Tanzania Business 101: What you need to know

This article is part of a series exploring key aspects of doing business in Tanzania. Part A covers the incorporation process and regulatory framework, Part B examines foreign exchange controls and export considerations, Part C discusses taxation, property ownership, and investment regulations, and Part D focuses on dispute resolution and choice of law.

1. If I register a business in Tanzania, does it cover both Tanzania mainland and Zanzibar?

No. It does not. Each jurisdiction has separate registries meaning it is necessary to register, apply for licences / permits and comply with regulatory obligations separately under each jurisdiction.

Please note that references to Tanzania in this article refer to Tanzania mainland only. No information has been provided regarding Tanzania Zanzibar.

2. Can a business be virtually without having a physical presence in Tanzania? 

No. Companies Act and the Business Licensing Act, among other laws still require entities during business in Tanzania to have a physical presence i.e. an office. Hence, virtual business without physical address is not possible. 
There are instances where there is co-occupation of one office by multiple entities provided that there is a representative for all entities and each entity strictly observes its regulatory compliance obligations. Also, for businesses where foreign entities supply services or goods to a local entity, it is common for such foreign suppliers not to set up an office in Tanzania because their role is to supply and their obligations terminate the moment the goods are loaded at the port of departure outside of Tanzania. 
However, there are some sectors particularly those bound by local content requirements where it is mandatory to set up an office in Tanzania and have joint venture arrangements with locals even if it is a one off supply of goods and/or services: e.g. pdf link here and here.

3. Which legal entity can a foreign investor register in Tanzania for doing business?

A foreign investor has an option to register a limited liability company where the liability of members is limited by shares, a partnership, a sole proprietorship or a branch (a branch of a foreign entity). These entities are considered to undertake commercial operations with the intention of making profit meaning there will be obligation to pay corporate taxes, among others. Prior to establishing a legal entity, it is important to consider the sector of operations and obtain tax advice on the best legal entity to register because each has its pros and cons when considered from a project and tax perspective. 

4. What are the capital requirements for investing in Tanzania?

The Companies Act does not impose a minimum capital amount so it can be as small as US$ 50. However, some sectors impose a minimum capital in order to obtain a specific regulatory licence. Hence, whilst the legal entity will be incorporated at the company registry (https://www.brela.go.tz/), the legal entity will not be able to obtain a sector specific licence until it increases its share capital to meet the minimum capital obligations required under the specific sector. Increase of share capital is a simple process which shouldn’t be difficult to implement. 

5. Is it necessary to issue and pay up the entire share capital?

No. The Companies Act does not require all share capital to be issued or be fully paid up. This is left at the discretion of the shareholders of the company.

However, the sector specific licence may require a certain amount of share capital to be issued and paid up and will require proof that the said share capital is paid up. Note that, the share capital payment should be direct deposit to the company’s bank account in Tanzania. Funds advances for operation expenses or a loan cannot be considered as paid up share capital unless there are relevant corporate approval documents which convert such capital injections and loans into equity.

Take note to ensure that the audited financial statements (AFS) of the company indicate whether shares are paid up or not to avoid any future issues where the shares are indicated as paid up in the AFS but in reality they are not paid up. 

6. Are different classes of shares allowed?

Yes. Different classes of shares are allowed under the Companies Act. To mention a few, ordinary, preferential and redeemable shares can be issued by the company, provided that at least one shareholder should hold ordinary shares. One shareholder can hold shares in different classes. Also, it is possible for one class of shares to have different rights attached to that share class, usually it is indicated in more details in the shareholders agreement and the subscription agreement. 

7. What licences and permits are required before commencing a business?

I have split these into two categories. Category A is for general licences and permits which are necessary regardless of sector of operations, and category B are sector specific. Category A is divided into two parts: Part A - necessary licences and permits prior to commencement of operations and Part B – can be obtained in due course but not more than 6 months from incorporation. 

Category A - Part A are as follows: 

1. Certificate of Incorporation/ Registration (https://www.brela.go.tz/); 
2. Tax Identification Certificate (https://www.tra.go.tz/); and
3. General Business Licence (https://business.go.tz/obtain-a-business-license). If the nature of your business is not on the list, it is possible to liaise with the relevant Authority and identify a category to register under. 

