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The Complete Guide And The requirement How To Register A Company In Tanzania

 

 

Tanzania, a land of over 53 million people. This  population expected to grow at  3 percent a year according to world bank .

Tanzania continues to report as fastest  economic growth  in 2017 compared  with other  regions in Africa with economic growth rates at 7.1 percent. IMF ranks Tanzania as the only country in EAC with this economic growth. The middle class is growing in the region.

 

It’s this upward growth that makes Tanzania  a great destination for business.

If you’ve been thinking about starting a business in Tanzania , this article will help you know the requirement, cost  to help you register your business in Tanzania, fast and easy any time you ready  and save you tons of your time and energy  and hassles in set up your business in Tanzania

Most forms of business vehicles in Tanzania are Sole proprietor, partnership and Limited liability Companies. But it is highly advised for a foreign investor to register a limited liability company due to some reasons I will explain later.  Also, it is statutory requirement for foreign investor to have a local partner for some sectors, but it is highly recommended to have local partner in any business. This is good for the business and it can make many things much easy.

1: Sole proprietorship

This is most appropriate in the case of a sole investor.

Advantages include:

  • The procedure for setting up 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 corporate tax.

Disadvantages include:

  • 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 permit.

2: Partnership

It can be appropriate where there is more than one investor.

Advantages include the fact the costs of set up are lower than for a company.

Disadvantages include:

  • It tends to be difficult to raise capital.
  • The business is not a separate legal entity from the partners.
  • The partners are personally liable for the liabilities of the business.
  • If a partner leaves the partnership, the business is automatically dissolved unless otherwise agreed.
  • It has limitation for a foreigner when applying for working and residence permit.

A partnership deed is advisable to set out how to control partnership business and decision-making.

Also Read.tHow To Register Your Business In Tanzania -5 Steps

3: Limited liability company

A limited liability company can be established under the Companies Act 2002 which sets out the relevant legal framework.

Relevant bodies or authorities involved in the establishment of a business are the:

  • Business Registration and Licensing Agency (BRELA), the company registry for companies in Tanzania.
  • Ministry of Industries and Trade, or the relevant municipality (depending on the business activity) responsible for issuing licences to companies carrying on business in Tanzania.
  • Tanzania Revenue Authority, responsible for issuing tax identification number (TIN) certificates to resident or non-resident persons carrying on business in Tanzania.

 

A: To set up a limited liability company,  the general requirement are,

  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

 

B: Advantages include

  • 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.

C: Disadvantages include:

  • 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.

D: Establishing a presence from abroad

  1. What are the most common options for foreign companies/individual establishing a business presence in your jurisdiction?

Generally, a foreign company/Individual establishes a business in Tanzania by either:

  • Setting up a limited liability Tanzanian new company or as a group subsidiary. (Use requirements in 3;A above)
  • Registering a foreign limited liability company in Tanzania as a branch, that is, having an established place of business in Tanzania. (Use requirements below)

If the company has a charitable purpose it will generally set up a Tanzanian company limited by guarantee.

The limitation of liability concept applies in a similar way to other common law jurisdictions.

  1. How can an overseas company trade directly in your jurisdiction?

An overseas company can establish a branch by registration of an established place of business in Tanzania. A foreign company is not deemed to have a place of business in Tanzania solely on account of its doing business through an agent in Tanzania at the place of business of the agent.

Once a foreign company is registered in Tanzania, it has the same powers as if it were a company incorporated in Tanzania, and is therefore subject to the laws of Tanzania.

A foreign company seeking to establish a place of business in Tanzania must deliver the following documents to the Registrar:

  • Certified copy of memorandum and articles of association or other instrument constituting or defining the constitution of the company. If the instrument is not in English, a certified translation is required.
  • A list of directors and company secretary of the company.
  • A statement of all subsisting charges created by the company.
  • Names and addresses of one or more persons, resident in Tanzania authorised to accept on behalf of the company service of process and any other notice required to be served on the company, and to represent the company as its permanent representative at its place of business (with a statement as to the extent of its authority).
  • Full address of registered principal office of the company and full address of place of business in Tanzania.
  • Statutory declaration made by the director or secretary of the company stating the date on which the company’s place of business in Tanzania was established, the business that is to be carried on and if different from the registered name of the company, the name under which that business is to be carried on.
  • A copy of the most recent accounts and related reports of the company including, if not in English, a translation of the same.

