REGISTRATION OF A COMPANY IN TANZANIA

The first thing that is required by anyone wishing to do a registration of a company in Tanzania is to do a name search.

Once a name has been approved you can proceed to registration of a company in Tanzania or reserving the chosen name for a future date.

First Phase: Incorporation

  1. Registering a company in Tanzania as a subsidiary

Foreign companies that want to establish a long term presence in Tanzania often use this type of legal   structure.   Expected   benefits   such   as   no   flow   back   of   liability    from    the    locally incorporated company      to      its      parent       company       also       apply       to Tanzanian incorporated subsidiaries. In order to obtain a Certificate of Incorporation; an applicant should first request for a name clearance at the Companies Registry (BRELA) before lodging any documents. After obtaining a name clearance, the applicant submits the memorandum and articles of association, and company forms 14a and 14b containing the following particulars to BRELA:

–          Address of the registered place of business

–          The directors’ nationalities

–          The directors’ usual physical residential addresses

–          The directors’ dates of birth

–          The directors’ occupations and directorships in other Tanzanian companies

–          The company secretary’s residential address and date of birth

–          Signatures from both directors and company secretary

  1. Registration of a foreign company (Branch)

A company that has been incorporated outside of Tanzania may establish a branch office in Tanzania by obtaining a Certificate of Compliance from BRELA. This type of entity is easier to wind up and therefore often used by those who do not wish to establish a long-term presence in Tanzania. Foreign companies with a branch in Tanzania are required to grant a Power of Attorney to a person resident in Tanzania who will act as the company’s representative and as the person authorised to receive court process. An applicant must file company Form 434 at BRELA together with the following in order to be issued with a Certificate of Compliance:

–          A certified copy of the charter, statutes or memorandum and articles of the company or other instrument constituting or defining the constitution of the company

–          A list containing particulars of the directors and secretary of the company

–          A statement of subsisting charges created by the company related to property located in Tanzania

–          Name(s) and address(es) of one or more person(s) resident in Tanzania authorised to act as the company’s representative

–          Full address of the registered principal place of business and place of business in Tanzania

–          A statutory declaration made by a director or secretary of the company stating the date on which the company’s place of business was established in Tanzania and the business that is to be carried out – A copy of the most recent accounts

The      most    appropriate      way     of forming a company would be        by        obtaining         a            ‘CERTIFICATE OF INCORPORATION’.

For company formation we will need:

 

  1. Two suggested names for the company.
  2. The names of two directors and shareholders. (Please advise if they are all foreign) and provide us with the copies of passports
  3. The addresses of the directors.
  4. The ownership structure (percentage), if a foreign company then a certificate of incorporation and memarts are required.
  5. Initial Capital of the company
  6. Your proposed accounting date
  7. Address of the office in dar es salaam

 

The process involves:

  1. a) Conduction an official search of the name,
  2. b) Preparation of Memarts,
  3. c) Assessment of documents and fees,
  4. d) Payment of compliance fees,
  5. e) Submission of request for company registration,
  6. f) Obtain certificate of Registration.

Basing on what one wishes from the above, then memorandum and articles of registration of a company in tanzania will have to be prepared.

The present Regulations contain five Tables( A, B, C, D & E) of which table A, prescribing model articles for a company (whether public or private) limited by shares, is the most important and differs in its effect from the others. Such a company does not have to register articles and if does not, Table A becomes its articles. Even if it does register articles, in so far as these do not exclude or modify Table A, its provision will apply. Section 11(2) of Cap.212 provides

In the case of a company limited by shares and registered after the commencement of this Act, if articles are not registered, or, if articles are registered, in so far as the articles do not exclude or modify the regulations contained in Table A, Table A shall, so far as applicable, constitute the articles of the company in the same manner and to the same extent as if articles in the form of Table A had been duly registered

In other hands, it, and any other type of company (which will have to register articles) may, in them, adopt by reference any provisions of Table A, see section 11(1) of Cap.212 R.E 2002.

In contrast, the model article in Table C (relating to a company limited by Guarantee without a share capital), Table D (relating to a company limited by Guarantee and with a share capital) and Table E (relating to an unlimited company having a share capital) are merely models which cannot be adopted by reference and will not apply for fill lacunae in the registered articles.  Tables C and D also include model forms of memorandum for the types of company to which they relate as does Table B (for a public limited company).

Once the memorandum and articles of registration of a company in Tanzania are prepared. The submission for registration of a company in Tanzania requires there also be forms 14a and 14b. One depicts the Statement of Particulars of the Directors and Secretary and Situation of Registered office and the Declaration of Compliance. The other represent a requirement of signing a Declaration of Compliance. This as per section 14  has to be a statutory declaration by an advocate of the High Court engaged in the formation of the company, or by a person named in the articles as a director or secretary of the company, of compliance with all or any of the said requirements shall be produced to the registrar, and the registrar may accept such a declaration as sufficient evidence of compliance.

