Doing Business In Comparative Guide

1 Legal framework

1.1 Does your jurisdiction have a civil law system, a common law system or a hybrid system?

Tanzania's legal system is an intricate blend of civil and common law traditions, reflecting the country's multifaceted legal heritage. At its core, the system is founded on the principles of common law, inherited from its period under British colonial rule. This influence is most apparent in the higher courts, where judicial decisions and precedents play a crucial role in shaping the law. The Court of Appeal, for instance, relies heavily on case law to resolve disputes, embodying the common law's characteristic reliance on judicial wisdom accumulated over time.

However, the Tanzanian legal framework also incorporates elements of the civil law system. It features codified statutes that govern civil matters, providing a comprehensive and written body of law that judges must apply to the cases before them. In this respect, the judiciary may assume a more investigative role, characteristic of civil law jurisdictions, to determine the facts and enforce the law accordingly.

Beyond these two primary legal systems, Tanzania also recognises the importance of customary and Islamic law, particularly in personal and family matters. These laws are especially prevalent in rural areas and among the Muslim population, adding another layer to the country's legal tapestry.

The result is a hybrid legal system that is both flexible and adaptable. It allows for the coexistence of statutory laws with judicial decisions, enabling the legal framework to address a wide array of legal challenges.

1.2 Which legislative and regulatory provisions primarily govern the establishment and operation of enterprises in your jurisdiction?

The legislative and regulatory provisions that primarily govern the establishment and operation of enterprises in Tanzania are as follows.

The principal statute is the Companies Act (Cap 212), which provides for the incorporation, management and dissolution of companies. Other key instruments include:

• the Business Names (Registration) Act (Cap 213 of the Laws of Tanzania);
• the Business Activities Registration Act (Cap 208), which outlines the procedures for the registration of business activities;
• the Local Government Urban and District Authorities Acts, which govern the role of local government authorities in the registration and regulation of businesses within their respective jurisdictions;
• the Tanzania Investment Act 2022, and the Tanzania Investment Regulations 2023; which provides for the promotion and facilitation of investment in Tanzania, outlining the benefits and incentives available to investors;
• the Income Tax Act (RE 2019), which outlines the taxes chargeable on business operations;
• the Tax Administration Act, and the Tax Administration (General) Regulations, 2016; which sets out the framework for tax administration and compliance;
• the Non-Citizens (Employment Regulation) Act, 2015, which regulate the employment of non-citizens;
• the Employment and Labour Relations (General) Regulations, 2017 which regulate employment and labour relations between employer and employee;
• the National Social Security Fund Act which outlines compulsory social security benefits;
• the Workers' Compensation Act which sets out a framework for compensation of employees injured at the workplace; and
• the Occupational Health and Safety Act, 2003 which outlines how companies should comply with occupational health and safety.

1.3 Which bodies are responsible for drafting and enforcing these provisions? What powers do they have?

In Tanzania, the legislative and regulatory framework for businesses is established and enforced by several key bodies, each with specific powers and responsibilities:

• Parliament: The primary legislative body responsible for enacting laws that govern business operations. It has the power to draft, debate and pass legislation that affects all sectors of the economy.
• Business Registrations and Licensing Agency (BRELA): Operating under the Ministry of Industry and Trade, BRELA is tasked with:
• • the registration of companies and business names;
  • industrial licensing; and
  • the protection of IP rights.
  • Issuance of Ministry related business licenses
• Local government authorities: These authorities, which include municipal and city councils, are responsible for:
• • issuing business permits; and
  • ensuring compliance with local bylaws and regulations.
• Tanzania Investment Centre (TIC): The TIC is the primary agency for promoting and facilitating investment. It provides assistance to investors in obtaining necessary permits and approvals.
• Tanzania Revenue Authority (TRA): The TRA administers tax laws and collects revenue on behalf of the government. It ensures that businesses comply with their tax obligations.
• National Social Security Fund (NSSF): The NSSF manages social security schemes covering all employed persons in the private sector, including expatriates who have been granted work permits.
• Workers Compensation Fund (WCF): The WCF provides compensation for workers who suffer occupational injuries or diseases arising from and in the course of their employment.
• Fire and Rescue Force: This is responsible for conducting fire safety inspections and issuing fire safety certificates to businesses in order to ensure compliance with fire safety regulations.
• Occupational Safety and Health Authority (OSHA): The OSHA is responsible for ensuring workplace safety and health standards.

2 Types of business structures

2.1 What are the main types of business structures in your jurisdiction and what are their key features?

The main types of business structures in Tanzania include:

• sole proprietorships;
• partnerships;
• joint ventures;
• corporate-owned businesses; and
• companies.

The key features of each business structure are as follows:

• Sole proprietorships are solely owned entities, in which one person has ultimate control and makes all the decisions. The business survives as long as the individual or owner maintains it.
• Partnerships may be established by two or more parties that come together for a particular purpose or business. They are governed by:
• • the Law of Contract Act; and
  • usually, the provisions of the partnership deed, which specifies how the parties should relate to each other.
• Joint ventures are another form of business registered in Tanzania under the Business Names Act, in which two companies join together for a specific purpose – for example, implementing a specific tender or assignment – and dissolve it once this has been achieved.
• Corporate-owned businesses are businesses set up by existing companies that sell different products and businesses through the same entity.
• Companies are entities governed by a board of directors and are:
• • of different types – private, public and foreign; and
  • with different limits, some by guarantee and some by liability.
• The shareholders own the company's interest, while the directors manage the day-to-day affairs of the company.

2.2 What capital requirements apply to these different types of business structures?

The following capital requirements apply to business structures in Tanzania;

• Sole proprietorships: There are no specific capital requirements under the Business Names Act to set up such a business structure. However, payment of all applicable registration fees and taxes as stipulated under the law is required.
• Partnerships: Partnerships are subject to no capital requirements under the law. However, parties can stipulate their capital needs in the partnership deed and have this registered with the registrar of titles.
• Corporate-owned businesses: There are no capital requirements under the law to establish such businesses. All capital requirements are met through the registering corporate entity, which must meet the necessary capital requirements in order to be registered.
• Companies: Any sum may be used to establish a corporation as its authorised share capital, provided that it meets the general minimum capital requirement of at least TZS 20,000. Special share capital requirements apply in several industries, such as the banking, insurance and financial sectors, as outlined in the applicable legislation.
• Joint ventures: Joint ventures are not subject to any capital requirements under the law. However, parties can stipulate their capital needs in the joint venture deed and have this registered with the registrar of titles.

2.3 What is the process for establishing these different types of business structures? What procedural and substantive requirements apply in this regard? What is the typical timeline for their establishment?

The process is typically the same and is done online through the Business Registration and Licensing Agency.

The process involves:

• selection of the business name;
• collection of all necessary details, such as identification and addresses; and
• the uploading of this information onto the agency's servers.

The documents are reviewed by the agency and, if approved, the structure will be registered.

