setting up business in tanzania (a) company...
TRANSCRIPT
Setting Up Business in Tanzania
The process of setting up business in Tanzania starts from the business identification process.
This is followed by creation of a business entity and obtaining relevant licenses and
approvals. Below i outline the procedure for company registration, obtaining investment
approval, obtaining general business license, obtaining mining tenements (in case of mining
projects), obtaining banking business license (in case of bank formation), obtaining insurance
business license (in case of insurance company formation) and registration with tax
authorities:
(a) Company Registration
In order to do business in Tanzania, one needs to form a business entity in a form a sole
proprietorship, partnership or limited liability company. A business entity in a form of sole
proprietorship or partnership must be registered under the Business Names Registration Act.
The most common business entity is Limited Liability Company. All businesses operating in
Tanzania, whatever their legal form, must register with the Business Registration and
Licensing Agency (BRELA), which is under the Ministry of Industries and Trade. The first
step is to obtain name clearance from BRELA. Generally, the following documents are
required in the process of forming a company:
Name of the company (which must be cleared by the Registrar of Companies).
The address of the registered office in Tanzania;
Names, residential addresses and nationalities of the first subscribers and directors (at
least two).
Memorandum of Association (stating in details the objects of the company) and
Articles of Association (stating in detail the management structure and processes). At
least two copies of each document must be filed;
Filing a prescribed form to make a declaration that a company has complied with the
requirements of the Tanzanian company law; and
Payment of the filing fee, registration fee and the stamp duty.
(b) Investment Approval
In making application for investment incentives from Tanzania Investment Center, the
following documents are required:
Three (3) copies of the project‟s Business Plan/Feasibility Study. The intended project
should aim at foreign exchange generation and savings, import substitution, creation
of employment opportunities, linkage benefits, transfer of technology, expansion of
production of goods and services etc. The feasibility study should contain clear
statement of the project objective, information regarding the investor, details of
investment costs (foreign and local expected capital expenditure), how the proposed
investment will be financed, specific sources(s) of finance for the project, terms and
conditions of the loan if applicable, sources of technology if applicable, project
financial and economic analysis, market study, project capacity, production process if
applicable, environmental impact assessment, expected employment generation,
proposed implementation schedule, etc;
Three (3) duly filed copies of application forms which are issued by the Tanzania
Investment Center at a fee of US$ 100;
In case of expansion/rehabilitation, a copy of audited account for the past three years;
A copy of the company‟s Memorandum and Articles of Association;
A certified copy of the Certificate of company Incorporation;
A brief profile of investors(s);
Evidence of sufficient finance capital available to implement the project;
Evidence of land ownership for the location of the project;
Project implementation schedule; and
An overall covering letter to which all the above are attached.
(c) General Business License
The type and number of required licenses differs from one sector to another depending on the
degree of regulation in the sector involved. It is generally advisable to take legal advice on the
required licenses in a particular sector. Apart from fulfilling the sector specific requirements,
all businesses must obtain a general business license‟ issued under the Business Licensing
Act, 1972. To obtain a general business license, the Applicant must submit the following
documents:
Photocopy of the certificate of incorporation or certificate of compliance (in case of a
company) or certificate of registration or extract (in case of partnership or sole
traders);
Memorandum and Articles of Association showing among other things that the
objectives of the company allow it to do the business which the license is being
applied for;
Proof of Tanzania citizenship e.g. photocopy of passport, birth certificate, or in case of
a non-citizen, resident permit Class A (showing the holder to be the investor in that
company/business);
In case the shareholders of the company are non-residents, a Powers of Attorney to a
citizen/resident must be submitted;
Proof by the applicant having a suitable business premises for the business applied.
Proof that can be submitted includes title deed, tenancy agreements, receipt of rent or
property tax payment); and
Tax identification number (TIN) issued by Tanzania Revenue Authority.
As pointed above, there are additional authorizations that must be given by sector specific
regulators. When you inform us the nature of your business, we will advise you the sector
specific requirements that apply to your line of business. The following are examples of sector
specific requirements:
Customs agency license (issued by Tanzania Revenue Authority) for those applying
for a license to carry out the business of clearing and forwarding.
Tourist agency license (issued by the Ministry of Natural Resources and Tourism) for
those applying for a license to carry out tourism promotion business such as tourist
hotels, travel agents, tour operators, hunting, etc.
Mining tenement (issued by the Ministry of Energy and Minerals) for those applying
for a license to carry out mining business.
