If you’re keen on doing legitimate business in Tanzania, then you should register your business with Business Registration and Licensing Agency (BRELA) an agency empowered by the government under act No 30 of 1997 for business registration in Tanzania.
Setting up your business in Tanzania is fast and easy. But it can be a little bit frustrating if you don’t know where to steps even the cost of registration.
Inside this article, you are going to learn how you can easily register your business in Tanzania, and get trade license.
I am going to reveal the business structures available in Tanzania, their advantages and disadvantages.
This will help you decide which option to employ for your business in Tanzania Also you will discover the government fee for the business registration in Tanzania. Most importantly will learn all the requirement to set up your business in Tanzania.
If you want to learn how to register your business in Tanzania without wasting precious years or without begging anybody.You will find this publication extremely helpful.
Let’s get started.
Why You should register your business
Before moving any further, let’s talk first why is important to register your business in Tanzania.
There are countless reasons why it makes sense to register your company in Tanzania
1.You can attract funding
Your bank can easily get you money. For example, if you registered your company and you get an order to supply products worth 8,000,000.
You can show them and domicile your account with them.
This gives bank confidence that the money they are given you will be recovered. And the bank is assured of protection if the company is registered.
2.Gives your business professional feel
Once your register your business will open operate account and you’re going to give your bank details to all your customers.
This will let them know that their money is safe with you and they will surely receive what they ordered
3.Secure your brand.
Registering your business name gives you the safety of exclusively because nobody will be allowed to use such business name.
For example, I set up this website 3 years ago. And I intended to use the name of my website as a business name.
So once I went BRELA for registering www.tanzaniapetroleum.com as a business name I found the name was already taken by another business person in Tanzania. To stand out I picked up an alternative name. Never allow this happens to you
5 Easy Steps For The Registration Of Business In Tanzania
Now we have talked abut the importance of register your business, let’s dive into the 5 step for the business registration
Step 1: Deciding on your business structure
Once you have got an idea to start a new business in Tanzania, is vital to make a decision in best business structure that will best work for you.
Decide the type of business structure in Tanzania is very important because it helps you understand the legal requirement, taxes you need to pay and the personal investment cost.
Available business registration options in Tanzania are
1.Sole proprietor :An individual trading on their own
• The procedure for setting up a business is simple and low cost.
• Decision-making is easy as the proprietor does not need to consult with anyone before arriving at a decision.
• The business will be taxed at the rates applied to personal income rather than a corporate tax.
• It tends to be difficult to raise capital.
• The business is not a separate legal entity from its owner.
• The sole proprietor is personally liable for the liabilities of the business.
• The business is dissolved on the death of the sole proprietor.
• There is little scope for growth and expansion as it is limited to a single person in terms of capital and manpower.
• It has limitation for a foreigner when applying for working and residence perm
2.Partnership:Two or more people join forces together to run a business but not as company
It can be appropriate where there is more than one investor.
the fact the costs of set up are lower than for a company.
3.Limited liability company. : A legal entity separate from its shareholders. A limited liability company can be established under the Companies Act 2002 which sets out the relevant legal framework.
• A limited liability company enjoys many advantages over a sole proprietorship and a partnership, including:
• Distinct and separate legal personality separate from its shareholders.
• The liability of the shareholders is limited.
• The business is not dissolved on the death of one of the shareholders or directors.
: Disadvantages include:
It involves higher setup and running cost than other structure
It requires many legal requirements than other structures.
• Close regulation by statute.
• There are (limited) circumstances in which the “corporate veil” may be lifted and the shareholders can be liable for the obligations of the company (but this is rare and only in extreme cases).
• Although generally managed by its directors, bona fide third parties can rely on the apparent ostensible authority of a non-authorised director to bind the company.
For joint ventures, a shareholders’ agreement is advisable to best control the decision-making in the company. Limited liability companies are the most popular form of investment vehicles in Tanzania.
Step 2.Register your Business name
When you choose to operate as a sole proprietor or partnership you should register a business name with BRELA. A business name is a name in which your business operates.
Here are the step to register your business name:
1. Propose a right name for your business name
2. Check availability of your name. Once you select the name, Go online to BRELA website and search availability of your name.
Submit your business name for name search. You can’t register a business name that has already registered with BRELA by someone else.
So If the name you search is identical or too similar to the existing registered business name.
The name won’t be approved so you have to repeat the process with different searches and you will finally find one.
3.Register for your business name online
The good new is you don’t need to physically visit BRELA office for business registration. BRELA has an online registration system that makes business registration much easier and fun.
To perform your business search and register your business name, create an account in the online Business Name Registration System (OBRS). In this online registration process, enter your email address, and phone number.
For business name registration, you will be required to provide a phone number, email, and box.
And then you will receive an email notification to confirm your registration and you will be able to search or even register your business name.
Then after BRELA will approve your registration and you will make payment through CRDB or NMB Bank
BRELA will send you an original certificate via your postal address. This process is quite simple and doesn’t require to be a computer expert. But if you feel this is stressful work ask for help from someone else.
If you want to operate as a company you, you should first propose a company name and check company name availability similar way to what we have explained in sole proprietor and partnership.
Once you propose a company and you find the name is available You should prepare two important documents that are memorandums of the company and article of association.
And you will be required to fill a form No. 14A that gives detailed information about office location directors and company secretary.