The next stage is tax registration, where the business structure is registered in the centralised government system and starts paying general taxes such as income tax and rental taxes.

The final stage involves obtaining permits and licences. Depending on the business, licences are requested from a centralised system which is online and easily accessible, separate from local government and ministry-issued licences.

Substantively, all documentation should be correct and certified by qualified attorneys. All certificates for registration should also be stored properly, as they must be displayed at the place of work.

The business cannot commence operations until all licensing processes have been finalised and all requisite permits have been received.

The timelines for this process will depend on the type of structure:

• Sole proprietorships, partnerships and ventures take less time to register – approximately two to four weeks.
• Registration of companies may take four to six weeks, depending on any permit requirements – companies in the mining, construction and banking sectors may take longer to process.

2.4 What requirements and restrictions apply to foreign players that wish to establish a business directly in your jurisdiction?

• Requirements:
• • Foreign players must have the necessary identification documents, such as passports, in order to register their companies. They may also have to appoint local agents through a power of attorney in order to process some of the initial documentation, depending on the stage of registration they are at. Directors and shareholders need not be physically present, but all liabilities that occur under their business name will accrue to them.
  • Foreign players who will supervise the company operations directly must also process applicable work and residence permits as soon as they finish the licensing process.
• Restrictions:
• • Sector-specific limitations: Certain sectors – such as telecommunications, energy and financial services – may have additional restrictions or require local participation.
  • Land ownership: Foreigners cannot own land outright; they can only acquire rights of occupancy or leasehold interests through the Tanzania Investment Centre.
  • Employment of foreign nationals: There are restrictions on the employment of foreign nationals, including quotas and the need for local understudies in some cases. All foreigners working in Tanzania must have the requisite residence and work permits.
• Banking restrictions: Foreigners cannot operate business bank accounts without the requisite residence and work permits. Sector regulated businesses e.g., banking must have relevant permits before being allowed to operate bank accounts.

2.5 What other opportunities, using people/entities not connected with the main person, are there to do business in your jurisdiction (eg, agency, resale); and what requirements and restrictions apply in this regard?

Other opportunities include the following:

• Foreign companies may enter into joint ventures with Tanzanian companies for the implementation of projects. The applicable requirements and restrictions will depend on the terms of the joint venture agreement between the parties.
• Business can also be done by appointing a third party to conduct transactions through nominee shareholders appointed by the beneficial owners of the company (agency). However, new limitations have been introduced in this regard in order to combat illegal practices committed using agents as a cover.
• Franchises can also be established; in which case the applicable restrictions will depend on the terms of the franchise agreement.

3 Directors and management

3.1 How is management typically organised in the different types of business structures in your jurisdiction?

The management of companies is typically organised differently, based on the business structure involved:

• Sole proprietorships are managed by the individual who owns and operates the business. All decisions are made by him or her up until the conclusion of the lifetime of the business.
• Partnerships are managed on the basis of the partnership deed and primarily by the partners who established the partnership. The structure may allow a specific partner to make decisions while the other funds the operations, depending on the context of the partnership deed.
• Companies are managed by the board of directors, which manages the day-to-day operations. Decisions are passed by board resolutions sealed by the directors and authenticated by the approving board.
• Joint ventures are managed by the parties appointed to do so by the joint venture agreement. Decision are made in accordance with the terms of the governing agreement for the lifetime of the joint venture.

3.2 Is the establishment of specialist committees recommended or mandated for certain types of enterprises? If so, which areas should they cover?

In Tanzania, the establishment of specialist committees is recommended for certain types of enterprises, particularly in the public sector. For example, audit committees are required in public institutions in line with:

• Regulation 30 of the Public Finance Regulations 2001; and
• Order 12 of the Local Authority Financial Memorandum 2009.

These committees are essential to ensure accountability and transparency in financial management.

3.3 Is the appointment of corporate directors permitted in your jurisdiction?

Tanzanian law allows for the appointment of corporate directors. The Companies Act (12/2002) provides the legal framework for the appointment and responsibilities of directors, including corporate directors. Directors can be appointed on formation of a company and can be removed by the shareholders through the shareholders' meeting.

3.4 What requirements and restrictions apply to the appointment of directors, in terms of factors such as number, residence, independence, diversity etc?

• Requirements:
• • Appointed directors must consent to their appointment in writing, which must be signed and delivered to the registrar.
  • Appointed directors must meet the age requirements (21-70) and they should not be undischarged bankrupts.
  • A foreign director must have a valid residence and work permit or certificate of exemption.
  • The Companies Act requires companies to have at least two directors.
  • Directors must act in good faith and in the best interests of the company. They must apply their powers not for personal benefit but for the proper purpose of the company.
• Restrictions:
• • Persons aged 70 and above cannot serve as directors.
  • Undischarged bankrupts cannot serve as directors without an order from the court.

3.5 How are directors selected, appointed and removed? Do any restrictions or recommendations apply to their tenure?

Directors are typically appointed by the shareholders at the shareholders' meeting. The appointments are based on the following attributes:

• professional qualifications;
• experience;
• skills; and
• knowledge.

Directors of public companies are selected by vote and by the passing of an independent resolution authorising their appointment.

Directors may be removed at any time by the passing of an ordinary resolution approving the same, regardless of anything in the company articles or in any agreement with the directors.

3.6 What are the directors' primary roles and responsibilities, and how are these exercised?

In Tanzania, the role of directors under the Companies Act is multifaceted and encompasses significant responsibilities. Directors are tasked with the stewardship of the company and their duties are set out in detail to ensure that they act in the best interests of the company, shareholders and employees.

Key aspects of their role include the following:

• Acting in good faith: Directors must act honestly and in good faith in the best interests of the company.
• Due care and diligence: Directors must exercise due care, skill and diligence in their actions. This means that they should be well informed about the company's affairs and make decisions with a reasonable level of expertise.
• Management of company affairs: The board of directors has the authority to manage or direct the management of the business and affairs of the company.
• Liabilities: Directors can be held liable for actions taken by the company if they:
• • are found to have breached their duties; or
  • have been involved in fraudulent activities or trading while the company is insolvent.
• Corporate veil: In certain circumstances, the courts may lift the corporate veil to hold directors personally liable, especially if they have used the company to avoid legal obligations or for improper conduct.

The Companies Act sets a high standard for directors to ensure that they act with integrity and in the best interests of the company and its stakeholders. It is crucial for directors to be aware of these responsibilities and to conduct themselves accordingly to maintain the trust placed in them by the shareholders and the broader community.

3.7 Are the roles of individual directors restricted? Is this common in practice?

The roles of directors are governed by the specified memorandum and articles of the company. They are usually formulated freely and in no specific manner, as long as they do not contravene the provisions of the Companies Act.

3.8 What are the legal duties of individual directors? To whom are these duties owed?

The directors owe duties to the shareholders of the company, which are specified in the terms of their appointment or contract, if any.