Banking License (issued by the Bank of Tanzania) for those applying for a license to
carry out banking business.
Telecommunications/postal/broadcasting license (issued by Tanzania Communications
Regulatory Authority) for those applying for a license to carry out
telecommunications/postal/broadcasting business.
Insurance license (issued by Insurance Supervisory Department) for those applying for
a license to carry out insurance business.
Special license/permit (issued by Tanzania Food and Drugs Authority) for those
applying for a license to carry out business relating to food, drugs and cosmetics.
Fishing license (issued by the Ministry of Natural Resources and Tourism) for those
applying for a license to carry out fishing business.
Professional certificates/authorization for all professional businesses e.g. doctors,
lawyers, pilots, accountants, ship captains, etc (issued by the respective professional
organization).
Petroleum exploration license (issued by the Ministry of Energy and Minerals) for
those applying for a license to carry out petroleum exploration.
Industrial license (issued by the Ministry of Industries and Trade) for those applying
for a license to establish industries and factories.
The Chief of Police, Ministry of Home Affairs, must authorize a business that will
involve providing security services.
Most of the sector specific licenses are granted after making the payment of various fees.
Sometimes, before a business license or permit is issued, a physical verification of the
company‟s offices is done. Here are examples of the requirements for applying some of the
mining, banking and insurance sectors:
(d) Mining tenements
Mining business in Tanzania is regulated under the Mining Act, 1998. The Mining Act, 1998
provides for various types of mining tenements that can be granted. Generally, each type of
mining tenement requires to be licensed separately from the other. For example, the right to
conducting prospecting must be licensed separately from the right to carry out mining.
Depending on the nature of your business, you may be required to possess more than one
license. We generally advice you to take legal advice on the mining tenements that suits your
business. The following mining tenements are prescribed under the Mining Act, 1998:
Prospecting License; Retention License; Special Mining License; Mining License; Gemstone
Mining License; Primary Prospecting License; and Primary Mining License.
In addition to above licenses, the Mining Act, 1998 provides for dealers and brokers licenses
that may be granted to those dealing in raw gold, gemstone and other minerals. With regard to
diamonds, there are special rules governing licensing and trading.
The application for any of the above mentioned licenses must submit to the Minister
responsible for minerals in prescribed form. The form of application each license is provided
under the Mining (Provisional Licenses) Regulations, 1999. The application in a prescribed
form must be accompanied by a covering letter of introduction of the applicant. The
application must contain the following information (additional attachments are allowed):
In the case of an individual applicant, his full name, nationality and permanent
address;
For a body corporate, its name, permanent address and places where it was
incorporated including the certificate of incorporation;
Memorandum and Articles of Association of the Company;
Statement of the location of the applied area in either UTM or Long-Lat coordination
systems and shall include a plan of the area presented in a Topographical map of scale
1:50,000;
Statement of the size in sq. km of the applied area of land over which the license is
being applied for. The area must not exceed the prescribed maximum area;
For prospecting licenses, statement of the type of minerals to be prospected in the
specified area;
For prospecting licenses, statement of the proposed work plan setting details of
proposed prospecting methods;
Statement of the proposed expenditure during the tenure of the license and a statement
giving particulars of financial and technical resources;
If at the time of application third parties legally occupy the area under which the
application is made, their written consent must be obtained to carry out prospecting
and/or mining activities;
Statement on the proposal with respect to employment and training of Tanzanians
citizens;
Statement on the Environmental Management Plan; and
Payment of prescribed application fee.