Upon signing of the forms and the memarts, the documents will be assessed by an officer at Brela. This used to be an old system. These days all is done online though an electronic filling of the memarts and the forms. The registrations can only be done by a Tanzanian who has a national Id and it is advised that in\t be done by a lawyer who understand the complexity of the process and what it entails to form a company.

The Official fees for registration of a company in Tanzania are as follows:

 

SNO FEE DESCRIPTION FEE AMOUNT
1 Company whose nominal share capital is:
– More than Tshs. 20,000/= but not more than Tshs. 1,000,000/= TSHS 95,000 /=
– More than Tshs. 1,000,000/= but not more than Tshs. 5,000,000/= TSHS 175,000 /=
– More than Tshs. 5,000,000/= but not more than Tshs. 20,000,000/= TSHS 260,000 /=
– More than Tshs. 20,000,000/= but not more than Tshs. 50,000,000/= TSHS 290,000 /=
– More than Tshs. 50,000,000/= TSHS 440,000 /=
2 For registration of a company not having a share capital where the number of members as stated in the Articles of Association: TSHS 300,000 /=
3 Filling fee for the application, meaning shs. 22,000/= for each document i.e Memorandum and Articles of Association, Forms no. 14a and 14b. TSHS 66,000 /=
4 Each Stamp duty for each copy of the Memorandum and Articles of Association is charged TSHS 5,000 /=
5 Stamp duty for Form no. 14b is charged TSHS 1,200 /=
6 For reservation of a company name TSHS 50,000 /=
7 For company name change TSHS 22,000 /=
8 For the receipt and/or registration by Registrar of any document which under the Act is to be delivered to him TSHS 22,000 /=
9 For the late filing/registration fee to be paid to the Registrar of any document delivered to him (per month or part thereof) TSHS 2,500 /=
10 For filing of Annual Returns TSHS 22,000 /=
11 For certification of any document, per page TSHS 3,000 /=
12 For making search in any file/perusal TSHS 3,000 /=
13 For obtaining a written search report per file TSHS 22,000 /=
14 Fees payable by a company to which Part XII of the Act applies
– For the registration of certified copy of a charter, statute or memorandum and articles of the company, or other instrument constituting or defining the constitution of the company USD 750 /=
– For registration of filling any document required to be delivered to the Registrar under Part XII of the Act/other than the balance sheet USD 220 /=
– For filling of Balance Sheet USD 220 /=
– For late filing/registration fee to be paid to the Registrar of any document delivered to him out of time (per month or part thereof) USD 25 /=
15 For obtaining a copy of Certificate of Incorporation TSHS 4,000 /=

 

If the registrar is satisfied that the requirements for registration are met and that the purpose for which incorporators are associated is lawful he issue a certificate of incorporation signed by him or authenticated under his official seal.

About a year ago after this step you had to registered with Tax authority which is Tanzania Revenue Authority(TRA).  These days the Tin number of the company is the number of incorporation of that company. Hence technically you will already have a TIN and the next step will be to get a business licence so that you can start to legally run your business in Tanzania.

Business license differs depending on the type of business and the legal requirement for the sector your business will operate.

But general business license can be obtained from municipal council in which your business is operating also from the ministry of industry trade and investment For the business that operates in certain sector, may requires special permit or licence. If you want to import or export goods you will have to get a licence from the ministry of industry and trade.

Here are examples of the type of business and kind of license they should have

Oil and gas exploration, drilling and extraction Should get license for petroleum upstream regulatory authority and from the ministry of energy.

If you want to set up petrol station business, starting lubricant business, distributing and marketing of petroleum products, solar power and all renewable energy project you should get license from Energy, Water and Utility Authority (EWURA),

If you are keen to start selling food, hotels, restaurant, drugs, and cosmetics you should get special license from the Tanzania Food and Drugs Authority)

For those who want to establish factories should get a special permit from the ministry of industry, trade, and investment.

If you want the set up a consultation company such as IT consultant, Financial consultant, oil and gas consultation you should get the license from the municipal you want to run a business,

Photocopy of the certificate of incorporation or certificate of compliance (in case of a company) or certificate of registration or extract (in case of partnership or sole traders);
• Memorandum and Articles of Association showing among other things that the objectives of the company allow it to do the business which the license is being applied for;
• Proof of Tanzania citizenship e.g. photocopy of passport, birth certificate, or in case of a non-citizen, resident permit Class A (showing the holder to be the investor in that company/business

BANK ACOUNT

Once a company is dully formed and you have the necessary certificate like business license etc, you can open a bank account for the company form a choice of more than 20 bank operating in Tanzania.

TAXES

Registration of a company in tanzania also requires a keen eye on the tax regime. Tanzania generally follows international practice with regard to the structure of its taxation framework. Income tax, including corporation tax is charged on the total annual income less allowable expenses of any person or company resident in Tanzania, including employment, business and investment income. The rate of income tax for companies is currently 30%, although certain reliefs are available. VAT is also charged on chargeable supplies at a rate of 18%, although again, certain reliefs and exemptions are in place. Other taxes in place, in common with many other jurisdictions, include excise duty and stamp duty.

