Tanzania Business 101: What you need to know - Part C

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.

44. As a foreigner can I own land in Tanzania, for investment or otherwise?

No. A non-Tanzanian individual or a company in which majority of equity is owned by foreigners cannot own land except through the Tanzania Investment Centre. The investor will be required to register its project at the Tanzania Investment Centre and obtain a certificates of incentives. Once this certificate is obtained the investor can progress to the next step to obtain a derivative title which allows the Tanzania Investment Centre to be the title holder and in turn the Tanzania Investment Centre grants a derivative title to the investor for a specific project as disclosed to the Tanzania Investment Centre for a tenure not exceeding the term of the right of occupancy which can be 33, 66 or 99 years.  If the land in question is under the village land, then it will be necessary to convert that land into general land and then proceed with the derivative title at the Tanzania Investment Centre. Also, there are restrictions imposed on entities which are majority foreign owned from leasing village land, hence conversion to general land becomes necessary.

45. Are tax exemptions granted to investors? What about stabilization arrangements?

Yes. There are general tax exemptions granted under the relevant tax legislations to specific sectors or activities meaning the exemptions will apply to all persons who operate in those sectors or undertake business in the exempted activities. 

Also, it is possible to negotiate additional or separate tax breaks or exemptions as a strategic investor or special strategic investor either under the Tanzania Investment Centre through the National Investment Steering Committee or through direct negotiations with the relevant Government Authorities, which includes the Tanzania Revenue Authority. Also, there are tax breaks granted to the investors falling under the regime of the special economic zones under the EPZA - https://www.epza.go.tz/. 

In principle tax stabilization clauses are not allowed particularly in the extractive sector which falls under the natural wealth and resources legislations. In rare instances a grace period can be negotiated directly but overall these are rare. Accordingly, the changes in tax legislations apply from the date of commencement. 
It is important to note that the exemptions granted arising from negotiations which are not applicable to all persons operating in the same sector and doing same business activities will be subject to time limitation or specifics as to the extent and type of tax exemptions. Hence, blanket exemptions are not applicable unless it is projects involving the Government and its Authorities. 

46. Is it mandatory to register a project under the Tanzania Investment Centre?

No. Ordinarily it is not mandatory to register projects or investment under the Tanzania Investment Centre, although there are limited sector specific licences which require a certificate of incentives from the Tanzania Investment Centre.  

Registration with the Tanzania Investment Centre has its benefits. To the extent that the project has attained the requirements for registration with the TIC (stipulated here: https://www.tic.go.tz/faqs/what-criteria-do-investors-need-to-have-to-register-the-project-with-the-center), it is beneficial to proceed with registration whether or not the investor intends to own land. 

Note that there are some sectors which are excluded namely: 

1. a business enterprise which is authorised to conduct reconnaissance prospecting or mining operations under the Mining Act, or is seeking authorisation to conduct any such operations;
2. a business enterprise which is authorised to conduct exploration or production operations or to construct or operate a pipeline under the Petroleum Act or is seeking authorisation to conduct any such operations; and
3. a business enterprise which is engaged in the manufacture, marketing or distribution of hazardous chemicals, armaments or any type of explosives.

Notwithstanding, the Tanzania Investment Centre can issue an automatic certificate of incentives to any investor otherwise excluded to enable them enjoy the guarantee of transfer of capital, profits and dividends. and guarantees against expropriation. 

47.What are the most common sectors for foreign investment?

Tanzania’s business environment is diverse and there are opportunities across all sectors. The areas with high investor interest are extractives (mining, oil and gas), energy, agriculture, telecommunication and technology, fintech and financial services (i.e. microfinance, financial institutions and banks), tourism and entertainment, manufacturing and industries, property and construction, gaming, infrastructure and PPP investments. 

48. Can a foreign investor participate in the Dar es Salaam Stock Exchange (DSE)? 

Yes. As a general principle a foreign investor can participate at the DSE. There are maximum thresholds which the listed companies are required to observe when it comes to allowing foreign investors to acquire securities issued by such publicly listed and traded companies. 

49. Can foreign listed entities cross list at the Dar es Salaam Stock Exchange?

Yes. It is possible for foreign listed companies to be cross listed at the DSE subject to fulfiling the requirements imposed by the Capital Markets Authority and the DSE. 

50. Can an investor acquire majority stake of a publicly listed entity at the Dar es Salaam Stock Exchange?

Yes. It is possible for a foreign investor to acquire majority stake of the securities listed at the DSE provided that the required steps for such substantial acquisitions are met and the prior approvals from the DSE and the CMSA are obtained, including the approval from the shareholders of the listed entity.

51. Can a foreign investor buy treasury bonds and bills issued by the Government of Tanzania?

No. Ordinarily the treasury bonds and bills are limited to Tanzanians including companies, insurance, investment and pension funds registered and licenced in Tanzania. Sometimes the Government may resolve to borrow directly from foreign banks, international organisations and financial institutions through direct arrangements, and the Government will issue security as shall be agreed in those contracts.