3.9 To what civil and criminal liabilities are individual directors primarily potentially subject?

Directors are mostly liable for the criminal liabilities of the company, as long as they were responsible for such acts. As the directors constitute the limbs of a company, any act done by the company is presumed to be done by the directors.

In terms of civil liability, a director may be imprisoned as a civil prisoner or ordered to pay fines if the company is unable to pay its debts.

4 Shareholders/members

4.1 What requirements and restrictions apply to shareholders/members in your jurisdiction, in terms of factors such as age, bankruptcy status etc?

Requirements and restrictions:

• Shareholders must be at least 21 years old.
• They must subscribe to the articles of association and contribute to the company's capital.
• Shareholders can be individuals, companies or a mixture of both.
• A private company needs at least two shareholders, while a public company needs more than 50 shareholders.

4.2 What rights do shareholders/members enjoy with regard to the company in which they have invested?

• To be paid dividends;
• To make decisions relating to company operations; and
• To vote based on the type of shares, whether preferential or ordinary.

4.3 How do shareholders/members exercise these rights? Do they have a right to call shareholders' meetings and, if so, in what circumstances?

Shareholders exercise their rights through voting rights exercised at company meetings.

In Tanzania, shareholders can call meetings under the following circumstances:

• To elect directors: Shareholders may call a meeting to elect directors as required by law or the company's memorandum.
• To appoint auditors: A meeting can be convened to appoint auditors and the audit committee.
• To discuss financial statements: Shareholders have the right to discuss and approve the company's financial statements.
• To address shareholder concerns: Meetings can be called to address any concerns or issues raised by shareholders.
• To vote on proposals: Any proposal that requires shareholder approval, such as amendments to the memorandum or changes to the company's constitution, can be put to a vote at a shareholders' meeting.

4.4 What influence can shareholders/members exert on the appointment and operations of the directors?

Directors supervise the day-to-day operations but shareholders own the overall interest.

Shareholders influence the appointment of directors by consenting to their appointment and deciding on their qualifications. Shareholders can authorise the termination of directors and can grant them a mandate or limit their operations.

Shareholders can influence operations by making overall decisions on:

• the operations of the company, including finances and day-to-day matters; and
• the directors' use of the capital they have invested in operating the business.

4.5 What are the legal duties/responsibilities and potential liabilities, if any, of shareholders/members?

In Tanzania, shareholders have certain legal duties and responsibilities, as well as potential liabilities. Here is a comprehensive overview:

• Legal duties and responsibilities:
• • Fiduciary duty: Shareholders have a fiduciary duty to act in the best interests of the company and its stakeholders.
  • Compliance with laws: Shareholders must ensure that the company complies with all relevant laws and regulations.
  • Voting rights: Shareholders have the right to vote on important company matters, such as the election of directors and the approval of financial statements.
  • Share transfer: Shareholders are responsible for following proper procedures when transferring shares, including notifying the registrar of companies.
• Potential liabilities:
• • Personal liability: Generally, shareholders are not personally liable for the company's debts due to the corporate veil. However, this protection can be lifted in case of fraud or wrongful trading.
  • Legal action: Shareholders may face legal action if they breach their fiduciary duties or engage in activities that harm the company.

4.6 To what civil and criminal liabilities might individual shareholders/members be subject?

Generally, shareholders are not personally liable for the company's liabilities due to the corporate veil. However, there are instances where the veil may be lifted if directors or members:

• seek to avoid legal obligations; or
• engage improper conduct in the name of the company.

4.7 Are there rules governing the issuance of further securities in a company? Do rights of pre-emption exist and, if so, how do they operate? Can they be circumvented? If so, how and to what extent?

The Companies Act stipulates several provisions regarding the issuance of further securities. According to the Companies Act, companies must adhere to specific rules when issuing new shares or securities. These rules include the following:

• Authorisation: Companies must obtain authorisation from their shareholders before issuing new shares. This is typically done through a resolution passed by the shareholders.
• Capitalisation: The act allows for capitalisation, which is the process of applying profits to pay for unissued shares in proportion to the current holdings of members as fully paid or partly paid bonus shares.
• Rights issue: In the event of a rights issue, existing shareholders are given the first opportunity to purchase new shares at a subscription price lower than the market value of the outstanding shares.

The Companies Act also requires that any application for the issue of new shares be lodged with the Capital Markets and Securities Authority (CMSA) at least three weeks prior to the date of closure of the books. The CMSA may impose conditions for the protection of existing shareholders and potential investors.

4.8 Are there any rules on the public disclosure of levels of shareholding and/or stake building?

There are no specific rules requiring public disclosure of shareholding levels in Tanzania. However, beneficial ownership rules apply to both private and public companies, with certain exemptions, which require companies to register their beneficial owners with the registrar of companies as per the Companies (Beneficial Ownership) Regulations 2021.

5 Operations

5.1 What are the main routes for obtaining working capital in your jurisdiction? What are the advantages and disadvantages of each?

In Tanzania, businesses have several routes to obtain working capital, each with its own advantages and disadvantages.

Equity financing:

• Advantages:
• • No obligation to repay investors.
  • No interest payments, which can be beneficial for startups or businesses with irregular cash flow.
• Disadvantages:
• • Dilution of ownership and control.
  • Dividend payments are not tax deductible.

Debt financing:

• Advantages:
• • Interest payments are tax deductible.
  • Retention of full ownership and control over the business.
• Disadvantages:
• • Obligation to repay the principal and interest, regardless of business performance.
  • Can be difficult to obtain without an established credit history or collateral.

Trade credit:

• Advantages:
• • Allows businesses to receive goods or services and pay for them later.
  • Can improve cash-flow management.
• Disadvantages:
• • May come with high interest rates if payments are delayed.
  • Could affect relationships with suppliers if payments are not made on time.

Bank overdrafts:

• Advantages:
• • Flexible borrowing option that allows businesses to cover short-term cash shortfalls.
  • Interest is only paid on the overdrawn amount.
• Disadvantages:
• • Higher interest rates compared to other forms of debt.
  • Banks can demand repayment at any time.

Asset-based lending:

• Advantages:
• • Access to funds based on the value of the business's assets.
  • Can be a good option for businesses with significant physical assets.
• Disadvantages:
• • Risk of losing assets if the loan cannot be repaid.
  • The amount of funding is limited to a percentage of the asset's value.

Each of these routes has its own implications for a business's financial structure and strategy. It is important for businesses – especially those in growth phases, such as startups – to carefully consider their options and choose the one that best aligns with their financial goals and capabilities.

5.2 What are the main routes for the return of proceeds in your jurisdiction? What are the advantages and disadvantages of each?

Direct reinvestment: Businesses may choose to reinvest their profits directly back into the company's operations to fund growth and expansion initiatives.

• Advantages: Potential for higher future returns; supports business sustainability.
• Disadvantages: No immediate increase in liquidity; reinvestment risks tied to business performance.