(e) Banking Business License
The Bank of Tanzania heavily regulates banking business and other financial institutions in
Tanzania. The regulatory framework is provided in three main legislation, namely, the Bank
of Tanzania Act, 2006, Banking and Financial Institutions Act, 2006 and Foreign Exchange
Act, 1992. A foreign investor who is intending to establish a bank or financial institution must
obtain a license from the Bank of Tanzania. The process of obtaining license is length and
complex. It is strongly advised that investors who intend to establish a bank or financial
institution should engage experienced advisers that will assist in preparing the application for
license. The Bank of Tanzania is one of the regulators in the East African region that adheres
strictly to principles and because of this very few bank failures have occurred in Tanzania
comparing with other East African countries. The application for license must be made to the
Governor of the Bank of Tanzania by submitting a letter of application. The letter of
application must be in a form prescribed under the Banking and Financial Institutions
Regulations. The letter must indicate among other things, the name of the bank or financial
institution to be established, the location of the principal place of business, the proposed share
capital and the name of subscribers. There are strict regulations on capital requirements and
we advise you to confirm with your advisers on whether the proposed capital and subscription
arrangement is in line with the regulations. The letter of application must be accompanied
with the following documents:
Draft Memorandum of Association. The Memorandum of Association of a company
that has already been registered by the Registrar of Companies are not acceptable;
Draft Articles of Association. The Articles of Association of a company that has
already been registered by the Registrar of Companies are not acceptable;
Proof of availability of funds for investment as a capital of the proposed bank or
financial institution;
List of subscribers and proposed members of the Board of Directors and other senior
officers;
Information sheet (profile) for every subscriber proposed members of the Board of
Directors and other senior officers;
Proof of citizenship of every subscriber, proposed members of the Board of Directors
and other senior officers in the proposed management team. The information to be
supplied include detailed curriculum vitae (CV), photocopy of the first five pages of
the passport, a passport size photo and a historical background of every person;
Audited balance sheet and income statement of every subscriber, proposed members
of the Board of Directors and other senior officers engaged in business;
Certified copies of annual returns of every subscriber, proposed members of the Board
of Directors and other senior officers (together with accompanying schedule/financial
statements) filed during the last five years with income tax office for income tax
purposes;
Tax clearance from the Income Tax Office;
Statements from two persons (not relatives) vouching for the good and moral character
and financial responsibility of the proposed subscribers, members of the Board of
Directors and other senior officers;
Business plans for the first four years of operations including the strategy for growth,
branch expansion plans, dividend payout policy and career development program for
the staff. Budgets for the first year must also be included;
Projected annual balance sheets for the first four years of operations;
Projected annual income statements for the first four years of operations;
Projected annual cash flow statements for the first four years of operations; and
Discussion of economic benefits to be derived by the country and the community from
the proposed bank/financial institution.
The Banking and Financial Institutions Regulations provides detailed guidelines on items that
must be covered in the business plan. According to these regulations, the business plan must
cover market analysis, plans and objectives, credit policy and procedures, organization and
administrative structure, financial projections, etc.
(f) Insurance Business License
The insurance business is regulated under the Insurance Act, 1996. The government agency
known as Insurance Supervisory Department (ISD) was established in 1996 under this
legislation to be the regulator of insurance business in Tanzania. All types of insurance
business must be registered with ISD. These include insurers, brokers, insurance agents and
agents for brokers. The Insurance Act, 1996 sets out rules on capital requirements for insurers
for long-term business, general insurance, composite insurance, non-marine insurance and
marine insurance. There are also minimum capital requirements for insurance brokers, loss
adjusters, insurance surveyors, motor assessors and risk managers. The procedure of applying
for applying for registration as an insurer is stated in Insurance Regulations, 1998. According
to these regulations, the application for registration as an insurer must be submitted by way of
a letter in a prescribed form. Where some information is not known or available at the time of
applying for registration as an insurer, it is essential that this should be brought to the
attention of ISD because an application that lacks some information is normally returned to
the applicant. The letter of application for registration as an insurer must contain the following
information:
The full name of the company that is applying for registration as an insurer;
The physical address of the registered office of a company applying for registration as
an insurer. The physical address to be given must be the same address that has been
notified to the Companies Registry as a registered office of the company;
The physical and postal address of the head office of the company applying for
registration as an insurer;
Indication of the name of the person managing the business of the company that is
applying for registration as an insurer. This person can be a manager, controller, chief
executive or principal officer with the executive power to control the policy or day-to-
day activities of the company;
Indication of the proposed principal officer of the company. The principal officer is
defined as “the person for the time being responsible for the daily management of the
insurer or broker”;
Indication of the auditor of the company (where an auditor is not resident in Tanzania