Category A – Part B are as follows: 

1. Social Security Registration (https://www.nssf.go.tz/); 
2. OSHA (https://www.osha.go.tz/); 
3. Fire Registration Certificate (https://portal.zimamoto.go.tz/); 
4. Value Added Tax Certificate as soon as the business attains the minimum threshold (https://www.tra.go.tz/index.php/value-added-tax-vat/97-how-should-i-register-for-vat); 
5. Workers Compensation Fund Registration Certificate (https://portal.wcf.go.tz/);
6. Registration and payment of service levy as stipulated under the Local Government Finances Act (https://www.tra.go.tz/Images/headers/CHAPTER_290-THE_LOCAL_GOVERNMENT_FINANCE_ACT.pdf); and
7. If any the employees has outstanding loan from the Higher Educations Student Loan Board, the company shall register, deduct from salary and remit otherwise penalties will apply  to the company (https://www.heslb.go.tz/?lang=).

Category B 
There are sector specific depending on the business operations and sector(s) of the company and it is possible for one entity to fall under multiple regulatory bodies. Prior to commencement of business, identify the specific sector(s) and obtain legal advice on the sector specific licences which may be required. The regulatory structure of Tanzania meaning, the default position for any investor is to assume that there is a sector specific licence required before being proven otherwise. Note that penalties will apply for undertaking business operations without sector specific licence unless the sector is unregulated.

8. Is it possible to register single shareholder companies in Tanzania? 

No. From a practical perspective, is it not possible to register a single shareholder company. The requirement of minimum two shareholders can be met by issuing 1 share to the second shareholder. 

9. Are minority shareholders protected?

Yes. Whilst there is no specific provision in the Companies Act which expressly lists the protections of the minority shareholders, the minority shareholder may institute legal proceedings against the company if the company is operating contrary to the law or the minority shareholder is of the opinion that its rights have been or about to be breached. 

10. How soon should the local entity file tax returns from the incorporation date?

Immediately after incorporation, the entity should endeavor to get a tax identification certificate and commence filing tax returns whether or not business has commenced and/or there are no profits. If business has not commenced, the returns can be zero but must be filed. Otherwise penalties for non-filing will continue to accrue even if it is zero returns. During incorporation phase, it is important for the entity to retain a tax declarant and to identify an accounting firm which will ensure monthly returns are filed religiously.

11. What is the timeframe for registering a business in Tanzania?

Registering a business and obtaining Category A – Part A registration certificates usually takes between 14 to 20 working days. It is important to note that they cannot be applied concurrently. It is necessary to have an office lease agreement stipulating the address of the entity and a tax clearance certificate. 
For the registrations under Category A – Part B usually takes between 3 to 6 months to complete because some involve physical visit by the Regulatory bodies. 
For those under Category B, the timeframes can vary greatly depending on the processes and the requirements imposed by the relevant regulatory bodies, but usually not exceeding 2 years from the date of application.  

12. Is a local director and/or local ownership in joint venture with a Tanzanian necessary?

No. In principle it is possible to register a company at the company registry which is 100% foreign owned and all directors are foreigners. However, some sectors require local directors and/or local ownership as a condition for a sector specific licence or as part of local content requirements which are imposed in some sectors e.g. mining, oil and gas.
On assumption that no local directorship or local ownership is required, the investor may require a local director or have one of the foreign directors to come in Tanzania for biometrics as part of the process to obtain a tax identification certificate for the legal entity. 

13. Can an investor remit dividend outside of Tanzania freely?

Yes. This is a guaranteed right of every investor in the country provided that, taxes are paid for which the dividends relate to and the relevant documents are submitted to the remitting local bank. Note that, the incorporation documents and/or the shareholders agreement may restrict payment of dividends either until the outstanding loans are paid or on an unpaid shares. 

14. Is there a requirement to obtain sector specific licence for fintech business in Tanzania?

Yes. Ordinarily there is a sector specific licence issued by the Bank of Tanzania (BOT) and/or the Tanzania Communications Regulatory Authority - https://www.tcra.go.tz/. Note that there may be additional sectorial licences to be obtained prior to being able to undertake fintech business. 

