Further to that, a Derivative Right to occupy and use land may be created out of the GRO; "village land", which is the land within the area declared to be a village and is managed by the Village Council in which a Customary Right of Occupancy "CRO" may be issued. The GRO or a Derivative Right to occupy and use land may only be granted over village land after conversion of the village land to general land; and "reserved land", which is land that is set aside under various laws for various purposes, including but not limited to forests, national parks, highways and hazardous land Land titles that can be issued in Tanzania The following are the various land titles available in Tanzania: GRO — means a right to occupy and use land under a long term lease of either 33, 66 or 99 years which is granted by the President in general land or reserved land for a period up to but not exceeding 99 years.
A GRO is one of the highest forms of land tenure in Tanzania and effectively constitutes a 99 year lease from the Government. CRO — means a right to occupy and use land under a long term lease of either 33, 66 or 99 years which is granted by a village council. Derivative Right — means the right to occupy and use land created out of a GRO and includes a lease, a sub-lease, a licence, a usufructuary right and any interest analogous to those interests.
A Derivative Right can be granted for a period of 10 days less than the period for which the GRO has been granted. General restrictions on occupation of land in Tanzania by foreign companies The Land Act states that non-citizens shall not be allocated or granted land, unless it is for investment purposes under the Tanzania Investment Act Section 20 1 of the Land Act.
The Land Act further states that, a body corporate registered in Tanzania, whose majority shareholders or owners are non-citizens, shall be considered a foreign company for the purpose of this Act Section 20 4 of the Land Act. A foreign company cannot occupy village land in Tanzania on the basis set out below: Unlike the Land Act which provides for the possibility of a foreign company owning land in Tanzania by way of a Derivative Right or a lease, the VLA does not have a similar provision, hence a foreigner cannot own village land through a CRO or lease , even if it is for investment purposes.
However, section 17 1 of the VLA provides a limited and prescriptive list of "non-village organisations" which can occupy village land - a foreign company is not included in this list. A foreign company cannot acquire any legal title to village land in Tanzania because a CRO can only be granted to citizens of Tanzania or a group of persons, all of whom are citizens of Tanzania.
Accordingly, an organisation whose shareholders are both citizens and non-citizens will not qualify for a grant of a CRO. Options available for a foreign company looking to access village land in Tanzania In order for a foreign company to access village land, it must first process a conversion of the village land into general land and upon conversion, the foreign company may acquire: a GRO, if the majority of the shareholders of a company are citizens of Tanzania; or a Derivative Right through the Tanzania Investment Centre "TIC" , if the majority of the shareholders of the company are non-citizens of Tanzania.
The procedural requirements for acquiring a Derivative Right involve a number of steps. Indeed, a key feature is that if a foreign company is interested in acquiring village land for the purposes of investment, the village land must be converted into general land before the TIC can grant a Derivative Right to the investor to use the land.
This is one of a number of hurdles to overcome and further advice should be sought should this be a process that you wish to undertake. It should be also noted that should a foreign company fail to meet the conditions of investment agreed upon on the granting of a Derivative Right, the TIC can re-acquire the land. However, the foreign company will be entitled to compensation on any developments that have been made on the land.
Other options for foreign companies looking to gain access to land more generally i. Under a long lease, foreign companies could enter into a lease with local land owners for the most part of the term of right of occupancy of the land. The Commercial Court of Tanzania operates two sub-registries located in the cities of Arusha and Mwanza. The sub-registries, however, do not have resident judges. A judge from Dar es Salaam conducts a monthly one-week session at each of the sub-registries.
The government said it intends to establish more branches in other regions including Mbeya, Tanga, and Dodoma, though progress has stalled. Despite legal mechanisms in place, foreign investors have claimed that the GoT does not consistently honor its agreements. Additionally, investors continue to face challenges receiving payment for services rendered for GoT projects. One high profile example of such a dispute is that of a U. Many international investors have complained that international arbitration was not an option during contract negotiations with the GoT and state-owned enterprises.
Recently, more investors have been able to include international arbitration clauses in large investment agreements, however this is not the norm. Arbitration is legislated by the Arbitration Act of which came into force in January The Arbitration Act is only applicable on mainland Tanzania, not in Zanzibar. There are two arbitration bodies in Tanzania.
