Investors' FAQs for Establishing Business in Tanzania
- Joseph Magweiga Marwa
- Feb 8
- 10 min read
Q: What is the minimum capital required to start a business in Tanzania?
A: The capital requirement varies by industry. For example:
Microfinance businesses: TZS 20,000,000.
Investing through Tanzania Investment Centre (TIC): $50,000 for local investors and $500,000 for foreign investors.
For small scale businesses any capital is allowed but to enjoy the investment incentives you need to qualify for minimum capital as mentioned above
General Questions
Q: How long does it take to register a company in Tanzania?
A: The entire process typically takes between 3 to 14 days, provided all documentation is in order and there are no complications.
Q: Do I need to be physically present in Tanzania to register a company?
A: No, the registration can be completed through a power of attorney, allowing you to finalize the process from abroad. However, for opening a bank account and securing certain permits, a visit to Tanzania may be required.
Q: What is the cost of registering a company in Tanzania?
A: Costs include government fees (approximately $250 for local entities) and service fees if using an agent.
Q: Can I operate as a sole proprietor in Tanzania?
A: Yes, sole proprietorship is allowed for locals. However, foreign investors typically need to register a Limited Liability Company (LLC) or another form of incorporated business.
Labor and Employment
Q: Can I hire more foreign workers if necessary?
A: Yes, you can apply for special exemptions if your business requires more foreign employees, especially for technical positions. Approval from the Ministry of Labour is required.
Q: What is the local-to-foreign employee ratio required by law?
A: Generally, the ratio is 10 local employees for every 1 foreign employee, but exceptions can be granted for specialized roles.
Q: What are the working hours in Tanzania?
A: The standard working hours are 8 hours per day or 48 hours per week, as stipulated by labor laws.
Legal and Compliance
Q: What are the penalties for non-compliance with OSHA?
A: Non-compliance with OSHA regulations can result in heavy fines and suspension of your business license. Workplace safety is critical for continued operation.
Q: Is dual taxation a concern for foreign investors?
A: No, Tanzania has Double Taxation Agreements (DTAs) with countries such as the UK, India, and Canada to prevent double taxation on income.
Q: How do I secure land for investment purposes?
A: Investors can lease land from private owners or apply for derivative rights through the Tanzania Investment Centre (TIC). For large-scale projects, land allocation may be facilitated by the Ministry of Lands.
Q: What is required for environmental compliance?
A: An Environmental Impact Assessment (EIA) Certificate is mandatory for specific projects and requires submitting an EIA report to the National Environmental Management Council (NEMC). Project like Mining, Fuel and Gas Stations, Constructions of factories, plants or dams etc
Taxation
Q: What is the corporate tax rate in Tanzania?
A: The corporate tax rate is 30% for resident companies. Agricultural enterprises benefit from a reduced rate of 5% for the first three years of operation. Projects registered under special Economic zones (EPZA) like EPZ or SEZ can enjoy tax holiday and VAT exemptions up to 10 years
Q: Do I need to register for Value Added Tax (VAT)?
A: Yes, if your How should I register for VAT? Registration for VAT is mandatory to every person upon attaining the registration threshold of 200 million in the period of twelve months and above. This condition applies to all types of registration except for professional service providers, Government entity or institution which carries on economic activity and an intending traders after fulfillment of sufficient evidence such as contracts, tenders, building plans, business plans and bank financing. A person who is required to be registered shall make an application to Commissioner General within thirty days (30) but an intending trader may make such application at any time.
Q: Are there incentives for investors in Tanzania?
A: Yes, TIC and EPZA offers incentives like tax holidays, duty exemptions, and streamlined licensing for qualifying investments.
Q: What is the withholding tax rate in Tanzania?
A: Withholding Tax rates
Description of Payment | Rate for Resident | Rate for Non Resident |
(i)Dividends from the Dar es salaam Stock Exchange listed corporations (ii) Dividend from resident corporation to another resident corporation where the corporation receiving the dividend holds 25% or more of the shares in the corporation | 5%
5% | 5%
NA |
Dividends from other corporations | 10% | 10% |
Interest | 10% | 10% |
Royalties | 15% | 15% |
Other Withholding payments from Investment Returns. | 15% | 15% |
Rental Income | 10% | 15% |
Technical services fees (mining) | 5% | 20% |
Transport (Non-resident operator/ charterer without permanent establishment). | N/A | 5% |
Insurance Premium | N\A | 5% |
Natural Resources Payment | 15% | 15% |
Service Fees | 5% | 15% |
Directors Fee (Non full time Directors) | 15% | 15% |
Commission to agents by service providers on money transfer through mobile phones. | 10% | N/A |
Payments for goods supplied to Government and its institutions by any person. | 2% of gross payment | N/A |
Aircraft | 10% | 15% |
Other Assets | N/A | 15% |
Other Withholding | 15% | 15% |
Banking and Finance
Q: Can foreign investors open bank accounts in Tanzania?
A: Yes, foreign investors can open corporate bank accounts, though fulfilling Know Your Customer (KYC) requirements may necessitate a visit to Tanzania.