15. Is it a must to register a trade/service mark?

No. It is not a must to register a trade or service mark, but it is strongly recommended to do so to protect your brand/mark. Note that there are separate registries for Tanzania mainland and Zanzibar. Also, Tanzania has legislations for copyrights, industrial rights and patents and each has its own registration processes. Tanzania recognizes some IP rights which are registered outside of Tanzania but it is important to always cheque if there is such local recognition and sometimes registering directly in Tanzania registries affords more protection to the proprietor. 

16. Are there anti-trust / merger laws in Tanzania?

Yes. There are anti-trust laws in Tanzania which are enforced and regulated by the Fair Competition Commission (FCC) - https://www.fcc.go.tz/. It is important to note that acquisitions and dispositions of assets or equity are subject to obtaining a merger approval provided there is a change of control within or outside of Tanzania, there is a change of control and a combined threshold is met and the current threshold is Tanzanian Shillings 3.5 billion (approx. US$ 1.5 million). It is worth noting that, there are recent amendments to the Fair Competition Act of Tanzania and you can read more here: https://www.clydeco.com/en/insights/2024/11/notable-amendments-to-the-fair-competition-act.
Note that, a consumer may lodge a complaint at the FCC if their rights have been breached by a service provider, manufacturer or distributor as provided in the following link: https://www.fcc.go.tz/en/legal-framework. 

17. Are there restrictions on non-compete and exclusivity contracts?

Yes. There are restrictions on these types of contract and in principle such contracts are prohibited. However, it is possible to apply and obtain an exemption from the Fair Competition Commission. Usually the exemptions are issued on a limited time basis, requiring renewals. 

18. Do standard terms and conditions need to be registered?

Yes. Standard terms and conditions need to be registered by the Fair Competition Commission. 

19. Are there data protection laws in Tanzania?

Yes. There are data protection laws in Tanzania and it is a new legislation. Among other obligations, there is a requirement to register with the Data Protection Commission as shown on this link: https://www.pdpc.go.tz/en/.  Data collectors which includes companies which collect customer, employees, service providers etc. data must be registered and observe the requirements imposed under the data protection laws and regulations. 
Note that it is now possible for a person to file a complaint that their data was used, shared or processed contrary to their will or without their consent. Similarly, there is an Electronic Transactions Act which provides the obligation to protect the electronic data of consumers and other third parties which should be read together with the data protection laws and regulations. 

20. Is there a requirement to register ultimate beneficial owner (UBO)?

Yes. There is a mandatory requirement to register an ultimate beneficial owner for entities in Tanzania. The UBO registry is under the company registry, BRELA and the link for registration can be found here: https://bo.brela.go.tz/.

21. Is there consumer protection framework under the laws of Tanzania?

Yes. There are various laws which provide on consumer protection, including but not limited to the anti-trust legislation as addressed herein above. There are those which are sector specific and those which are applicable generally. Consumers have a right to institute legal proceedings against the person who has breached their rights and may be awarded damages, among others. 

22.  How do I provide a service or supply goods to a Government Authority in Tanzania?

Procurement of goods and services by Government Authority is done through competitive public procurement processes unless exempted or undertaken through unsolicited projects. Unsolicited projects and contracts are usually negotiated directly with the relevant Government Authority and can be initiated by directly contacting the Government Authority. 
The competitive bids are usually announced publicly by the relevant Government Authorities’ on their websites or newspapers and there is https://www.ppra.go.tz/services/taneps where overall Government Tenders can be found. Also, there are private sites which post tenders announced by Government Authorities. Usually bids are submitted electronically through the relevant site or via emails, although sometimes hard copy submissions may be applicable. 
The Government body which deals with public procurement and handles any complaints arising from the procurement process and/or award is the Public Procurement Authority: https://www.ppra.go.tz/ and any appeals are filed at the Public Procurement Appeals Authority: http://ppaa.go.tz/.

23. Is there public private partnership law in Tanzania?

Yes. There is a Public Private Partnership Act and it is very active. The Government is keen to enter into PPP arrangements and investors are welcome across various sectors. There is a detailed process for initiating the PPP process to finalization and can be read here: https://www.clydeco.com/clyde/media/fileslibrary/Publications/2013/MEBE_-_010_-_Public_Private_Partnerships_in_Tanzania_the_new_regime_explained_-_Eng_-_Sep2013_2.pdf and https://www.clydeco.com/en/insights/2023/07/tanzania-ppp-act-amendments. 
Note that, government guarantees are not granted for PPP projects but other forms of government support can be negotiated and agreed as highlighted here: https://www.linkedin.com/pulse/energy-sector-tanzania-amalia-lui-o0vqf/.

