Tanzania: Commercial Law In Tanzania

Last Updated: 20 December 2018
Article by Adams & Adams


The United Republic of Tanzania comprises Tanganyika, on the African mainland, and the islands of Zanzibar and Pemba. Tanganyika lies on the east coast of Africa and is bordered by Kenya and Uganda to the north; Rwanda, Burundi and Democratic Republic of the Congo to the west; and Zambia, Malawi and Mozambique to the south. The islands of Zanzibar and Pemba lie off the east coast of Tanganyika.

Area: 947 300 km2

Population: 41.9 million

Capital: Dodoma (largest city Dar es Salaam)

Currency: Tanzanian shilling

GDP: USD 62.2 billion (2010)

Internet domain: .tz

Languages: wahili, English (official languages)

Working week: Monday – Friday

Exports: Raw cotton; cashew nuts; gold; coffee

Imports: Industrial raw materials; construction materials; consumer goods; transport equipment; crude oil


Business vehicles

There are three forms of companies commonly used by foreign investors:

  • A company limited by shares.
  • A company limited by guarantee.
  • An unlimited company.

Companies may be private or public. The minimum number of shareholders required for incorporation is two and the maximum is 50, excluding persons who become shareholders by virtue of being employees of the company. The minimum number of directors required for a company is two.

Private companies may enter into any types of commercial activities; however, they are prohibited from making any invitation to the public to purchase its shares or debentures. In the event that it is wound up and its assets are insufficient to cover its liabilities, the liability of its shareholders is limited to the amount left unpaid on their shares.


The following steps need to be taken in order to incorporate a company:

  • An application needs to be submitted for clearance of the proposed company name at the Business Registration and Licensing Authority (BRELA).
  • The following information is then filed with the Business Registration and Licensing Agency: memorandum and articles of association, regulatory forms, name of the local company to be incorporated, names of the initial shareholders, names and addresses of the initial directors and the physical address of the proposed registered office.
  • Application need to be made to the Tanzania Revenue Authority of a taxpayer identification number (TIN).
  • A business licence from the regional trade office (depending on the nature of the business) will be required. Businesses such as banks, insurance companies, contractors, hotels and most professions must have specific licenses in addition to the business licenses.

After obtaining name clearance the process of incorporation takes approximately 7 working days.

Regulatory Reporting

All companies need to submit annual returns which must be done in the prescribed form. Audited balance sheets form a part of the returns. Foreign companies are required to file only audited balance sheets of their companies.

Share capital

A limited private company has a share capital and is formed or incorporated for purposes of carrying on business to derive a profit. Currently, the minimum required authorised capital for a private company other than banks, insurance companies and other financial institution is approximately USD 15.


The minimum number of directors required for a company is 2 of any nationality. The company secretary similarly does not need to be local.

Are local shareholders required?

Subject to the exchange control restrictions and sector specific laws, ownership of a company by foreigners and companies is generally not restricted. Most business activities are open to foreign investors. In a few sectors such as shipping agencies, insurance, telecommunications and broadcasting, ceilings have been placed on foreign shareholdings by licensing authorities.

Branch Company

A foreign company is allowed to conduct business in Tanzania after being certified by the Companies Office that, it has complied with the requirements of Tanzanian company law.

The following documents have to be filed with BRELA:

  • Certified copies of memorandum and articles of association, charter or statue.
  • Notice of the location of the registered office in the country of origin.
  • List and particulars of directors of the company.
  • Persons resident in the country who are the representatives of the company.
  • A statement of all subsisting charges created by the company, not being charges comprising solely of property situated outside Tanzania.
  • A statutory declaration made by a director or secretary of the company, stating the date on which the company's place of business in Tanzania was established, the business that is to be carried on and, if different from the registered name of the company, the name under which that business is to be carried on.
  • A copy of the most recent accounts and related reports of the company.



  • Fair Competition Act 8 of 2003.

The Act is enforced by the Fair Competition Commission and Fair Competition Tribunal, based in Dar es Salaam.


A merger is notifiable where the following threshold is met:

  • The merging parties' combined annual turnover or asset value exceeds USD 460 750.

A merger may not be implemented prior to the necessary approval having been obtained from the Fair Competition Commission.

Restrictive Practices

The Act regulates both horizontal and vertical restrictive practices. In addition to prohibiting such practices where they are likely to result in a substantial lessening or prevention of competition, certain practices are specifically prohibited, for example, bid rigging, price fixing and the division of markets.

Abuse of Dominance

The Act prohibits the abuse of a dominant position.


Following a determination that a firm has breached a provision of the Act, the Fair Competition Commission may impose a penalty of not less than 5% but not exceeding 10% of the firm's annual turnover.


Consumer protection is regulated by the Fair Competition Act, 2003 (FCA). The FCA's primary purpose is to regulate competition law in Tanzania. However, the FCA is also replete with certain fundamental consumer rights.

From a consumer protection perspective the FCA regulates, among other things, the following aspects:

  • Misleading and deceptive conduct.
  • Unfair business practice.
  • Manufacture's obligations toward consumers.
  • Warranties.
  • Product safety and product recall.
  • Implied conditions in contracts.


Tanzania does not currently have any promulgated data protection laws. However, there are constitutional privacy protection provisions as well as legislation regulating the interception and monitoring of communications which, jointly provides a fairly regulated framework of personal data protection issues.

For purposes of data protection and privacy the most relevant legislative provisions provide that:

  • Every person is entitled to respect and protection of his person, the privacy of his own person, his family and of his matrimonial life, and respect and protection of his residence and private communication.
  • Licensed communications services providers are prohibited from disclosing any information received from their customers.
  • If a licensed communications services provider discloses a data subject's personal data, without any legal basis, he commits an offence and shall, on conviction, be liable to a fine of not less than USD 2 800, or to imprisonment for a term not less than twelve months, or to both.