Dividends: Companies can distribute a portion of their profits to shareholders as dividends.

• Advantages: Direct reward to investors; signals company's profitability.
• Disadvantages: Reduces funds available for reinvestment; taxable for recipients.

Loan repayments: Paying down debt can be a prudent way to use excess proceeds.

• Advantages: Reduces interest costs and financial risk; improves balance-sheet health.
• Disadvantages: Reduces cash reserves; potential pre-payment penalties.

Capital reduction: Reducing the company's issued share capital is another method to return funds to shareholders.

• Advantages: Can return surplus capital; may improve return on equity.
• Disadvantages: Shrinks the company's equity base; subject to regulatory approval and can be complex.

Sale of assets: Liquidating non-core or underperforming assets can free up capital.

• Advantages: Immediate cash inflow; can improve operational efficiency.
• Disadvantages: Potential loss on sale; may signal financial distress.

Tax credits and incentives: Utilising tax credits and incentives can effectively reduce tax liabilities.

• Advantages: Lowers effective tax rate; encourages certain investments.
• Disadvantages: Often subject to strict eligibility criteria; may not provide immediate cash benefits.

Repatriation of profits: Multinational companies may repatriate profits to their home country.

• Advantages: Consolidates global profits; may benefit from tax treaties.
• Disadvantages: Subject to withholding taxes; complex regulatory requirements.

Proceeds of Crime Act: The Proceeds of Crime Act provides mechanisms for the return of proceeds from criminal activities to the state.

• Advantages: Deters crime by removing financial incentives; allows for asset recovery.
• Disadvantages: Legal complexities in asset seizure and forfeiture; potential for lengthy legal proceedings.

Tax Administration Regulations: The Tax Administration Regulations, 2020 offer provisions for the remission of interest and penalties on overdue tax liabilities.

• Advantages: Provides relief for compliant taxpayers; encourages voluntary disclosure of tax liabilities.
• Disadvantages: Excludes certain categories of interest and penalties; eligibility criteria must be met.

Each route for the return of proceeds has strategic implications and must be chosen based on the company's financial goals, regulatory environment and market conditions.

5.3 What requirements and restrictions apply to foreign direct investment in your jurisdiction?

In Tanzania, foreign direct investment (FDI) is governed by the Foreign Exchange Regulations 2022. These regulations define 'FDI' as an investment made by:

• a non-resident to acquire a lasting interest in an enterprise within Tanzania; or
• a resident to acquire a lasting interest in an enterprise outside Tanzania.

This interest must give the investor control or significant influence over the management of the enterprise.

Requirements for FDI in Tanzania include the following:

• Company incorporation/registration: To engage in business activities, foreign investors must either:
• • set up a new company in Tanzania; or
  • acquire shares in an existing Tanzanian company.
• Sector-specific requirements: Different industries have unique requirements regarding minimum capital, share acquisition and local content. For example, the mining sector requires companies to submit local content plans demonstrating the transfer of knowledge and technology to local communities.
• Permits and licences: Foreign investors must obtain the necessary permits and licences to operate within the country. These include work and residence permits, as well as industry-specific permits, such as those from the mining commission or the Tanzania Communications Regulatory Authority.
• Investment incentives: To access incentives such as tax exemptions and import duty reductions, foreign investors must register under the Tanzanian Investment Act and meet a minimum investment capital threshold of $500,000.
• Tax compliance: Investors must pay all relevant taxes associated with foreign investment, including taxes on dividends and other capital contributions.
• Financial reporting: Investors must submit financial information to the relevant authorities and comply with reporting obligations, such as declaring dividends and losses to the tax authorities.
• Record keeping: All transactions related to foreign investments must be accurately reported and documented to ensure compliance with regulations.

Restrictions on FDI in Tanzania include the following:

• Land ownership: Foreigners are restricted from owning land directly; they can only acquire land under a derivative title granted by the Tanzania Investment Centre.
• Foreign currency transactions: Residents cannot open or maintain foreign bank accounts without approval from the governor of the Bank of Tanzania. Additionally, foreign loans exceeding a tenure of 365 days must be registered with the Bank of Tanzania.

5.4 What exchange control requirements apply in your jurisdiction?

The following exchange control requirements apply in Tanzania:

• Tanzanian residents are restricted from:
• • engaging in outward portfolio investment:
  • acquiring real estate;
  • engaging in outward direct investment outside the East Africa Community (EAC) and the South Africa Development Community (SADC); and
  • lending to non-residents as per the Foreign Exchange Regulations 2022.
• Residents and non-residents can hold, sell and purchase foreign currency only from authorised dealers within Tanzania. An exception is for accounts within prescribed territories for the purposes of settlement of securities held within EAC and SADC countries.

5.5 What role do stakeholders such as employees, pensioners, creditors, customers and suppliers play in shaping business operations in your jurisdiction? What other influence can they exert on an enterprise?

Stakeholders such as employees, pensioners, creditors, customers and suppliers influence business operations in the following ways:

• Employees participate in corporate governance and decision-making processes. They provide labour, competence and experience. They also interact with customers and develop key relationships.
• Creditors enhance finances by ensuring that there is access to capital and financing solutions, both short term and long term, which enhance business and encourage investment.
• Suppliers and customers enhance business transactions locally and influence the export and import of goods, which also significantly affects the trading industry, thus:
• • contributing to revenue generation;
  • enhancing job opportunities; and
  • increasing per-capita revenue.
• Pensioners contribute to business operations by acting as:
• • mentors in business operations;
  • sources of capital; and
  • sound business advisers.
• Customers make contributions by providing a stable market for those in the production sector and consuming goods.

Other institutions also vital to business operations include:

• government agencies, which provide monitoring, support and security and maintain a calm business environment;
• the media; and
• digital promoters.

5.6 What key concerns and considerations should be borne in mind with regard to general business operations in your jurisdiction?

General business operations concerns:

• Regulatory compliance: It is vital to comply with local laws by:
• • registering your business;
  • obtaining all permits and licences;
  • complying with all financial governance rules, such as proper know-your-customer procedures and due diligence processes; and
  • cooperating with local law enforcement.
• Corporate governance: Businesses must maintain transparency by:
• • filing and paying all relevant taxes;
  • maintaining active records of operations; and
  • filing reports with the respective authorities.
• Sector-specific requirements: These must also be complied with to ensure that the business is legally operated, including by:
• • filing local content reports; and
  • fulfilling all stipulations with regard to share composition.
• Anti-money laundering:
• • Strict policies should be set up to govern financial crime and all forms of money laundering. These policies should be reviewed frequently to ensure that they are up to date and compliant.
  • Due diligence on customers should be conducted to ensure that businesses are aware of who they are transacting with and, if possible, their source of funds, in order to comply with anti-money laundering laws and obligations.
  • Suspicious transactions must also be reported to the Financial Intelligence Unit whenever they occur.
• Work permits: Foreigners must have all relevant work and residence permits to work in Tanzania; working without them is an offence punishable by law.