full explanation is required, and the experience and knowledge of the auditor in
handling company accounts in Tanzania should be explained);
Indication of the actuary of the company (where the actuary is not an independent
consultant to the company, a full explanation should be explained);
Statement of the amount of authorized share capital of the company and the total
amount of issued and paid-up share capital (excluding preference shares and non
voting shares of the company). Where the issued share capital of the insurer is not
fully paid-up a full explanation must be provided;
Statement of the financial year of the company (where the current financial period in
question is in respect of a period lesser or greater than one year the dates of the period
should be stated);
The payment of the registration fee is in respect of the application to register as an
insurer. In the event that such application is rejected (other than because of insufficient
information or documentation) the fee will not be refunded to the applicant. Upon
completion or registration the fee so paid will also include the first year‟s annual
registration fee;
The Principal Officer or the Director of the Company should sign the application; and
The letter of application must be accompanied with the following additional
information/documents:
(1) A statement showing:
(a) the individual classes of insurance business under which the insurer wishes to transact;
(b) the monetary settlement account and reinsurance treaty limits which the insurer can
underwrite under each of the classes of insurance business listed in (a) above.. Net
retention limits together with treaty capacity must indicate the local underwriting
capacity before recourse to facultative placements. Net retention limits per risk when
compared with unencumbered capital must also indicate the underwriting policy of the
insurer;
(c) details of shareholdings in excess of 5 percent of the paid up share capital of the
insurer;
(d) a statement of any links with a Tanzania registered insurance brokers;
(e) the names, physical and postal address and all other business interests of each
Director and of the Principal Officer;
(f) the business and insurance experience, professional qualifications and age of each
working controller, manager, director and partner; and
(g) the proposed policies of the company in respect of: -
underwriting;
risk selection;
premium rating;
investment of insurance funds;
limitation of growth of gross and net premium income;
treaty and facultative reinsurance placement; and
control of management expenses
(2) Copies of the following documents:
The Memorandum and Articles of Association;
Brokers and agency and underwriting agreements;
Insurance agents identity card;
Management agreements;
Policy forms and standard endorsement wordings;
Treaty reinsurances ceded outwards;
Treaty reinsurances underwritten inwards;
Form 10 (Statement of Solvency) and Form 11 (Statement of Admissible); and
Last audited accounts.
(3) For application to be registered as an insurer transacting long term insurance business, the
following additional documentation, information and declarations is required:
Information required under section 7(1) of the Insurance Act, 1996 regarding
policy and endorsement forms, table and statements of rates of premiums and
benefits including of paid-up and surrender values and report from the actuary that
the tables and statements are actuarial sound;
A list of the statutory life insurance funds proposed to be issued under section 76
of the Insurance Act, 1996;
A formal written request to the Commissioner, if required under section 71(3)(b)
and (4) of the Insurance Act, 1996; and
Form 12 (Actuary‟s Abstract).
(g) Registration with Tax Authorities
Once a company has been incorporated by the Registrar of Companies, the company is
required to register with the nearest Tanzania Revenue Authority (TRA) office. The first
document that must be issued by TRA is Tax Identification Number (TIN). Normally, Tax
Identification Number is issued within three days.
Once the Tax Identification Number has been issued, the tax file will be opened. Once a file
number has been issued, the company is expected to complete provisional tax return forms.
These have to be submitted within three months of the initial accounting date. The company
must estimate its profits for the first year and make quarterly provisional tax payments. Once
a file number is issued, TRA will issue an Income Tax Clearance Certificate, which can be
used to obtain the general business license.
If the turnover of the business is Tanzanian Shillings Forty Million (approximately US$
fourty thousand), the business must register for Value Added Tax. VAT is charged at 20%. In
order to be registered for VAT, the following applicant must fill the application form obtained
from Tanzania Revenue Authority (Value Added Tax Department). The filled form must be
returned with the copies of the following documents:
Certificate of incorporation or certificate of compliance (in case of a company) or
certificate of registration or extract (in case of partnership or sole traders);
Memorandum and Articles of Association showing among other things that the
objectives of the company allow it to do the business which the license is being
applied for;
Proof of Tanzania citizenship e.g. photocopy of passport, birth certificate, or in case of
a non-citizen, resident permit Class A (showing the holder to be the investor in that
company/business);
In case the shareholders of the company are non-residents and don‟t have a resident
permit, a Powers of Attorney to a citizen/resident must be submitted;
Proof by the applicant having a suitable business premises for the business applied.
Proof that can be submitted includes title deed, tenancy agreements, receipt of rent or
property tax payment);
Tax identification number (TIN) issued by Tanzania Revenue Authority;
Income Tax Clearance Certificate issued Tanzania Revenue Authority (Income Tax
Department);
Business license issued by the Ministry of Industries or local authority under the
Business Licensing Act; and
Three photos of the applicant or one of the resident directors of the company or local
representative.
Conclusion
The requirement discussed above may, however change without notice and you are
generally advised to seek legal advice before relying on them
In In case of any querry please dont hestate to contact us and we will be glad to assist
you.