24. How is the Regulatory Framework in Tanzania?

As highlighted above, Tanzania has a strong regulatory framework and a lot of sectorial activities are subject to specific regulatory control. It is advisable to identify the regulatory body(ies) which the investor is subject to and identify the requirements for registration, including licensing and annual fees prior to initiating the incorporation processes. 

25. What are the available options to exit a company or a business?

One can exit the company in totality i.e. ceasing to hold equity or sell the business segment which is no longer required: 

1. Share transfer or transfer of the business which is no longer required and retaining the rest of the business activities
2. Call and forfeiture if the shares are not paid and there is failure to pay when called to do so
3. Cancellation of shares and reduction of share capital, with or without payoff
4. Redemption of shares if they were issued as redeemable shares
5. Voluntary or creditor winding up of the company
6. Striking off of the company from the company register

It is important to identify if there are any exit obligations imposed under the law particularly to those sectors where there is an agreement entered between the investor and any Government Authority. 

Also, tax considerations should be taken into account during the exit process because usually there are taxes payable on exit or transfer of shares or business. The company registry is unlikely to approve any exit, transfer or closure of business without a valid tax clearance certificate. 

Note there is a requirement to advertise the acquisition of a business or equity under the Transfer of Businesses (Creditors Protection) Act. Also, worth chequeing if a merger approval from the Fair Competition Commission will be required. 

26. What are the options for restructuring of a company or a business in Tanzania?

Restructuring can be triggered by a number of factors, including: 

1. when a shareholder wants to exit the company; 
2. there is a new investor in the company; 
3. Government acquiring equity in the company either by operation of the law or by agreement between equity holders and the Government; 
4. Subscription of additional shares but not all shareholders want or are able to subscribe to more equity; or
5. Conversion of debt to equity etc. 

There are multiple options for restructuring ranging from an acquisition of shares through a transfer, allotment of shares etc. The Companies Act is accommodating of the various structures which may be adopted, including the nature of shares to be issued. 
Overall, it is necessary to consider the regulatory approvals which need to be obtained for the intended restructuring, including a merger approval from the Fair Competition Commission, payment of taxes and licence conditions depending on the licences held by the target entity. 

27. Can a restructuring occurring outside of Tanzania at or above the nonresident shareholder trigger regulatory obligations in Tanzania? 

Yes. To mention a few:

1. Merger approval from the Fair Competition Commission can be trigged by a restructuring occurring at or above a nonresident parent level. Note that the law does not exempt the changes occurring in the stock exchanges outside of Tanzania affecting the shareholding structure of the parent company which has a subsidiary in Tanzania. 
2. Payment of taxes i.e. capital gains tax can be triggered even if the acquisitions or the restructuring is occurring outside of Tanzania, no matter how many levels up. 
3. Consent / approval / notification to a licensing authority may be applicable because there are some licences which require the issuing authority to consent, approve or be notified prior to such restructuring occurring outside of Tanzania. 

28. If a foreign investor wants to enter into a joint venture with a Tanzanian, what are the key issues to consider?

Prior to entering into any joint venture arrangements, it is important for the foreign investor and the local joint venture partner to consider the following: 