The Government fees for registration are approximately US$1,250. The filing fees are approximately US$220.

On completion of the registration, the foreign company will be issued with a BRELA Certificate of Compliance.

Foreign companies that have established branches in Tanzania must file, among other things, annual accounts in every calendar year.

 

In addition to that, a company must have the following.

 

TIN Certificate. The company must register with the Tanzania Revenue Authority (TRA) for a Tax Identification Number that will be used by the company for payment of taxes.

VAT Certificate and Electronic Fiscal Device (EFD). This will make sure you comply with VAT act by issuing special receipt for all sales.

TAX Clearance Certificate. A Tax Clearance Certificate is obtained from the TRA prior to making an application for a business licence.

Business License. The company must have a business license specific to its type of business. This is usually obtained from the Ministry of Industry, Trade and Investment, or relevant Municipal Council, depending on the type of business.

Other licences and authorizations/permit. Company trading in certain business sectors may require special authorizations/permit. For example, a company dealing in manufacturing of commodities must obtain an Environmental Impact Assessment Certificate from the National Environmental Management Council, Other will need approval from Tanzania beural Standards (TBS) or from Tanzania foods and drugs authority (TFDA) ect.

 

WORKING PERMIT

Any foreigner is obliged to apply for working permit before he/she start working in Tanzania. This includes business man/woman.

Documents/Items Required at Labour Commission

  1. Contract of employment
  2. Application Form, TFN 901
  3. Job description
  4. Curriculum Vitae for the Applicant
  5. Two recent passport Size photos of the applicant
  6. Certification from respective professional bodies that regulate the post for which a work permit is sought, i.e engineers, auditors, accountants, advocates/lawyers, medical doctors etc
  7. Academic professional certificates
  8. Certified translation in authorised Kiswahili or English certificates if they are in other languages than English/Swahili
  9. Photocopy of passport
  10. Previous work permit (for renewal application)
  11. Business license
  12. Tax Identification Number (TIN)
  13. Value Added Tax
  14. Memorandum & Articles of Association
  15. Succession Plan in the case of employment
  16. Other information as may be required by the Labour Commissioner

 

Documents/Items Required at Immigration Service Department

  1. Application forms (TIF 1) duly filled in duplicate ;
  2. General security covenant (TIF. 13);
  3. Curriculum vitae (CV) of the employee;
  4. A copy of National Passport (with validity of not less than a year);
  5. Certified copies of Academic Certificates;
  6. Service testimonial from previous employer (if any);
  7. Employment contract, duly signed by the employer or his representative and the employee;
  8. Job description;
  9. Official translation of documents/certificates in case they are written in a language other than English or Kiswahili;
  10. Certificates of Registration, Clearance or License from authorize Institutions i.e. Persons with some job titles or qualifications that require registration with authorize Institutions and Certificate, Clearance or Licenses be issued. These include Accountants, Engineers, Architects, Surveyors, Doctors, Teachers, Nurses, Pilots, Employees in Security Companies, executive Personnel in Financial Institutions such as Banks, Bureau De Change etc.
  11. Memorandum and Articles of Association of the employing company;
  12. Certificate of Incorporation or Compliance (as the case may be)
  13. Business Licenses (these may include other Licenses, issued to some businesses, e.g.  Industrial License, Mining License, Casino License, Tourist Agent’s License, Certificate of Registration from Contractors Registration Board) etc.
  14. Value Added Tax (VAT) Certificate (for Businesses entitled to pay this type of tax);
  15. Tax Payer’s Identity Number (T.I.N.) Certificate;
  16. Business License Tax Clearance Certificate;
  17. A letter of recommendation from the Director of Employment, Ministry of Labour and Employment;
  18. A covering letter from the Employer;
  19. Six Passport Size photographs.

 

Fees:

Labour Commissioner-  2500usd

Immigration Department-  2050usd

Desbursement 500usd

Proffessional Fees 2000usd

 

Conclusion 

We intend to assist foreigners who wish establish their business in Tanzania. This includes company registration, getting registered as Tax payer, getting business license and business permit as well as getting working and residential permit. Tanzania has many business opportunities.

If you need a help, please do not hesitate to reach out to me,.

WhatsApp  +255655376543

Email: hussein.Boffu@tanzaniapetroleum.com

 

 

 

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Updated: December 10, 2017 — 9:45 AM
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