(a) the individual classes of insurance business under which the insurer wishes to transact;
(b) the monetary settlement account and reinsurance treaty limits which the insurer can
underwrite under each of the classes of insurance business listed in (a) above.. Net retention
limits together with treaty capacity must indicate the local underwriting capacity before
recourse to facultative placements. Net retention limits per risk when compared with
unencumbered capital must also indicate the underwriting policy of the insurer;
(c) details of shareholdings in excess of 5 percent of the paid up share capital of the insurer;
(d) a statement of any links with a Tanzania registered insurance brokers;
(e) the names, physical and postal address and all other business interests of each Director and
of the Principal Officer;
(f) the business and insurance experience, professional qualifications and age of each working
controller, manager, director and partner; and
(g) the proposed policies of the company in respect of: -
· underwriting;
· risk selection;
· premium rating;
· investment of insurance funds;
· limitation of growth of gross and net premium income;
· treaty and facultative reinsurance placement; and
· control of management expenses
(2) Copies of the following documents:
· The Memorandum and Articles of Association;
· Brokers and agency and underwriting agreements;
· Insurance agents identity card;
· Management agreements;
· Policy forms and standard endorsement wordings;
· Treaty reinsurances ceded outwards;
· Treaty reinsurances underwritten inwards;
· Form 10 (Statement of Solvency) and Form 11 (Statement of Admissible); and
· Last audited accounts.
(3) For application to be registered as an insurer transacting long term insurance business, the
following additional documentation, information and declarations is required:
· Information required under section 7(1) of the Insurance Act, 1996 regarding policy and
endorsement forms, table and statements of rates of premiums and benefits including of paid-
up and surrender values and report from the actuary that the tables and statements are
actuarial sound;
· A list of the statutory life insurance funds proposed to be issued under section 76 of the
Insurance Act, 1996;
· A formal written request to the Commissioner, if required under section 71(3)(b) and (4) of
the Insurance Act, 1996; and
· Form 12 (Actuary‟s Abstract).
(g) Registration with Tax Authorities
Once a company has been incorporated by the Registrar of Companies, the company is
required to register with the nearest Tanzania Revenue Authority (TRA) office. The first
document that must be issued by TRA is Tax Identification Number (TIN). Normally, Tax
Identification Number is issued within three days.
Once the Tax Identification Number has been issued, the tax file will be opened. Once a file
number has been issued, the company is expected to complete provisional tax return forms.
These have to be submitted within three months of the initial accounting date. The company
must estimate its profits for the first year and make quarterly provisional tax payments. Once
a file number is issued, TRA will issue an Income Tax Clearance Certificate, which can be
used to obtain the general business license.
If the turnover of the business is Tanzanian Shillings Forty Million (approximately US$
fourty thousand), the business must register for Value Added Tax. VAT is charged at 20%. In
order to be registered for VAT, the following applicant must fill the application form obtained
from Tanzania Revenue Authority (Value Added Tax Department). The filled form must be
returned with the copies of the following documents:
Certificate of incorporation or certificate of compliance (in case of a company) or certificate
of registration or extract (in case of partnership or sole traders);
Memorandum and Articles of Association showing among other things that the objectives of
the company allow it to do the business which the license is being applied for;
Proof of Tanzania citizenship e.g. photocopy of passport, birth certificate, or in case of a non-
citizen, resident permit Class A (showing the holder to be the investor in that
company/business);
In case the shareholders of the company are non-residents and don‟t have a resident permit, a
Powers of Attorney to a citizen/resident must be submitted;
Proof by the applicant having a suitable business premises for the business applied. Proof that
can be submitted includes title deed, tenancy agreements, receipt of rent or property tax
payment);
Tax identification number (TIN) issued by Tanzania Revenue Authority;
Income Tax Clearance Certificate issued Tanzania Revenue Authority (Income Tax
Department);
Business license issued by the Ministry of Industries or local authority under the Business
Licensing Act; and
Three photos of the applicant or one of the resident directors of the company or local
representative.
Conclusion
The requirements discussed above may, however, change without notice and you are
generally advised to seek legal advice before relying on them.
This Article has been prepared by Ngassa Dindi. To contact Ngassa, please use the following
address:
6th Floor, Nyerere Pension Tower Bibi Titi/Morogoro Road P.O.Box 78934 Dar es Salaam
TANZANIA
Tel: +255 22 2124127