29Tanzania was once known as Tanganyika. Tanzania is the oldest of the East African countries and, tragically, one of the world’s poorest. Agriculture, which accounts for more than one-quarter of the country’s gross domestic product, drives the economy. Nonetheless, safaris and wildlife-related experiences are the most popular activities and the reason many visitors visit Tanzania. Tanzanian culture is Swahili, an Arab/African mix, but there are also considerable Asian communities, mainly Indians, and the country is mostly homogenous, with a wealth of age-old customs and traditions. The local community is recognized for being kind and respectful to guests, and there is a strong feeling of national pride that pervades the country.
Tanzania’s general economic prognosis is favorable, with most concerns under government control. With the private sector contributing to the country’s future growth, the government’s ambitious investment plans will be aided, and it will be a source of both financing and innovation, culminating in the creation of employment for locals joining the labor force. Tanzania’s human resources are highly skilled in areas where infrastructure developments have linked rural farmers to markets and people to services. Ideally, the benefits of this expansion would be dispersed to the country’s farming community.
If the Tanzanian market attracts you to start a business, you need to have a corporate legal entity to maintain the good legal standing of your business as well as to protect you from the intervention of personal assets in case of bad debts. In this article, Tetra Consultants has laid down points to take note of to register company in Tanzania. Our team based in Tanzania specializes in providing corporate services to all types of companies from start-ups to large corporate entities. Our services package provides 360˚ support, from the initial company set up in Tanzania to a range of services that have been developed to ensure that, once operational, you have all the support you need to succeed including ongoing management and administrative solutions.
Things to note when setting up a company in Tanzania
- There are no limits on international entrepreneurs promoting their products or services in Tanzania. If you start a company in Tanzania, you will be able to keep your firm’s earnings without paying any additional costs to the government.
- Tanzanian investment account company registration is lower than in other countries due to Tanzania’s low client payment index.
- Some locations of the country provide businesses with the possibility of being free from paying VAT. This is done in order to attract more businesses to the nation.
- To enhance Tanzania’s social and economic conditions, the government has chosen to designate some zones in Tanzania where companies would not be required to pay withholding or corporate tax for a decade.
Different types of entity structure
- Before one even begins to register company in Tanzania, it is critical to first decide on what specific type of business structure to operate in. In Tanzania, there are 4 main types of business structures – sole proprietorship, partnerships, limited company, and branch operations.
- Sole proprietorships are one of the most simple business structures, where a single individual owns the business as in charge of making all relevant decisions and running operational activities. This makes the business and its operating structure relatively straightforward. Hence, this structure is best suited for small enterprises, as all benefits and liabilities of the business flow through to the individual. However, by being a sole proprietor, authorities see the owner and the business itself as the same entity, meaning that one is personally responsible for the business’s actions and inactions. As such, assets owned by the individual privately are at risk in honoring the liabilities of the company. Furthermore, as a sole proprietor, the income tax imposed is in accordance with the personal income tax rate, not the corporate tax rate, as profits of the business flow directly to the individual.
- Meanwhile, a partnership is a business made of at least 2 or more individuals but is not incorporated. This means that the group of owners and business partners have to privately determine how profits earned are distributed amongst themselves, and are all responsible for any debt obligations or legal action taken against the business.
- Last but not least, In clear contrast to a sole proprietorship or partnership, a limited company is viewed by the authorities as its own legal entity endowed with the exact same legal abilities of a natural person such as the ability to own property, conduct business, borrow, lend, sue or be sued. Additionally, owners of the company do not directly own any assets of the corporation and are usually not personally responsible for its liabilities. Hence, it offers limited liability which personally protects business owners, the easy transfer of assets, and perpetual existence as an entity. Furthermore, this means that limited companies come with the benefits of lower tax rates in contrast to partnerships, lowering the net business costs. However, this could result in higher administrative costs due to set-up fees, more paperwork, or additional money spent acquiring the support of experts in the respective areas to handle more complex tax filing requirements.
Decide the Name of the Company
- Once the organizational structure of your entity is decided, you can proceed to choose a name for your company. Here are some important considerations you will need to take note of when choosing a business name:
- Ensure that it is reflective of the product or service you offer
- Consider how you want your business to be viewed by the public
- Select a name that is easy to pronounce and remember
- Ensure that the name is distinct and unique to avoid legal problems and confusion.
- There are a few ways to check for the availability of a company name in Tanzania which is to do a search test on the Business Registry available through the Business Registrations and Licensing Agency (BRELA). Once confirmed of the availability of the name so opted, you can proceed with the registration of the same with BRELA.
Process of Inclusion
- Foreign companies looking to operate in Tanzania are not only required to register the company with Business Registrations and Licensing agency but also to complete the process of Inclusion wherein you will be required to notify the Tanzania Investment Centre of the intention of starting a business and compliance adhered with respect to registration of company in Tanzania. The request for declaring compliance with business registration in Tanzania must be sent to the Tanzania Investment Centre together with the names of the firm’s secretary and director. Also, the entrepreneurs should be required to outline the company’s mission and the roles and hierarchies of each employee.
Obtain a relevant business license
- The company must also secure the necessary business license before starting its operations. In Tanzania, two authorities namely, the Business Registration and Licensing Agency for Class “A” Business Licenses and Local Government Authorities (LGAs) for Class “B” Licenses, are responsible for issuing business licenses. The type of activity in the business will determine the business license.
- The Municipal Council in the area where your business will operate or the Ministry of Industry, Trade and Investment (MITI) both provide general business licenses. Companies in particular industries, such as oil and gas, food and beverage, manufacturing, and consultancy, must submit applications for specific licenses or permissions. For registration purposes, one must have these documents in order to obtain a business license:
- A certified copy of the memorandum and articles of association
- A certified copy of a Certificate of Incorporation or compliance,
- A certified copy of the Tanzania Revenue Authority’s TIN certificate for the company,
- A certified copy of the Tanzania Revenue Authority’s Tax Clearance certificate,
- A certified copy of the Lease Agreement or title deed as evidence of having a business location,
- Copies of directors’ or shareholders’ passports or national identity cards. If the shareholders of the firm are non-residents, a power of attorney to a citizen or resident should be provided or attached. For non-citizens, attach a photocopy of the residency permit class “A”.
- Navigating the country of Tanzania’s complex business climate as an entrepreneur planning to register a company in the nation might be a challenging process – a hassle to say the least. As such, Tetra Consultants hopes that this article has provided you with a much better understanding of the business culture of Tanzania so that you can truly decide whether you should do so yourself. So, what are you waiting for?
- Contact us to find out more about the process of setting up a company in Tanzania, 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.