Q: Is it easy to repatriate profits from Tanzania?
A: Yes, foreign investors can repatriate profits, dividends, and capital in accordance with the Bank of Tanzania (BOT) regulations.
Industry-Specific Questions
Q: What sectors are open for foreign investment?
A: Key sectors include agriculture, mining, energy, tourism, real estate, manufacturing, telecommunications, financial services, and microfinance.
Q: Are there restrictions on foreign ownership?
A: Some industries, like small-scale mining and retail trade, are reserved for Tanzanians. Otherwise, foreign ownership is unrestricted in most sectors.
Q: Can foreign investors acquire land in Tanzania?
A: Foreign investors cannot own land outright but can lease land for investment purposes through TIC or private agreements.
Q: Are renewable energy projects encouraged in Tanzania?
A: Yes, the government supports renewable energy investments and provides incentives for solar, wind, and hydropower projects.
Other Practical Concerns
Q: Do I need a work permit to operate a business in Tanzania?
A: Yes, a Class A work permit is required for investors. Additional permits may be necessary depending on the type of business.
Q: What are the electricity connection requirements for businesses?
A: Applications for electricity connections are processed through TANESCO. The time required depends on location and project complexity.
Q: Are there protections against expropriation?
A: Yes, Tanzania guarantees protection against expropriation under the Tanzania Investment Act, 1997, ensuring security for foreign investors.
Q: How do I transfer property rights in Tanzania?
A: Property transfers are facilitated by the Ministry of Lands. Documentation such as sale agreements, land titles, and consent from local authorities are required.
Q: What are the benefits of registering with TIC?
A: The benefits are divided into two categories: fiscal incentives and non-fiscal incentives.
Q: What fiscal incentives does TIC offer to investors?
A: TIC offers:
75% Import Duty Relief on capital goods for projects.
0% Import Duty on specific capital goods used in production.
Q: What qualifies as capital goods under TIC?
A: Capital goods are tangible assets used in the production of other goods or services, such as:
Plant
Machinery
Tools
Equipment
Buildings for production purposes.
Q: Are there specific criteria for items classified as plant and machinery?
A: Yes, they must:
Have a lifespan exceeding 12 months.
Be directly used in the production of goods or rendering of services.
Non-Fiscal Incentives
Q: What non-fiscal incentives does TIC provide?
A: TIC provides:
Investment Guarantees: Protection under the Tanzania Investment Act.
Free Transfer of Capital and Profits: Assurance for repatriation of profits and capital.
Guarantee Against Expropriation: Protection from government seizure of investments.
International Dispute Settlement: Access to the International Centre for the Settlement of Investment Disputes (ICSID).
Automatic Immigration Quota: Approval for up to five immigration permits for key personnel.
Access to Domestic Credit: Foreign investors can access loans from local banks.
Q: What is the purpose of TIC's One-Stop Shop Services?
A: The One-Stop Shop is designed to simplify and expedite the investment process by centralizing key services such as business registration, licensing, and land allocation.
Q: Can foreign investors access loans from Tanzanian banks after registering with TIC?
A: Yes, TIC allows foreign investors to obtain credit from domestic financial institutions.
Q: Does TIC provide any guarantees to protect my investment?
A: Yes, TIC guarantees investment protection, including safeguards against expropriation and international dispute resolution through ICSID.
Incentives Offered by EPZA for Investors in Tanzania
I. Investment Information
Q: What investment information does EPZA provide to investors?
A: EPZA offers reliable and relevant information, including:
Available investment opportunities.
Market trends and data.
Details about Special Economic Zones (SEZs) investments.
Assistance in establishing investments within SEZs.
II. Facilitation Services Through One-Stop Service Center (OSSC)
Q: What facilitation services does the One-Stop Service Center (OSSC) provide?
A: The OSSC offers a range of support services, including:
Guidance on establishing SEZ investments.
Assistance with company registration and administrative procedures.
Support in obtaining factory space or serviced land.
Facilitation of tax incentives, visas, and work permits.
Logistics support for clearing and forwarding merchandise.
Connections to key public and private organizations.
Identification of potential suppliers and joint venture partners.
Post-investment support.
III. Tax Incentives
A. EPZ User License
Q: What tax incentives are available under the EPZ User License?
A: Investors with an EPZ User License enjoy:
Duty and Tax Relief:
Exemption from customs duty, VAT, and other taxes on raw materials and capital goods.
Corporate Tax Exemption:
10 years of exemption, followed by corporate tax as per the Income Tax Act.
Withholding Tax Exemption:
Exemption on rent, dividends, and interest for the first 10 years.
Local Taxes and Levies:
Exemption from local government taxes and levies for 10 years.
Customs and Inspections:
On-site customs inspection and exemption from pre-shipment inspection requirements.
Immigration and Visas:
Provision of business visas at the point of entry for key personnel.
Automatic immigration quota for up to five persons during the startup period.
