial department at Breakthrough Attorneys
has noted that in order to simplify the registration process, one
must prepare all information that is required prior to activating the
registration online. Initiating the process with incomplete
information may prolong and complicate the registration process.

The above compliance matters (in item 4.0) are of general nature
and are not exhaustive. Compliance issues differ depending on
the industry or line of business the entity or one is engaged in.
Further compliance issues may change pursuant to the
regulations or rules passed from time to time by government
institutions regulating certain matters or lines of business. In
essence, an aspiring investor/businessman who wishes to start a
business in Tanzania should also take note that there are other
permits and licenses which are sector-specific over and above
the ones mentioned hereto. Some are usually needed prior to the
business licensing (as expounded in item 4.3 above) and some
complementary to the business license. All in all, it is advised that
a new business ought to prudently map the sector/industry it is
keen to ply its trade in and understand fully, the permits and
licenses that are required for all aspects of its business to operate
smoothly and fully.

Important Notice:

8 of 9 20/04/2020, 21:27
Breakthrough Attorneys - Business In Tanzania By A Foreign Investor about:reader?url=https://breakthroughattorneys.com/registering-a-busi...

This publication has been prepared for general guidance on

matters of interest only, and does not constitute professional
advice. You should not act upon the information contained in this
publication without obtaining specific professional advice. No
representation or warranty (express or implied) is given as to the
accuracy or completeness of the information contained in this
publication, and, to the extent permitted by law, Breakthrough
Attorneys, its members, employees and agents do not accept or
assume any liability, responsibility or duty of care for any
consequences of you or anyone else acting, or refraining to act,
in reliance on the information contained in this publication or for
any decision based on it.

9 of 9 20/04/2020, 21:27