Company Registration in Tanzania: A Guide for Foreign Investors
Introduction:
Tanzania provides a structured and business-friendly environment for foreign investors. However, setting up a company requires compliance with various legal, tax, and employment regulations. This guide outlines the legal requirements, shareholder obligations, work permits, payroll taxes, timelines, and other key considerations based on Tanzanian laws and regulations.
1. Legal Requirements
Foreign companies can register in Tanzania under different legal structures based on their business goals and regulatory requirements:
- Limited Liability Company (LLC): The most common structure, allowing foreign ownership.
- Branch of a Foreign Company: A foreign entity extending its operation in Tanzania.
- Limited Liability Partnership (LLP): Common for professional services firms.
Key Steps for Registration
(a) Business Registration with BRELA
Governing Law: The Companies Act, Cap 212 (R.E. 2002)
The Business Registration and Licensing Agency (BRELA) is responsible for company incorporation. The process includes:
- Company Name Reservation – Submit an online application to secure a unique business name.
- Preparation of Incorporation Documents:
- Memorandum and Articles of Association (MEMARTs)
- Details of Shareholders and Directors (names, nationalities, ownership structure)
- Declaration Forms (Forms 14a and 14b) – Signed by directors and certified by an advocate.
- Submission and Registration:
- File the documents via BRELA’s Online Registration System.
- Pay the registration fee (varies based on company type).
- Issuance of Certificate of Incorporation – Once approved, BRELA provides official legal recognition.
(b) Tax Registration with Tanzania Revenue Authority (TRA)
Governing Law: Income Tax Act-Cap 332; Value Added Tax Act-Cap 148
After company registration, the next step is tax registration with the Tanzania Revenue Authority (TRA).
- Taxpayer Identification Number (TIN) Registration – Required for both the company and individual shareholders.
- Value Added Tax (VAT) Registration – Mandatory for companies exceeding the VAT threshold.
- Tax Compliance Certificate – Issued upon fulfilling tax obligations, required for operations and business licensing.
(c) Business Licensing & Compliance
- Obtain a Municipal Business License from the local government.
- Sector-Specific Licensing is required for businesses in regulated industries such as finance, telecom, and mining.
2. Shareholder Requirements
Foreign companies must comply with ownership rules based on their chosen legal structure:
(a) Foreign Shareholder Rules
- Foreigners can own 100% of a Tanzanian company in most sectors.
- Regulated sectors (e.g., mining, telecommunications, banking) may require local partnerships or impose additional requirements.
- Minimum Capital Requirement: Generally, no minimum capital is required for LLCs, but investments under the Tanzania Investment Act must have at least $500,000 to qualify for incentives.
(b) Local Shareholding Option
- Businesses with 51% local ownership benefit from fewer regulatory hurdles and tax incentives.
- Joint ventures with Tanzanian partners ease compliance with work permit regulations and government policies.
3. Work Permits and Residence Permits
Governing Law: The Non-Citizens (Employment Regulation) Act, 2015
Foreign investors and employees must obtain work and residence permits before beginning operations.
(a) Types of Work Permits
- Class A – For investors and business owners.
- Class B – For skilled employees working for Tanzanian companies.
- Class C – For religious workers, researchers, and missionaries.
(b) Residence Permits
- Issued by the Immigration Department.
- A valid work permit is required before applying for a residence permit.
(c) Application Process & Timeline
- Processing Time: 30–60 days.
- Companies are expected to hire Tanzanians except for specialized skills unavailable locally.
4. Payroll Taxes & Compliance
Governing Law: Income Tax Act, 2004; Employment and Labour Relations Act, 2004
Employers must comply with payroll tax regulations:
| Tax/ Contribution | Rate | Who Pays? |
|---|---|---|
| PAYE (Income Tax) | 9%-30% | Employee |
| Skills Development Levy (SDL) | 4% | Employer |
| Social Security (NSSF) | 10% | Employer |
| Workers Compensation Fund (WCF) | 1% | Employer |
Employers must file and remit taxes monthly via the Tanzania Revenue Authority (TRA) portal.
5. Estimated Registration Timeline
| Stage | Timeframe |
| Company Name Reservation (BRELA) | 1-3 days |
| Company Registration (BRELA) | 5-7 days |
| Tax & License Registrations (TRA, Local Authority) | 7-14 days |
| Work Permit (Class A/B) | 30 days |
| Residence Permit (Class A/B) | 30 days |
6. Estimated Costs for Registering a Foreign Company in Tanzania
| Stage | Estimated Cost (TZS/USD) | Timeframe |
| Company Registration (BRELA) | TZS 50,000-600,000 | 7-14 days |
| TIN & VAT Registration (TRA) | Free | 3-7 days |
| Municipal Business License | TZS 100,000-1,000,000 | 14-21 days |
| Work Permit (Class A) | USD 1,000-3,000 | 30 days |
| Residence Permit (Class A) | USD 2,000+ | 30 days |
7. Other Key Considerations
(a) Local Representative Requirement
- A foreign-owned branch must appoint a local representative with Power of Attorney.
(b) Banking & Financial Compliance
- Businesses must open a corporate bank account in Tanzania.
- Financial records must comply with International Financial Reporting Standards (IFRS).
(c) Sector-Specific Regulations
- Audit firms must register with the National Board of Accountants and Auditors (NBAA).
- Investment projects above USD 500,000 must register with the Tanzania Investment Centre (TIC).
Conclusion
Registering a foreign company in Tanzania is a structured but manageable process. Foreign investors should ensure compliance with legal, tax, and employment regulations to operate smoothly. Seeking professional legal or consultancy support can help simplify regulatory processes and avoid penalties.
Written by Linda Lucas