The first is the Arbitral tribunal, where the parties agree on the number of arbitrators. If no agreement is reached, the Arbitral tribunal will have a sole arbitrator. For example, the Act states that the adjudication of the International Arbitration be physically in Tanzania. The law also introduces some mandatory provisions in which the Arbitration Act shall be used regardless of the nature of the Arbitration.
The mandatory provisions deal with procedures such as stay of proceedings, limitation of time, power of court to remove arbitrators, immunity of arbitrators, duties of the Arbitral tribunal, expenses of arbitrators, attendance of witnesses, enforcement of the award, and other provisions.
It also amends existing laws which restrict arbitration locales to Tanzania only using Tanzanian judicial bodies, such as Section 11 of the Natural Wealth and Resources Permanent Sovereignty Act of Bankruptcy Regulations Tanzania has a bankruptcy law which allows for companies to declare insolvency. The insolvency process includes the appointment of receiver managers, administrative receivers, or liquidators.
In practice the process is very long and expensive. Preferential debts such as government taxes and rents, outstanding wages and salaries, and other employee compensation take priority over other claims, including those from creditors. Insolvent or illiquid companies may also seek the protection of the courts by seeking a compromise or arrangement as proposed between a company and its creditors, a certain class of creditors, or its shareholders.
Bankruptcy proceedings can take several years to conclude in Tanzania. The recovery rate for creditors on insolvent firms was reported at Industrial Policies Investment Incentives The Tanzania Investment Center TIC offers a package of investment benefits and incentives to both domestic and foreign investors without performance requirements.
At the time of this publication, the government was revising these incentives. Investors are advised to consult the TIC for up-to-date information. Current investment incentives include the following: Discounts on customs duties, corporate taxes, and VAT paid on capital goods for investments in mining, infrastructure, road construction, bridges, railways, airports, electricity generation, agribusiness, telecommunications, and water services.
No remittance restrictions. The GoT does not restrict the right of foreign investors to repatriate returns from an investment. Guarantees against nationalization and expropriation. Any dispute arising between the GoT and investors may be settled through negotiations or submitted for arbitration. Allowing interest deduction on capital loans and removal of the five-year limit for carrying forward losses of investors.
The government introduces waivers through the Public Finance Act with the aim of attracting investment in certain targeted sectors. The government also re-introduced VAT exemption for non-governmental organizations having agreements with the GoT, to the extent that the agreements provide for such exemption. The minister of finance may make regulations prescribing the manner of application, granting and monitoring of exemptions, which previously required the minister to appoint a technical committee for guidance on these matters.
The government does not currently offer any incentives for clean energy investments. Investment incentives offered for EPZs include the following: An exemption from corporate taxes for ten years. An exemption from duties and taxes on capital goods and raw materials. An exemption on VAT for utility services and on construction materials. An exemption from withholding taxes on rent, dividends, and interests. Exemption from pre-shipment or destination inspection requirements. SEZs offer similar incentives, excluding the ten-year exemption from corporate taxes.
For purposes of this section, investors licensed primarily for export markets are investors whose exports are more than eighty percent of total annual production. Incentives and allowances outside Free Economic Zones 1. Approved investor investing outside Free Economic Zones, may be granted the: exemption from payment of import duty, excise duty Value Added Tax and other similar taxes on machinery, equipment, spare parts, vehicles and other input necessary and exclusively required by that enterprise during construction period indicated in the Investment Certificate; exemption from payment of business license fee for the first three months of trial operation; corporate tax exemption for up to five years; hundred percent foreign ownership; hundred percent retention of all profits after tax; hundred percent allowance Research and Development; and hundred percent allowance for free repatriation of profit after tax.
Without prejudice to the provisions of paragraph 1 of this Part, approved investor investing in manufacturing sector may further be granted the: exemption from payment of any tax on all goods produced for exports; exemption from payment of trade levy for raw materials and industrial inputs procured from Tanzania mainland; exemption from payment of import duty, VAT, and other similar taxes on raw and packaging materials during project operations; exemption of Income Tax on interest on registered borrowed capital; and hundred percent allowance investment deduction on capital expenditure within five years.