6 Accounting reporting

6.1 What primary accounting reporting obligations apply in your jurisdiction?

In Tanzania, entities must prepare financial statements that comply with International Financial Reporting Standards (IFRS), which were adopted in July 2004. These standards aim to improve reporting practices, transparency and disclosures by reporting entities. The primary obligations include:

• preparing annual financial statements;
• ensuring accurate representation of financial positions and performance; and
• disclosing material information for stakeholders' decision making.

6.2 What role do the directors play in this regard?

Directors play a crucial role in the governance of accounting reporting. They are responsible for:

• ensuring that the company's financial statements are prepared in accordance with IFRS and other applicable regulations;
• overseeing the company's internal control systems; and
• approving financial statements before they are issued.

6.3 What role do accountants and auditors play in this regard?

Accountants and auditors are instrumental in the accounting reporting process. Their roles include:

• assisting in the preparation and presentation of financial statements;
• ensuring compliance with accounting standards and regulatory requirements; and
• conducting audits to provide assurance that financial statements are free from material misstatement.

6.4 What key concerns and considerations should be borne in mind with regard to accounting reporting in your jurisdiction?

When dealing with accounting reporting in Tanzania, several concerns should be considered, including:

• adhering to the continuously evolving IFRS;
• maintaining high-quality financial reporting to satisfy regulatory requirements and stakeholder expectations; and
• ensuring that the financial statements provide a true and fair view of the company's financial health.

7 Executive performance and compensation

7.1 How is executive compensation regulated in your jurisdiction?

In Tanzania, there is no statutory cap or specific structure for executive compensation. However, companies listed on the Dar es Salaam Stock Exchange must adhere to the Guidelines on Corporate Governance Practices by Public Listed Companies in Tanzania. These guidelines require the disclosure of remuneration policies, including incentives for the board and senior management

7.2 How is executive compensation determined? Do any disclosure requirements apply?

Executive compensation is typically determined by the board of directors and should be sufficient to attract and retain talent. It must be approved by shareholders and disclosed annually, especially for public listed companies

7.3 How is executive performance monitored and managed?

Executive performance is monitored by:

• regularly evaluating performance;
• producing monitoring and evaluation reports to assess contributions to organisational effectiveness; and
• setting performance targets aligned with the company's strategic objectives.

7.4 What key concerns and considerations should be borne in mind with regard to executive performance and compensation in your jurisdiction?

Key considerations include:

• aligning compensation with long-term company performance and shareholder interests;
• ensuring transparency and accountability in compensation determination and disclosure; and
• balancing the need to attract top talent with shareholder expectations.

8 Employment

8.1 What is the applicable employment regime in your jurisdiction and what are its key features?

Tanzania employment regime is governed by numerous laws and regulations as follows:

• the Constitution,1970 as amended from time to time;
• the Employment and Labour Relations Act (16/2004);
• the Labour Institution Act;
• the Employment and Labour Relation (Code of Good Practice) Rules;
• the Non-citizens (Employment Regulation) Act, 2015;
• the Public Services Act;
• the Public Service Regulation; and
• the Labour Institution Wage Order (GN 196/2013).

In Tanzania, employment is simply an agreement between an employer and an employee that the employee will provide certain services. In return, the employee is paid a salary or hourly wage. Although employees can negotiate certain items in an employment agreement, the terms and conditions are primarily determined by the employer.

Key features of the Tanzanian employment regime include the following:

• Work standards: Working conditions include, among others:
• • working hours;
  • health and safety regulations; and
  • leave entitlement.
• Employment contracts: Employers must provide contracts with clear terms and conditions as well as job descriptions, plus stipulations as to termination.
• Protection of employees: The laws protect workers from exploitation and unfair treatment by their employer.
• Dispute resolution: The regime provides mechanisms for resolving disputes between employers and employees through mediation and arbitration.
• Employment of foreigners or non-citizens: The Non-Citizens (Employment Regulation) Act, 2015 controls the employment of non-citizens, requiring work permits and setting out conditions for their employment.
• Leave: Employers should ensure that employees are provided with paid leave, including:
• • annual leave;
  • sick leave; and
  • maternity and paternity leave.

8.2 Are trade unions or other types of employee representation recognised in your jurisdiction?

Trade unions are recognised in Tanzania.

The Employment and Labour Relations Act (6/2004) governs trade unions and collective bargaining and gives employees the right to join unions in order to protect their rights. The activities of trade unions include:

• promoting and maintaining industrial harmony, such as representing members in negotiations and collective bargaining;
• representing their members in dispute settlement before commissions for mediation and in any other forum where necessary; and
• protecting workers' interests.

The trade unions in Tanzania include:

• the Tanzania Teachers Union;
• the Tanzania Union of Industrial and Commercial Workers Union;
• the Researchers, Academicians and Allied Workers Union;
• the Tanzania Local Government Workers Union; and
• the Tanzania Mines and Construction Workers Union.

8.3 How are dismissals, both individual and collective, governed in your jurisdiction? What is the process for effecting dismissals?

In Tanzania, dismissal is governed by the following laws:

• the Employment and Labour Relations Act;
• the Labour Institution Act;
• the Employment and Labour Relations (Code of Good Practice) Rules;
• the Non-Citizens (Employment Regulation) Act, 2015;
• the Public Services Act; and
• the Public Service Regulation.

The Employment and Labour Relations Act governs individual dismissal and collective dismissal, setting out the procedures that the organisation or employers should follow when conducting dismissals:

• Individual dismissals: The employment contract governs individual terminations or dismissals, which should be in line with the applicable laws, which are:
• • the law of contract; and
  • the Employment and Labour Relations Act as the principal act concerning dismissals, which sets out the procedures to be followed.
• Dismissal is done based on contract terms but also according to laws and regulations which provide for situations such as:
• • misconduct;
  • absenteeism;
  • sickness; and
  • a breakdown in the employer-employee relationship.
• The law provides that there must be just cause for dismissal after a thorough investigation of poor performance or any kind of misconduct. The employee must be granted the right to be heard after this investigation. A written notice of termination must also be issued stating the reasons for dismissal; and all compensation or benefits entitled to the employee must be paid upon dismissal.
• Collective dismissals: Under the Employment and Labour Relations Act, collective dismissal is discussed in terms of retrenchment or in terms of redundancy and reorganisation. For this procedure to be effective, the law requires that the employer follow all procedures necessary to ensure a fair process.

8.4 How can specialist talent be attracted from overseas where necessary?

Specialist talent can be attracted through the work permit regime, which sets a quota for the employment of non-citizens. The issuance of work permits is restricted to two categories:

• Class A (issued to investors and self-employed non-citizens); and
• Class B (issued to non-citizens other than those that qualify for Class A).

Where an exception arises, a ministerial exemption by way of an exemption certificate will be issued.