Court structure

There are 2 forms of Magistrate's Courts in Tanzania; the lower form, known as a Primary Magistrate's Court, and the higher form, the District Magistrate's Court. The High Court of Tanzania has jurisdiction over all civil and criminal matters in Tanzania as well as having appellate, extended, revision and supervisory jurisdiction over all subordinate Courts. Specialised divisions of the High Court exist in the form of the Commercial, Labour and Land divisions of the High Court. The Court of Appeal of the United Republic of Tanzania is the superior court of Tanzania and has the jurisdiction to confirm, reverse or vary any decision made by the High Court. Although in statute, a Special Constitutional Court exists, it has never convened.

Security by foreign litigants

Where it appears to a court that a plaintiff resides out of Tanzania and does not possess sufficient immovable property within Tanzania, the court on its own accord, or on the application of any defendant, may order the plaintiff to give security for the payment of all costs incurred and likely to be incurred by any defendant.


In most cases, the successful party is awarded costs. The court may order that security for costs be provided. The amount and time for payment are set by the court. Factors that the court will consider when awarding costs depend on the complexity of the matter, and its nature and importance.

Alternative dispute resolution

Arbitration is recognised in Tanzania but is considered to be underdeveloped. There are 2 principal arbitration bodies, both with their own set of arbitral rules: Tanzania Institute of Arbitrators (TIA) and the National Construction Council (NCC). The Arbitration Act, 2002 is the statutory authority for arbitration and the Civil Procedure Code contains a set of arbitration rules. The New York Convention came into force in Tanzania on 12 January 1965.


Governing legislation

Employment and Labour Relations Act, 2004.

Particulars of employment

A contract shall be in writing if the contract provides that the employee is to work outside the United Republic of Tanzania.

The employer may provide a written statement to the employee stipulating the particulars of employment. The maximum probationary period permitted is 6 months.

Forms of contracts

  • Unspecified period of time.
  • Specified period of time for professionals and managerial cadre.
  • For a specific task.

Termination of employment / dismissal

  • The provisions of unfair termination of employment do not apply to employees with less than 6 months employment with the same employer.
  • Termination of employment includes:
  • A lawful termination of employment under the common law.
  • A termination by an employee because the employer made employment intolerable for the employment.
  • A failure to renew a fixed term contract on the same or similar terms if there was a reasonable expectation of renewal.
  • A failure to allow an employee to resume work after taking maternity leave.
  • A failure to employ an employee if the employer has terminated the employment over a number of employments for the same or similar reasons and has offered to re-employ 1 or more of them.
  • Termination of employment is unfair if the employer fails to prove that the reason for the termination was valid and fair related to the employee's conduct, capacity or compatibility or based on the employer's operational requirement and in accordance with a fair procedure.

Dispute resolution mechanisms and remedies

A dispute must be referred to the Commission for Mediation and Arbitration Act No. 7 established under section 12 of the Labour Institutions Act, 2004.


There are certain exchange control regulations which apply in Tanzania but most restrictions were eliminated under the Foreign Exchange Act of 1992 in order to attract investment and simplify international transactions.

Exchange control regulations are largely dependent on the operations and activities concerned.

For example, in respect of capital transactions (foreign source loans) the relevant transaction documentation must be submitted for approval and the issuance of a Debt Record Number to the Bank of Tanzania.

All transactions in foreign currency are regulated by the Foreign Exchange Act which permits any person, resident or not, to hold any amount of foreign currency, to sell any amount of specified foreign currency to an authorised dealer and to open and maintain a foreign currency account with an authorised dealer.

In terms of the Investment Act of 1997, investors are guaranteed unconditional transferability through any authorised dealer in freely convertible currency of net profits, foreign loan service, royalties, fees and technology transfer fees, emoluments of foreign personnel and repatriation of capital, after taxes, on sale of investment. Generally, the repatriation of foreign currency from the country is not restricted.


Income tax

Taxable income is obtained by adjusting income according to specific tax rules. All expenditures incurred wholly and exclusively in the production of income from any business or investment generally are deductible. Capital expenditures is subject to specific deprecation rates.

Types of taxable income

The types of tax payable include dividends tax, capital gains tax, corporate tax and branch remittance tax on foreign companies.

Tax rates

The company taxation rate is 30%. However, newly listed companies on the Dar es Salaam Stock Exchange that have issued at least 30% of their share capital to the public are subject to a 25% rate for 3 consecutive years from the date of listing. A company that has tax losses for 5 consecutive years is liable to a minimum tax at 0.3% on turnover for the fifth year.

Dividends received by a Tanzanian company from another resident company in which it holds at least 25% of the shares are subject to a 5% withholding tax, otherwise the rate is 10%. CGT is included in business or investment income and taxed at a rate of 30%. Withholding tax on dividends paid to a non-resident or a non-controlling resident are subject to a 10% withholding tax.

The tax rate is 5% where the dividends are paid to a resident company controlling 25% or more of the distributing company's shares and where dividends are paid to a resident or non-resident by a company listed on the Dar es Salaam Stock Exchange.

The withholding tax rate on interest paid to a resident or a non-resident is 10%, with an exemption available for certain interest paid to resident financial institutions. Withholding tax on royalties paid to residents and non-resident is 15%. Withholding tax on technical service fees paid by a resident mining company to a resident company is 5% and the rate is 15% if paid to a non-resident.

Double taxation treaties

Tanzania currently has double taxation agreements with Canada, Denmark, Finland, India, Italy, Norway, South Africa, Sweden and Zambia.

Published in April 2015

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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