Without prejudice to the provisions of paragraph 1 of this Part, Approved Investor investing in real estate business may also be granted the: exemption of income tax on interest on borrowed capital; stamp duty exemption; hundred percent allowance investment deduction on capital expenditure within five years; and capital gains tax on properties sold or purchased. EPZ status can also be extended to stand-alone factories at any geographical location. EPZ status requires the export of 80 percent or more of the goods produced.
SEZ status has no export requirement, allowing manufacturers to sell their goods locally. Performance and Data Localization Requirements The Non-Citizens Employment Regulation Act of see Section 12 Labor Policies and Practices below requires employers to attempt to fill positions with Tanzanian citizens before seeking work permits for foreign employees, and to develop plans to transition all positions held by foreign employees to local employees over time.
The Act was amended in June to extend the time limit for work permits of non-citizen employees from the initial five years to eight years; applications are now submitted through the Online Work Permit Application and Issuance System OWAIS.
Prior to the amendment, an investor could employ up to five non-citizens during the initial period of investment. Because the local content LC initiative cuts across all economic sectors, the government decided that oversight of LC development should take a multi-sector approach, rather than being confined to a single ministry or sector.
The objective of the local content policy is to put local products and services — delivered by businesses owned and operated by Tanzanians — in an advantageous position to exploit opportunities emanating from inbound foreign direct investments. Bank of Tanzania BoT regulations require banks to physically house their primary data centers in Tanzania or face steep penalties. Protection of Property Rights Real Property All land is owned by the government and procedures for obtaining a lease or certificate of occupancy may be complex and lengthy.
Less than 15 percent of land has been surveyed, and registration of title deeds is handled manually, mainly at the local level. Foreign investors may also partner with Tanzanian leaseholders to gain land access. Land may be leased for up to 99 years, but the law does not allow individual Tanzanians to sell land to foreigners. There are opportunities for foreigners to lease land, including through TIC, which has designated specific plots of land a land bank to be made available to foreign investors.
Foreign investors may also enter into joint ventures with Tanzanians, in which case the Tanzanian provides the use of the land but retains ownership, i. Secured interests in property are recognized and enforced. Though TIC maintains a land bank, restrictions on foreign ownership may significantly delay investments. Title deeds are recognized as collateral for securing loans from banks. In January , the GoT amended the land law, requiring that loan proceeds secured by mortgaging underdeveloped land be used solely to develop the specific piece of land used as collateral.
The law does not apply to village land allocated by village councils, which cannot be mortgaged to a financial institution. It is the responsibility of the rights holders to enforce their rights where relevant, retaining their own counsel and advisors. The Fair Competition Commission FCC promotes competition, protects consumers against unfair market conduct, and has quasi-judicial powers to determine trademark and patent infringement cases.
The FCC is also tasked with combating the sale of counterfeit merchandise. Despite its efforts, limited resources make it difficult for the GoT to adequately combat counterfeiting. In , the DSE launched a second-tier market, the Enterprise Growth Market EGM with lower listing requirements designed to attract small and medium sized companies with high growth potential. Tanzania, however, restricts the free flow of investment in and out of the country, and Tanzanians cannot sell or issue securities abroad unless approved by the CMSA.
Under the Capital Markets and Securities Foreign Investors Regulation , there is no aggregate value limitation on foreign ownership of listed non-government securities. Only companies or citizens from EAC nations are permitted to participate in the government securities market. Even with this recent development allowing EAC participation, foreign ownership of government securities is still limited to 40 percent of each security issued.
Currently, no mining companies are listed on the DSE. However, participation in the formal banking sector remains low. Low private sector credit growth and high non-performing loan NPL rates are persistent problems. Financial services provision is dominated by commercial banks, with the ten largest institutions being preeminent in terms of mobilizing savings and intermediating credit. The only U. Private sector companies have access to commercial credit instruments including documentary credits letters of credit , overdrafts, term loans, and guarantees.
The Banking and Financial Institution Act established a framework for credit reference bureaus, permits the release of information to licensed reference bureaus, and allows credit reference bureaus to provide to any person, upon a legitimate business request, a credit report.
Foreign Exchange and Remittances Foreign Exchange Tanzanian regulations permit unconditional transfers through any authorized bank in freely convertible currency of net profits, repayment of foreign loans, royalties, fees charged for foreign technology, and remittance of proceeds.
Investors rarely use convertible instruments.
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