A work permit is valid for two years from the date of issue and may be renewed, although the total period of validity cannot exceed five years. A work permit issued to an investor who has contributed to the economy or the wellbeing of Tanzania may be extended to exceed 10 years subject to the labour commissioner's discretion .

Investors granted incentives under the Tanzania Investment Act, the Special Economic Zones Act or the Export Processing Zones Act will continue to be entitled to an initial automatic immigrant quota of five persons and potentially additional persons.

Employers must:

• prepare a succession plan and a training programme to demonstrate their commitment to preparing local employees to undertake the duties of non-citizen experts; and
• submit to the labour commissioner annual non-citizen returns.

8.5 What key concerns and considerations should be borne in mind with regard to employment in your jurisdiction?

• Labour laws: Familiarise yourself with the Employment and Labour Relations Act governing contracts, working hours, wages and working conditions.
• Work permits and visas: Non-citizens must obtain specific permits and visas.
• Taxation: Understand tax obligations, including income tax, social security contributions and other statutory deductions for both employers and employees.
• Job market: Assess the industry-specific job market and employment rates.
• Wages and benefits: Consider industry norms and the legal minimum wage (consider organisation salary scale).
• Cost of living: Evaluate regional cost of living impacts on salary and employee satisfaction.
• Cultural and social factors: Be considerate of differences in culture, religion or race. Discrimination is not permitted under Tanzanian employment laws, including in the recruitment process.
• Work culture: The local work culture emphasises hierarchy, respect for elders and collective decision-making.
• Language: Proficiency in Swahili, alongside English, can enhance communication.
• Diversity and inclusion: Promote an inclusive workplace that respects local customs and traditions.
• Workplace safety: Comply with the Occupational Health and Safety Act to ensure a safe working environment.
• Healthcare: Consider healthcare availability, particularly in remote areas, and the need for employer-provided health benefits, considering the requirements of the law on social security funds, workers' compensation funds and many others.
• Employee rights and relations: Understand and maintain good relations with labour unions; familiarise yourself with the mechanisms for resolving employment disputes, such as mediation, arbitration and the labour courts.
• Government initiatives: Stay informed about government programmes aimed at economic development and business incentives.
• Corporate social responsibility: Engage with local communities and contribute to social development to enhance company reputation and relations.
• Technology and infrastructure: Assess infrastructure, including transportation, telecommunications and utilities. Be aware of the workforce's technology adoption and digital literacy, impacting productivity and business processes.

In summary, employers in Tanzania should understand local laws, economic conditions, cultural nuances and infrastructure challenges to create a conducive and compliant work environment that benefits both the organisation and its employees.

9 Tax

9.1 What is the applicable tax regime in your jurisdiction and what are its key features?

The Tanzania mainland tax system has four major types of taxes:

• income taxes;
• value added tax (VAT);
• import duties; and
• excise duties.

The administrative organ for all taxes in Tanzania is the Tanzania Revenue Authority (TRA).

The tax regime in Tanzania is regulated by:

• the Tax Administration Act (Cap 438 RE 2019);
• the Tanzania Revenue Authority Act (Cap 399 RE 2019);
• the Income Tax Act (Cap 332 RE 2019);
• the VAT Act (Cap 148 RE 2019);
• the Finance Act, 2023;
• the Stamp Duty Act (Cap 189 RE 2019);
• the Customs (Management and Tariff) Act (Cap 403 RE 2019);
• the East African Community Customs Management (Amendment) Act, 2011; and
• the Tax Revenue Appeals Act (Cap 408 RE 2019).

Tanzania also has a number of tax dispute resolution organs, including:

• the Tax Revenue Tribunal;
• the Tax Revenue Appeals Board; and
• the Court of Appeal of Tanzania.

The TRA is the sole government organ vested with the power to collect, control and regulate all taxes (decentralised tax system).

9.2 What taxes apply to capital inflows and outflows?

The cash inflow taxes in Tanzania are:

• corporate tax;
• withholding tax; and
• VAT.

The cash outflow taxes are:

• transfer pricing;
• capital gains tax; and
• stamp duty.

9.3 What key exemptions and incentives are available to encourage enterprises to do business in your jurisdiction?

Key incentives vary depending on the specific sector and whether a specific ruling regime applies. For instance, the agricultural and foreign investment sectors enjoy a wide range of incentives in order to:

• support the agricultural sector;
• strengthen the backbone of the economy; and
• attract investors.

Other incentives are issued by the Tanzania Investment Centre, which offers deductions from import duty and VAT exemptions for investors that are registered with them for specific projects and have the requisite capital.

9.4 What key concerns and considerations should be borne in mind with regard to tax in your jurisdiction?

The Tanzanian tax regime appears strict and rigid to some, but flexible to others. This all depends on matters such as the availability of incentives and administrative directives. All in all, the tax regime has been designed to ensure the efficient collection of government revenue for subsequent utilisation in development activities and promotion of economic growth.

Taxes should be paid on the due dates; otherwise, penalties will accrue. All tax payments are made through a centralised online system and deposited directly into the Treasury in a bid to curb corrupt practices.

It is important to:

• familiarise yourself with the various types of taxes to ensure that you pay them on time and do not contravene the law;
• ensure that taxes are filed and financial statements are prepared when due, to avoid tax penalties; and
• issue invoices and electronic receipts for all sales transactions, to be on the safe side.

10 M&A

10.1 What provisions govern mergers and acquisitions in your jurisdiction and what are their key features?

Mergers and acquisitions are governed by:

• the Companies Act of 2002, which outlines the procedures for mergers, amalgamations and acquisitions, including the requirements for shareholder approval and the filing of necessary documents with the Business Registrations and Licensing Agency;
• the Fair Competition Act of 2003, which monitors M&A activity in order to safeguard consumer rights through procedures such as merger control and mandatory notification of transactions exceeding certain thresholds;
• the Capital Market and Securities Act of 1994, which regulates public companies and sets out rules and guidelines on takeovers, including:
• • mandatory offer requirements;
  • disclosure requirements; and
  • measures for the protection of minority shareholders; and
• the Income Tax Act of 2004 and the Stamp Duty Act, which provide – among other things – for:
• • the taxation of capital gains;
  • transfer pricing; and
  • the treatment of losses and allowances.

10.2 How are mergers and acquisitions regulated from a competition perspective in your jurisdiction?

The Fair Competition Act monitors M&A activity in order to safeguard consumer rights through procedures such as merger control and mandatory notification of transactions exceeding certain thresholds.

10.3 How are mergers and acquisitions regulated from an employment perspective in your jurisdiction?

The Employment and Labour Relations Act safeguards employee rights in case of a merger, acquisition or takeover. It ensures that procedures are duly complied with in case of retrenchment or the transfer of employment contracts from one employer to another.