Fill the form correctly with CAPITAL letter, submit an original filled form to BRELA and pay an application fee based on the magnitude and share capital of your business. and get back with a photocopy of filled form as a reference- This process it takes two days
As I said earlier, business registration fee in Tanzania is categories based on company share capital. But the cost for business registration in Tanzania is cheap that any serious entrepreneur who takes his business seriously can afford.
For company whose share capital is The 20000 to 1 million
Registration fee Tshs 95,000/=
Filling Fee Tsh 22,000 for each document, because you’re supposed to have 3 documents =22,000 ×3=66,000
Stamp duty fee for each copy of memorandum and article of association is TSH 5OOO because you nee 3 copies 5000 ×3= Tshs 15000
Stamp duty fee for form No 14b Tshs 1200
So Total cost for a company with share capital from 20,000 million to 1 million
Is 95,000 + 66,000+ 15000+ 1200=Tsh = 177,200
For a company with share capital 1 million to 5 million
Registration fee= Tshs 175000
Filling fee 3 ×22,000=66,000
Stamp duty fee 3 copy of memorandum and article of association = 3 ×5000=15000
Stamp duty fee for form No 14b Tsh 1200
Total cost is Tshs 257,200
Forcompany with share capital 5million to 20million
Total Registration Cost Tshs 342200
For a company whose share capital is Million 20 to Million 50
Total Registration Cost is Tshs 372200
For a Company whose share Capital is More than 50 Million
Total registration cost is 522200
SUMMARY FOR BUDGET IN COMPANY REGISTRATION IN TANZANIA
|CompanyWhose share Capital;||Total Registration Cost (Tanzania shillings)|
|20,000 to 1 million
|1million to million 5
|5Million to 20 million
|20 million to 50million
|More than 50 million
Here are the requirement for setting up limited company in Tanzania
1. A minimum of two shareholders and two directors (for a foreigner, must have at least one local partner)
2. Propose the company name (Should be searched and cleared)
• Propose Share capital
1. List names of shareholders and directors
2. Propose the name of Company secretary (only One)
3. Propose company address, Secretary and shareholders address. (Postal and physical address)
• List Date of birth of each director
• List business occupation of each director
Step 3. Register with Tax Authority
Now let see the government fee for the business registration In Tanzania
Once you have got the certificate of incorporation from the BRELA, the next step is to get a TIN and make assessment of the Tax.
Tax identification number issued for free by Tanzania Revenue Authority (TRA).
To obtainTIN, you have to physically visit the TRA office nearby the region you want to run your business for biometric scanning.
The TRA officialswill take your photo, fingerprints, and sign. After two 2 to 3 days TRA will issue your TIN.
For nonTanzanian, you have to get the resident permit in order to obtain a TIN number.
That is why I emphasis for the nonresidents to find a local partner.
Remember some facilitator use others ignorance to charge people a lot of money for the TIN while the Authority has said TIN is free for the people, So make sure this won’t happen for you.
Once TRA has issued a TIN, they will open a tax file for your company or business and you will be required to fill the tax return form.
You will estimate a net profit for the first year. So if you estimated the net profit of your business for the first year is TZS 2,000,0000 (USD 1000) Then, 30 percent of the 2,000,000 which is equal TZS 600,000(USD 300) is the amount of tax you need to pay to the authority and make quarterly provision tax payment.
Afterwards, the official from TRA will offer will issued an Income Tax Clearance Certificate which you will use to obtain business license.
If the turnover of your business is over TZSH 100 million you will need to apply for Value-added Tax(VAT) from the TRA
The following documents should submit to the authority for the tax assessment.
- Copy of certificate of register ( if you operate as sole proprietor or partnership)
- Copy of certificate of incorporation (if you operate as limited liability company)
- Copy of memorandum and article of association
- 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);
If the directors of the company are non-citizen of Tanzania, resident permit should submit
The company must estimate its profits for the first year and make quarterly provisional tax payments
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.
Step 4. Get A Business License
Now you have registered with BRELA, you have registered with Tax authority which is Tanzania Revenue Authority(TRA). So you have TIN, certificate of incorporation (for the company), certificate of register or extract (for sole proprietor or partnership).
The last step is to obtain a business license so you can start to legally run your business in Tanzania.
Business license differs depending on the type of business and the legal requirement for the sector your business will operate.
But general business license can be obtained from municipal council in which your business is operating also from the ministry of industry trade and investmentFor the business that operates in certain sector, my requires special permit or license
Here are examples of the type of business and kind of license they should have
Oil and gas exploration, drilling and extraction Should get license for petroleum upstream regulatory authority and from the ministry of energy.
If you want to set up petrol station business, starting lubricant business, distributing and marketing of petroleum products, solar power and all renewable energy project you should get license from Energy, Water and Utility Authority (EWURA),
If you are keen to start selling food, hotels, restaurant, drugs, and cosmetics you should get special license from the Tanzania Food and Drugs Authority)
For those who want to establish factories should get a special permit from the ministry of industry, trade, and investment.
If you want the set up a consultation company such as IT consultant, Financial consultant, oil and gas consultation you should get the license from the municipal you want to run a business,
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
Step 5: Run a Business
Congratulation, Now you have all it takes to run a legal business in Tanzania. Go out there and turn your idea into physical reality. There is no high time to become your own boss, work on your own terms and enjoy flexibility than now.
I hope that helps. But If you want to a help on registering a company in Tanzania please do not hesitate to reach out to me via Hussein.Boffu@tanzaniapetroleum.com