It has been observed that the trend of doing global business is progressively shifting to African countries. This is because Africa contains several large nations like Tanzania that are regarded as among the best places to invest in the formation of new companies. All categories of entrepreneurs choose to register company in Tanzania since it is a potential hub for both large and small size firms. But, in order to start a business in another nation, you must first understand the norms and regulations of the country in question.
A Tanzanian company must be registered in order for its existence to be recognized by the law as an entity with legal status and all the benefits and privileges. Consequently, Tanzanian law stipulates that all firms must register with the appropriate official in accordance with the Companies Act. The Ministry of Industry and Trade’s Business Registrations and Licensing Agency (BRELA) is an executive agency in charge of overseeing the administration of business law, including the registration of companies, company names, trade and service marks, patents, and industrial licenses. It was officially instituted on December 3rd after being founded by the Government Executive Agencies Act No. 30 of 1997.
If you too are contemplating setting up a Tanzania company, then Tetra Consultants’ team of business set-up consultants is here to assist you to get started. Tetra Consultants is an international consulting firm that is proficient in assisting entrepreneurs to jumpstart their business expansion journey in countries like Tanzania. Through this article, our team aims to guide you on the step-by-step procedure that takes place to set up a company in Tanzania.
5 Steps to setting up a business in Tanzania
Step 1: Choosing the entity type
The choice of the kind of business entity one desire to form must be made as the first stage in the formation of a company in Tanzania. The investor may select one of the following three most preferred company forms in Tanzania:
Limited Liability Company
- A limited liability corporation (LLC) and its stockholders are distinct legal entities in Tanzania. The maximum liability of each shareholder with respect to the debts and liabilities of an LLC is their proportionate share capital contribution. There must be at least two shareholders and two directors for an LLC to be incorporated in Tanzania, and they can all be of any nationality. The minimum paid-up share capital is not required. The most popular legal form used by foreigners to register companies is an LLC, which is ideal for incorporating small businesses with straightforward shareholding structures.
Public Company
- In Tanzania, a public company is one whose shares may be traded openly. Such a corporation must have at least two directors and seven shareholders, one of which must be a Tanzanian native and possess at least a 40% ownership position. A public company must also have at least US$300,000 in share capital to be incorporated. Anybody wishing to raise capital or list their firm on the Tanzanian national stock exchange should consider setting up a public company.
Branch or Representative Office
- An overseas company may open a branch office in Tanzania that is entirely controlled by foreign investors. It may be utilized to carry out domestic business.
Step 2: Reservation of company name and fulfillment of regulatory requirements
- The second stage involves selecting an appropriate name for the company that resonates. Regardless of their legal structure, all entities in Tanzania are required to file with the Business Registration and Licensing Agency (BRELA), which is a division of the Ministry of Industry and Commerce a unique company name. One must also receive name clearance from BRELA after completing the reservation process.
- To further proceed with the registration of the entity you need to check if you are able to meet the minimum requirements required for the chosen entity structure. For example, when setting up a limited liability company in Tanzania you are required to at least have one shareholder, one director, a company secretary, and a local registered address. Tetra Consultants team can assist with the fulfillment of the above requirements. We can assist with the provision of nominee director services in case required, a company secretary, and a local registered address.
- With everything in place, you can proceed to prepare for the drafting of company application forms and articles of incorporation to be submitted for company registration with the Tanzanian authorities.
Step 3: Company registration
- Once the aforementioned steps are completed, you can proceed with the submission of documents collated with respect to the personal information and identification of directors and shareholders of the entity, the articles of incorporation, proof of local registered address, and other documents required for supporting the company application form to the Business Registration and Licensing Agency (BRELA).
- Tetra Consultants’ legal team is proficient with the drafting of company application forms and articles of incorporation. Our team will prepare the prototypes of such documents fully customized for your business plan and send you for review. Once confirmed our team will submit the same on your behalf.
- Simultaneously, the Tetra Consultants team will proceed with the process of inclusion of the company name with the Tanzania Investment Centre. Here, a subscriber, secretary, or a person who is named in the articles of association as a director needs to submit the following to the Registrar of Companies:
- First directors and secretary and intended situation of the registered office
- Declaration of compliance on the application for the registration of the company.
Step 4: Corporate bank account opening
- We all understand the importance of carrying out financial transactions for any business entity and moreover how important it is for the smooth operation of your business. Tetra Consultants’ banking team is here to resolve all your concerns. Our banking team can assist with providing corporate bank account opening services for your business. Our team has built strong relationships with large banking organizations internationally and in Tanzania and we will present your business to each one of them.
- Generally, We expect the process of corporate bank account opening to be completed within 4 weeks.
Step 5: Post-registration Compliances
- Apply for Taxpayer Identification Number (TIN): At this stage, you will be required to apply for Taxpayer Identification Number (TIN) with the Tanzania Revenue Authority (TRA). Documents like a Certificate of incorporation also need to be attached to the TIN application enclosed with a Memorandum and Articles of Association while making an application to TRA.
- Apply for a business license: Further, to officially begin the business operation of your entity you will need to apply for a business license at the Ministry of Industry and Trade (MIT) and Local Government Authorities (LGAs). The license is either issued by MIT or LGAs based on the nature of the business.
- Apply for Value-Added Tax (VAT) registration: The following action is to submit a VAT registration application to Tanzania Revenue Authority. Businesses with an average starting capital of US$50 million in the first six months and $100 million in the first year must register for VAT. Tetra Consultants’ team of chartered accountants and tax associates is proficient with the processing of VAT applications through the TRA website, making sure the success of application within the less time and without the need to travel.
- Register for Workmen’s Compensation Insurance: The following step is to register for workmen’s compensation insurance through the National Insurance Corporation or another insurance company. Employers must submit the Workmen’s Compensation Tariff Proposal Form for this to the Tanzania Insurance Regulatory Authority (TIRA) and Workers Compensation Fund (WCF). Consequently, at this stage, you will also be required to register the newly incorporated entity with the Occupational Safety and Health Authority (OSHA) and obtain a Social Security Registration Number.
Conclusion
- Navigating the country of Tanzania’s complex business climate might be a challenging process – a hassle to say the least. However, with key benefits regarding tax rates and a business-friendly environment outlined above, it is easy to see why many businesses would choose to set up in Tanzania. As such, Tetra Consultants hopes that this article has provided you with a much better understanding of the key steps to register company in Tanzania so that you can truly decide on whether you should undertake the company registration process in Tanzania yourself.
- So, what are you waiting for? Contact us to find out more about the process of setting up a Tanzania company, and our dedicated and experienced team will respond within the next 24 hours. Tetra Consultants will not only empower you by helping to navigate the different regulations of Tanzania but also aid in facilitating the registration of your company there while providing invaluable, nuanced insights into any potential challenges.