10.4 What key concerns and considerations should be borne in mind with regard to M&A activity in your jurisdiction?

• Fair competition: Fair competition:
• • ensures that M&A activities do not create monopolies or reduce market competition;
  • protects consumer interests; and
  • maintains a healthy competitive environment.
• Financial capability: Assessing financial capability involves evaluating the acquiring company's ability to fund the transaction and the target's financial health to ensure a sustainable merger or acquisition.
• Employment rights: Employment rights focus on protecting employees' jobs, terms of employment and benefits during and after the M&A process, ensuring fair treatment and compliance with labour laws.
• Environmental, social and governance (ESG) considerations: ESG considerations in M&As involve evaluating the target's environmental impact, social responsibilities and governance practices to ensure alignment with the acquirer's ESG standards and goals.
• Tax implications: The tax consequences of the M&A transaction should be analysed – including potential liabilities, tax benefits and compliance with tax regulations – to optimise the transaction's financial outcome.
• Regulatory guidelines: Regulatory guidelines encompass adhering to legal requirements and obtaining necessary approvals from relevant authorities to ensure that the M&A transaction complies with national and sector-specific regulations.

11 Financial crime

11.1 What provisions govern money laundering and other forms of financial crime in your jurisdiction?

Legislation: In Tanzania, the legal framework addressing money laundering and financial crimes is comprehensive, encompassing various acts and regulations that work in tandem to prevent, detect and prosecute such offences.

The Anti-Money Laundering Act (Cap 423/2006) (AMLA), as amended, is the cornerstone of the anti-money laundering regime. Among other things, it:

• outlines the relevant offences;
• prescribes penalties; and
• establishes the Financial Intelligence Unit (FIU) for oversight and enforcement.

The AMLA is supported by the Anti-Money Laundering and Proceeds of Crime Act (10/2009) for Zanzibar, ensuring a unified approach across the nation.

The Proceeds of Crime Act targets the confiscation of assets derived from criminal activities. It criminalises the possession, transfer, concealment or disguise of property known to originate from crime, providing a legal basis for the seizure and forfeiture of such assets.

The Anti-Terrorism Act specifically addresses the financing of terrorism, prohibiting the provision of economic resources or services to individuals or entities involved in terrorist activities. It also includes measures for freezing and confiscating terrorist assets.

The broader Criminal Act encompasses a range of financial crimes, including fraud, embezzlement, bribery, corruption, theft and robbery. It lays down the legal procedures for the investigation and prosecution of these crimes.

Regulation: Regulations and guidelines further detail the practical measures required for compliance. These include:

• customer due diligence obligations;
• reporting obligations;
• record-keeping requirements;
• administrative sanctions for non-compliance;
• provisions for the protection of whistleblowers; and
• cross-border controls to monitor the movement of funds.

Enforcement and compliance: Enforcement is carried out by various governmental bodies, with the FIU playing a central role in analysing financial data relating to money laundering and terrorist financing. Compliance is ensured through a combination of administrative sanctions and legal protection for those who report suspicious activities.

This framework reflects Tanzania's commitment to combating financial crimes and aligning with international standards.

11.2 What key concerns and considerations should be borne in mind with regard to the prevention of financial crime in your jurisdiction?

The key concerns and considerations in relation to the prevention of financial crime in Tanzania include the following:

• Due diligence: Conduct due diligence to verify sources of wealth and sources of funds for partners and customers.
• Risk-based approach: Institutions should assess risks and apply a risk-based approach to prevent financial crime, including:
• • understanding the nature of risks; and
  • applying appropriate measures to mitigate them.
• Anti-money laundering policies: Institutions should develop and implement appropriate anti-money laundering policies.
• Reporting and monitoring: Financial institutions must adhere to strict reporting requirements and monitor transactions for suspicious activities as part of their compliance programmes.
• Know-your-customer requirements: Proper verification of customers' identities and understanding the nature of their business are crucial steps in preventing financial crime.
• Capacity building: Training and capacity building for staff in financial institutions should be provided on an ongoing basis to ensure that financial crimes are recognised and reported effectively.

It is also beneficial to keep abreast of the latest amendments and guidelines issued by the FIU and other regulatory bodies to ensure that all measures are up to date and effective in the fight against financial crime.

12 Audits and auditors

12.1 When is an audit required in your jurisdiction? What exemptions from the auditing requirements apply?

In Tanzania, an audit is required under the Tax Administration Act if the commissioner general of tax deems it necessary to ensure compliance with tax laws. The act empowers the commissioner general to audit or investigate a person's tax affairs considering factors such as:

• the person's history of compliance or non-compliance with the tax laws;
• the amount of tax payable by the person;
• the class of business or other activity conducted by the person; and
• any other matter considered relevant by the commissioner general for ensuring the collection of tax due.

The audit or investigation can be conducted under more than one tax law and is governed by:

• Section 45 of the Tax Administration Act (Cap 438); and
• the Tax Administration (General) Regulations, 2015.

The scope of audits can vary, including:

• comprehensive audits of all tax affairs;
• limited scope audits focusing on specific taxes; and
• single-issue audits targeting a particular area of potential non-compliance.

Exemptions from the auditing requirements are not explicitly mentioned in the legislation. Typically, however, exemptions may apply to:

• certain small taxpayers or businesses below a specified threshold of income or turnover; and
• entities that meet specific conditions set by the TRA.

12.2 What rules relate to the appointment, tenure and removal of auditors in your jurisdiction?

In accordance with the Companies Act, the rules for the appointment, tenure and removal of auditors are as follows:

• Appointment:
• • Auditors are appointed at the general meeting at which the accounts are presented and serve from the end of that meeting until the next one at which the accounts are presented.
  • The first auditors may be appointed by the directors before the first annual general meeting and will serve until its conclusion.
• Removal:
• • Auditors can be removed by ordinary resolution of the company at any time, despite any agreements in place.
  • Upon passing such a resolution, the company must notify the registrar of companies within 14 days or face penalties.
  • Auditors appointed under Section 170(5) of the Companies Act (first auditors) can be removed at a general meeting and replacements can be appointed if:
  • • they have been nominated by a company member; and
    • notice of this nomination was given at least 14 days before the meeting.

12.3 Are there any rules or recommendations that limit the scope of services as regards the provision of non-audit services by an auditor?

Yes, Tanzanian law has specific rules and recommendations that restrict the provision of non-audit services by auditors. According to the Accountants and Auditors (Practising) By-Laws, 2023, there are several restrictions and conditions laid out for auditors and audit firms, made under the Accountants and Auditors (Registration) Act (Cap 286). They include provisions relating to issues such as:

• eligibility to apply for a certificate of practice;
• the registration of audit and accounting firms;
• professional indemnity and conditions for partners of audit firms;
• a prohibition on practice in certain circumstances;
• restrictions on the preparation of client accounting records by auditors; and
• the audit quality review processes.

These bylaws ensure that auditors maintain independence and do not engage in non-audit services that could compromise their objectivity or conflict with their primary auditing responsibilities.