1. Undertaking due diligence (both legal, financial, tax and criminal) on the local partner
2. The nature of business to be undertaken and the requirements under the law
3. The source of capital and contribution obligations for each party
4. Declaration of dividends and conditions there to especially if shares allotted remain unpaid
5. Subscription of additional shares and dilution of a party who is not able to acquire and pay upfront the additional capita
6. Financial support during the initial operations of the company and source thereof
7. Shareholder loans and priority on their repayment, including any interest payable
8. Exit mechanisms, and tag / drag rights if applicable and disposition of assets and settling of liabilities 
9. Loss and how loss will be shared between the parties
10. Business development and marketing for business growth, including financing for the marketing initiatives
11. If directors and local partner will be entitled to any payments whether consultancy or monthly payments from the business 
12. If the foreign investor is the majority shareholder and the JV entity requires land, how will the land be owned given the restrictions on land ownership imposed on foreigners. 
13. What are the expectations of each party and milestones to be attained by each
14. If the investor is buying into the existing business of a local partner, due diligence must be undertaken, particularly legal, tax and financial to ensure the investor does not step into any liabilities without adequate prior knowledge. 
15. Dispute resolution mechanisms
16. If the investor and/or the local partner is an individual, what happens upon death of one of them
17. Restriction on undertaking personal businesses locally which compete with the local business by the JV parties
18. If any party is making contribution otherwise than in cash, how such contribution will be quantified 
19. Board membership and quorum and what happens on dilution 
20. Quorum for shareholders meetings and voting rights including what matters are reserved for shareholders and not under Board mandate
21. Admission of new shareholders and dilution of the initial shareholders, including if Government is entitled to free carry interest how it will be shared between the JV partners. 
22. Entering into a binding shareholders agreement to provide the rights and obligations of each of the parties, some of which are listed under this paragraph. 

29. How can a nonresident shareholder pay itself outside of Tanzania from the local entity funds?

All remittances to outside of Tanzania by a resident person require supporting documents. A nonresident shareholder can remit money to itself to outside of Tanzania under the following circumstances (among others): 

1. Remittance of dividends properly declared by the local entity and payment of taxes prior to the remittance; 
2. Reduction of nominal value of shares fully paid up if there is excess capital which is not required for the business; 
3. Reduction of share capital with payoff; or
4. Payment of services provided by the nonresident shareholder to the local entity on an arm’s length basis and transfer pricing considerations have been taken into account.

30. Is it possible to do criminal cheques on a resident individual? 

Yes. This is possible and it is usually undertaken at the Ministry of Home Affairs or the police. The individual concerned will visit the relevant office for finger printing and within 14 days, the results will be issued.

31. Can an investor freely trade in gold and minerals in Tanzania? 

No. Trading in (i.e. buying or selling) gold and other minerals is restricted and subject to regulatory controls. Any person, local or foreign who wishes to trade in minerals, including gold must hold either a mineral right entitling such person to mine, a dealer or refinery/smelting/processing licence. Also, mineral trading should be done at the designated mineral trading centres unless the minerals traded are exempted. There is a restriction against exportation of raw minerals so processing prior to export is necessary except in cases of minerals which cannot be processed without being depleted. Investors should avoid buying minerals particularly gold from persons who are not licenced or who cannot validate how they came into possession of such minerals otherwise exportation can be complicated. All export processes must be undertaken by a person who holds a licence hence the investor should not retain or hold the gold until after export unless the investor has valid licences and permits allowing him/her to trade in minerals. 
Buying centres are located at:  and . Also, it is anticipated that there will be establishment of mobile buying centres to allow easy trading of minerals. 
Note that this is an area shrouded with persistent fraud. Conduct extensive due diligence on the seller including site visits and establishing the source of the gold and retain services of reliable advisers especially legal and tax experts prior to any payment or engagement with the seller.  
Also, Tanzania residents are restricted from trading in gold coins either physically or virtually within or outside of Tanzania without the approval from the Bank of Tanzania. 

32. Is there ESG specific legislation in Tanzania?

Currently Tanzania does not have a centralized specific ESG legislation but there are frameworks for ESG under various legislations. More information can be found here: https://www.clydeco.com/en/insights/2024/10/esg-and-its-regulatory-framework-in-tanzania. Also, ESG is catching on in Tanzania and it is expected that the ESG legal framework will be released soon. 

33. Is there carbon trading legislation in Tanzania?

Yes. There is a Carbon Monitoring Centre (https://www.ncmc.sua.ac.tz/tanzania-carbon-trading-regulations) and carbon projects can be registered under the Centre. The legislative framework is relatively new but there have been carbon projects which were existing prior to the establishment of the registration Centre. 

34. Are NGOs regulated in Tanzania?

Yes. All non-government organisations which operate or intend to operate in Tanzania must be registered and licenced by the Registrar of NGOs. The process and documents are as provided here:
Note that, for international NGOs, there must be at least two founding members to qualify for registration in Tanzania. Once registration is completed, there are ongoing filing and disclosure obligations which should be complied with strictly.