Value added tax (VAT)

VAT is charged on the supply of goods and services in mainland Tanzania, and on the importation of goods and services from any place outside mainland Tanzania. The duty is charged where a taxable supply or service is made by a taxable person. VAT is also charged on the transfer of a business, or part of a business, if the purchaser is not registered for VAT.

An individual or company with an annual taxable turnover of more than TZS100 million falls under the definition of a “taxable person” and must be registered in accordance with the provisions of the VAT Act. The current VAT rate is 18% for the supply and import of goods and services. The VAT rate for the export of goods and certain services is 0%.

 

RATES OF INCOME TAX FOR ENTITIES
Tax source Resident Non-Resident
Corporate Tax 30% 30%
Total income of a domestic permanent establishment 30%
Repatriated Income of branch 10%
WITHHOLDING/INVESTMENT TAX RATES
Tax source Resident Non-Resident
Dividends to companies controlling 25% of shares or more 0% 10%
Dividends from DSE listed company 5% 5%
Dividends from other companies 10% 10%
Other withholding payments 15% 15%
Interest 10% 10%
Royalties 15% 15%
Technical services (Mining) 5% 15%
Transport non-resident operator/charterer without permanent establishment   5%
Rental income 10% 15%
Insurance premium 0% 5%
Natural resource payment 15% 15%
Service fees   15%
Capital gain for disposal of entity’s asset 10% 20%

 

TANZANIA INVESTMENT CENTER

Registration of a company in Tanzania can also be done under the auspices of the TIC.The Tanzanian Investment Center is a quasi-governmental body which has the power to grant certificates of incentives to certain investors (excluding those in the mining and upstream oil and gas sectors, which are governed by tailored legal frameworks) where the value of an investment from a foreign company or foreign owned company is greater than USD 500,000. Such investors are entitled to certain fiscal and non- fiscal incentives and exemptions which would not otherwise be available to them in Tanzania, including, amongst other things, tax incentives, assistance with gaining all necessary licences and permits, guarantees against misappropriation and the ability of a foreign investor to hold a derivative title to land. The Government of Tanzania also has the ability to grant further additional incentives and reliefs for identified strategic or major investments if the minimum investment is not less than USD 20 million and USD 50 million for local investor and foreign investor respectively.

Once all the above has been adhered to the company is full fledged and running its business the directors should be keen on the following:

  1. FILING OF ANNUAL RETURNS

It is a statutory duty for every company incorporated in Tanzania to file their Annual Returns with the Registrar of Companies accompanied with Audited Accounts, which are made up to a date not later than the return date. The return date is the date of the anniversary of the company’s incorporation.

  1. ANNUAL GENERAL MEETING

It is a statutory requirement that every company shall in each year hold a general meeting as its annual general meeting in addition to any other meetings in that year and shall specify the meeting as such in the notices calling the same.

As long as a company holds its annual general meeting within eighteen months of its incorporation, it need not hold it in the year of its incorporation or in the following year and not more than fifteen months shall lapse between the date of one annual general meeting of a company and that of the next. It is worth noting that every company shall cause minutes of all proceedings of the general meetings, and of all proceedings at meetings of its directors are entered in a book kept for that purpose and any such minutes are to be signed by the Chairman of the meeting at which the proceedings were held, or by the Chairman of the next succeeding general meeting or meeting of directors, as the case may be, shall be evidence of the proceedings

  1. KEEPING OF BOOKS OF ACCOUNTS

It is a requirement of the law that every company shall keep in English or Swahili proper books of account, which are sufficient to show and explain the company’s transactions. The accounts shall disclose with reasonable accuracy at any time, the financial position of the company and enable the directors to ensure that any balance sheet, profit and loss account and cash flow statement prepared complies with the law. The books of account shall be kept at the registered office of the company or at such other place in Tanzania as the directors think fit, and shall at all times be open to inspection by the directors.

  1. REGISTER OF MEMBERS

Every company shall keep a register of its members and enter in it the names and addresses of the members, distinguishing each share by its number and by its class, the shares held by each member, the amount paid or agreed to be considered as paid on the shares of each member, the date at which each person was entered in the register as a member and the date at which any person ceased to be a member. The register of members shall be kept at the registered office of the company.

  1. CHANGE OF PARTICULARS

It is mandatory to notify the Registrar of Companies of any changes of the company’s registered particulars kept by the Registrar and any document delivered to the Registrar for registration must state in a prominent position, the company’s incorporation number, satisfy any requirement prescribed by law and conform to such requirements as the Registrar may specify for the purposes of enabling him to copy the document. If a document is delivered to the Registrar does not comply with the requirements of the law, he may serve on the person by whom the document was delivered a notice indicating the respect in which the document does not comply.

A point to note however that its best to get a good lawyer for registration of a company in Tanzania. The process is easy and straightforward but can be made long.

Also always protect your company name or brand as well as the products and services you offer by registering a Trademark over them.

Should you have more queries please contact us at [email protected] or go to our contact us section for more info at www.abcattorneys.co.tz

Regards

ABC Attorneys