Unconditional Transferability:
Free transfer of profits, dividends, loan repayments, royalties, and emoluments for foreign staff.
B. SEZ User License
Q: What tax benefits are available under the SEZ User License?
A: Benefits include:
Customs and Tax Relief:
Exemption from customs duty, VAT, and other taxes on raw materials and capital goods.
Withholding Tax:
Exemption on interest from foreign-sourced loans.
Utility Charges:
Exemption from VAT on utility services like electricity and water.
Customs Inspection:
On-site customs inspection of goods within SEZs.
Q: What immigration benefits are available for SEZ investors?
A: SEZ investors receive:
A business visa for key technical, management, and training staff for up to two months.
An automatic immigration quota for five persons during the startup period.
C. SEZ and EPZ Developer License
Q: What incentives are provided to SEZ and EPZ developers?
A: Developers are eligible for:
Tax and Duty Exemptions:
Exemption on machinery, equipment, heavy vehicles, and construction materials.
Property tax exemption for the first 10 years.
Corporate Tax Relief:
Corporate tax exemption for 10 years.
Stamp Duty:
Exemption on instruments related to SEZ property and operations.
Employee Transportation:
Remission of taxes on up to two buses for employee transport.
Unconditional Transferability:
Free transfer of profits, dividends, loan repayments, and royalties.
IV. Additional Questions
Q: What is the treatment for goods entering SEZs or EPZs?
A: Goods destined for SEZs or EPZs are treated as transit cargo and are exempt from pre-shipment or destination inspection requirements.
Q: Are utility charges in SEZs exempt from VAT?
A: Yes, SEZ investors are exempt from VAT on utility charges, such as electricity and water.
Q: How does EPZA support investors post-investment?
A: EPZA provides ongoing support through:
Guidance on administrative matters.
Facilitating access to suppliers and partners.
Logistics support for customs and port operations.
Q: Who is eligible for EPZA incentives?
A: Eligibility extends to investors in SEZs and EPZs, as well as developers contributing to the infrastructure and operations within these zones.
Q: Can investors repatriate profits and dividends?
A: Yes, investors can repatriate net profits, dividends, and proceeds from the sale or liquidation of their investments.
Q: How can EPZA investors benefit from immigration services?
A: Investors receive:
Automatic immigrant quota for five persons.
Business visa assistance for key personnel during the startup phase.
Additional FAQs
Q: What is the process for acquiring land for investment?
A: Land acquisition requires:
Identification of suitable land.
Lease agreement with private owners or derivative right allocation through TIC.
Compliance with local land laws, including registration with the Ministry of Lands.
Q: Can foreign investors buy microfinance businesses in Tanzania?
A: Yes, foreign investors can invest in or acquire microfinance businesses, subject to compliance with Bank of Tanzania (BOT) regulations and approval.
Conclusion: Your Investment Gateway in Tanzania with Zatra Consultants
As Tanzania continues to establish itself as a beacon of opportunity in Sub-Saharan Africa, the importance of a knowledgeable and experienced partner cannot be overstated. Zatra Consultants is your gateway to unlocking the full potential of your investment in this vibrant economy. With our in-depth understanding of the local business environment, legal frameworks, and administrative intricacies, we are uniquely positioned to help you navigate the complexities of investing and setting up a business in Tanzania.
At Zatra Consultants, we provide a complete spectrum of services tailored to meet the needs of both local and international investors. From company registration, securing permits and licenses, to tax optimization and compliance with local laws, our team is equipped to ensure a seamless and successful entry into Tanzania’s market. We streamline the process, mitigating risks and maximizing efficiency, thereby allowing you to focus on the growth and development of your business.
Our Services Include:
Comprehensive guidance on the selection of the right business structure.
Assistance with the registration of local and foreign companies.
Expert advice on tax matters, including VAT and corporate tax compliance.
Facilitation of work and residence permits for foreign employees.
Strategic insights into investment opportunities across various sectors.
Support with obtaining business licenses and meeting regulatory requirements.
Continuous post-registration support to maintain compliance and optimize your business operations.
Why Choose Zatra Consultants?
Expertise and Reliability: Our team of experts is well-versed in Tanzanian laws and business practices, ensuring dependable and authoritative guidance.
Customized Solutions: We tailor our services to meet your specific needs, understanding that every investment scenario is unique.
Strategic Location: Based in the heart of Dar es Salaam, we are at the crossroads of East African commerce, offering strategic advantages to our clients.
Contact Us Today:
This comprehensive article covers all essential aspects of investing and setting up a business in Tanzania. If you have further questions or need personalized guidance, feel free to reach out to Zatra Consultants at:
📞 Phone: +255 747 912 965
📱 WhatsApp: +255 759 551 592
📧 Email: sales@zatra.co
📍 Address: Sinza A, Sam Nujoma Road, Mwenge Tower, Opposite Mlimani City Shopping Mall.
Partner with Zatra Consultants to make the most of your business venture in Tanzania, where your success is our priority. Let us help you tap into the abundance of opportunities that Tanzania has to offer with assurance and expertise.
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