Auditors cannot do the following:

• Prepare financial statements: Auditors are not responsible for drafting financial statements or presenting them at board or shareholders' meetings.
• Legal advice: Auditors should not provide legal advice or opinions on legal matters.
• Management decisions: Auditors should not make management decisions or intervene in operational matters.
• Conflict of interest: Auditors must avoid any conflict of interest that could compromise their independence.

12.4 Are there any rules or recommendations which cap the remuneration of an auditor as regards payment for the provision of non-audit services?

There are no direct rules or recommendations which cap the remuneration of auditors with regards to the provision of non-audit services in Tanzania.

13 Termination of activities

13.1 What are the main routes for terminating business activities in your jurisdiction? What are the advantages and disadvantages of each?

In Tanzania, businesses can be terminated either voluntarily or involuntarily.

Voluntary termination:

• Private companies: Members can initiate a winding-up application to close or terminate the business for reasons such as:
• • the expiry of the term in the articles of association; or
  • the completion of projects.
• Foreign companies: Foreign companies may exit the country by being struck off the Register of Companies after giving 30 days' notice.
• Business names, partnerships and joint ventures: Owners can apply for cessation to the registrar of business names.
• Advantages:
• • The process is simpler than involuntary termination.
  • There is no need to involve third parties or justify termination in court.
  • It is generally less expensive.
• Disadvantages: The person/entity terminating business must prove that all taxes have been cleared to be allowed to terminate business

Involuntary termination:

• Companies: Court-ordered winding up, often due to insolvency, which can be initiated by members or third parties.
• Advantages: It is an easier alternative for businesses with liabilities they cannot cover to terminate business.
• Disadvantages:
• • It is more complex and involves justifying the need for termination.
  • It involves courts and third parties, especially in case of insolvency.

13.2 What key concerns and considerations should be borne in mind with regard to the termination of business activities in your jurisdiction?

• Payment of all debts and liabilities or dividend distribution:
• • The company must clear its liabilities to terminate its business activities or prove incapability before a competent court of law – a process which takes time and is costly.
  • Companies must also submit a tax clearance statement showing that all taxes have been cleared and accounted for before business is terminated
  • Business owners are liable for all liabilities that the company encounters and remain so until business is terminated.
• Approval of deregistration from the registration authority: The authority must issue a statement/document showing that business has been terminated.
• Termination of employees: The business owner must set up a mechanism for the termination of employees to ensure that their rights are secured during termination. This includes issuing proper notice of termination
• Contractual obligations: Businesses must also fulfil their contractual obligations to their clients, contractors and affiliates before being approved for termination. This is why the termination period usually involves a notice period and must be advertised in the Gazette, so that any person with an objection is heard and their claims are determined and justified before business is terminated
• Asset distribution: Businesses must also make provisions for their assets, in terms of how they will be distributed and managed to allow for the proper termination of business.
• Procedural requirements: Businesses must comply with all procedures relating to termination, including:
• • issuing proper notice to the relevant authorities; and
  • paying the requisite fees for the termination process.

14 Trends and predictions

14.1 How would you describe the current landscape for doing business and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

Current business environment: Tanzania's business environment is very welcoming to investors, characterised by a supportive government and policies that encourage sectoral growth:

• Government support for investment: The Tanzanian government actively promotes foreign investment, implementing policies that are advantageous to international stakeholders. This includes the establishment of the Tanzania Investment Centre (TIC), a one-stop centre offering expedited services and solutions to investors. The TIC streamlines processes by bringing various government agencies together – from immigration to business registration – under one roof, facilitating a more efficient investment experience.
• Digitalisation efforts: Approximately 90% of business compliance procedures are now conducted online, encompassing tax filing, licensing and general compliance. This shift to digital platforms has significantly accelerated processes, improved accessibility and enhanced transparency, making it easier for businesses to operate and comply with local regulations.
• Investment incentives: To further attract investment, the government offers compelling incentives, such as tax breaks and exemptions on certain goods. These incentives are designed to reduce the operational costs for investors and make Tanzania an even more attractive destination for business.
• Utility infrastructure: The infrastructure in Tanzania is robust, with reliable access to essential utilities such as electricity, water and fuel. The Julius Nyerere Hydropower Project is nearing completion (97.43% of the work is done), promising even greater stability in power supply. Additionally, the introduction of compressed natural gas stations has improved the availability of fuel, making it more accessible for businesses.

Upcoming developments: Looking ahead to the next 12 months, several key developments are anticipated that will further enhance the business landscape in Tanzania:

• Streamlined registration: The government is set to simplify business registration procedures and reduce the time required to complete them, thereby accelerating the startup process for new businesses.
• Digital taxation: New tax regulations are expected to be introduced for online content providers, reflecting the growing digital economy and ensuring that digital businesses contribute fairly to the national revenue. Tanzania has now imposed a 3% withholding tax on income from the transfer of digital assets. This aligns with the new definition of 'digital assets', expanding the tax base and ensuring compliance with modern digital transactions. Owners of digital platforms, or those facilitating the transfer or exchange of digital assets, will now act as withholding agents. They will be responsible for collecting the tax and remitting it to the commissioner general of the Tanzania Revenue Authority. Foreign citizens operating digital platforms within Tanzania must register under the simplified tax regime. This move aims to streamline tax collection from international digital service providers.
• Industry-specific taxes:
• • Players in certain industries, such as users of compressed natural gas, may see the introduction of new taxes tailored to their specific sector, aligning tax policy with industry growth and environmental considerations.
  • An industrial development levy will also be imposed on selected import goods:
  • • 10% on beer;
    • 5% on non-alcoholic beer;
    • 5% on energy drinks; and
    • 10% on organic surface-active agents.
• Charging of fees in Tanzanian shillings: All companies and service providers are now mandated to charge fees in local currency

These initiatives demonstrate Tanzania's commitment to creating a dynamic and investor-friendly business environment, well positioned for sustainable growth and development.

15 Tips and traps

15.1 What are your top tips for doing business smoothly in your jurisdiction and what potential sticking points would you highlight?

• Invest in experienced business professionals: Having the right tax team, legal team and audit team on board will be your best investment from day one and will save a lot of headaches. The right experts will:
• • ensure compliance with the law;
  • put legal safeguards in place; and
  • defend your rights should need arise.
• Pay your taxes and pay them on time: Ensure that all taxes (eg, service levy, pay as you earn and the skills development levy (employee taxes) corporate tax, stamp duty and withholding tax) are paid on time. Again, experienced experts can assist with this.
• Licences and permits: Ensure that you have the correct licences and permits for the business that you are undertaking and that these are renewed on time. Comply with all occupational and health safety guidelines and all other operating guidelines.
• Compliance: Follow the rules and regulations of your chosen business structure. If a company:
• • file annual returns and financial statements;
  • file annual reports for foreign companies; and
  • pay maintenance fees for business names.
• Staff: Hire skilful and experienced staff with correct qualifications so as to ensure your work is done and is done effectively and efficiently.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.