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Incorporation

Setting up a company in Tanzania

When setting up a company you may want to consider these factors:

  1. Business Factors

    Since 2013, Tanzania eased the setting up process for new companies by eliminating all requirements for inspections by health, town and land officers as a prerequisite for a business license.

  2. Corruption

    According to Transparency International, Tasmania’s corruption perceptions index ranks the country 117 out of 168 in the world, increasing entry barriers for small firms entering the local market.

    As some of the most affected sectors are government procurement, land administration, taxation and customs, it is recommended to entrust on-site PEOs to ensure the effectiveness of the incorporation processes.

Your Options

The legislation in Tanzania provides for a rather wide range of organisational forms to incorporate business entities. Private Limited liability companies (LLCs), Public companies, Branches and representative offices are the most popular.

Limited liability companies (LLCs)

A LLC enjoys many advantages in Tanzania and in particular:

  • A distinct legal personality separated from its shareholders.

  • The liability of its shareholders is limited.

  • In case of death of one of the shareholders or directors, the business will not be dissolved.

 

First step: Application for company name at the BRELA agency.

Every applicant must submit an application to the agency with at least 3 or more proposed names for the company and the Company Registrar will approve only 1 of the names proposed.

Different businesses/projects, registered under the umbrella of the company can have different names.

The application can be submitted either by mail or at the counter of the BRELA for clearance of the proposed name.

After receiving confirmation that the name is available, the applicant must prepare a memorandum and articles of association, that will be submitted to BRELA.

If the memorandum and articles of association have been prepared and presented for registration without name clearance, the search will be conducted during the registration process.

It is now possible  to perform the online name search directly on the BRELA website.

Second step: notarised declaration of compliance

A notarised declaration of compliance is required at this stage from the entrepreneur.

Third step: Application for company incorporation.

Business names and companies can be registered only in the city of Dar es Salaam. Using a lawyer to perform this task is a common practice.

To apply for a certificate of incorporation, it is necessary to submit the following forms to the Registrar of Companies:

– 14a (First Directors and Secretary and Intended situation of Registered Office); – 14b (Declaration of Compliance on Application for the Registration of a Company), including the Memorandum and Articles of Association.

After these two forms are filed, the certificate of incorporation will be processed within 2-3 days.

Company registration fee are as follows (based on share capital) (1USD = 1,187 TZS):

  • Share capital from 20,000 to 500,000: TZS 50,000.
  • Share capital from 500,000 to 1,000,000: TZS 80,000.
  • Share capital from 1,000,000 to 2,000,000: TZS 100,000.
  • Share capital from 2,000,000 to 3,000,000: TZS 120,000.
  • Share capital from 3,000,000 to 5,000,000: TZS 150,000.
  • Share capital from 5,000,000 to 10,000,000: TZS 180,000.
  • Share capital from 10,000,000 to 30,000,000: TZS 200,000.
  • Share capital 30,000,000 and over: TZS 300,000. Filing fee: TZS 45,000: 15,000 per document

Stamp duty fee related to the original memorandum and articles of association: is TZS 6,200.

Fourth Step: Application to the Tanzania Revenue Authority for taxpayer identification number (TIN)

TIN registration (free of charge) is now available online and can take minimum 2 days to be processed.

Upon receiving the Certificate of incorporation it is necessary to attach it to the TIN application with Memorandum and Articles of Associations.

The limited company is required to fill TIN application forms as follows:

  • Application for the company.
  • Application for each shareholders/directors, in case any director has already issued with TIN certificates. The same TIN number must be used.

Fifth step: Obtaining the taxpayer identification number (TIN)

It is necessary that a minimum of one director is physically present at the tax office to register his/her biometric data and that someone then visits the TRA offices to pick up the TIN number.

Sixth step: Application for a business license.

Depending on the nature of the business, business licenses in Tanzania are either issued by the Ministry of Industry and Trade or the Local Authorities. The following documents must be submitted with the application:

  • Certificate of incorporation;
  • Memorandum and Articles of Association;
  • Proof of Tanzanian Citizenship;
  • Proof of a suitable company premises;
  • Taxpayer Identification Number (TIN).

Seventh step: Application for VAT

VAT registration is made at the Tanzanian Revenue Authority and it can take approximately 3–5 days to be processed.

Eight step: Registration for the workmen’s compensation insurance.

In order to register for a workmen’s compensation insurance, every employer must complete the Workmen’s Compensation Tariff Proposal Form at the National Insurance Corporation or at an alternative provider.

Ninth step: Social Security registration

In approximately a week it is possible to obtain a social security number. Every employer in the formal sector is required to register his/her employees (every employee can choose the scheme under which to register).

Processing Time: Approximately 15 weeks

Fee: Registration fees vary depending on each company’s nominal share capital and in particular:

More than TZS 20,000 but not more than TZS 1,000,000 = TZS 95,000

More than TZS 1,000,000 but not more than TZS 5,000,000 = TZS 175,000

More than TZS 5,000,000 but not more than TZS 20,000,000 = TZS 260,000

More than TZS 20,000,000 but not more than TZS 50,000,000 = TZS 290,000

More than TZS 50,000,000 = TZS 440,000

Each Stamp duty per copy of the Memorandum and Articles of Association is charged TZN 5,000

To reserve a company name a fee of TZS 50,000 is due.

Public companies

Differently from a LLC a public company is not restricted from transferring its shares and it is allowed to invite the public to subscribe for shares in the company.

Furthermore, there are no restrictions on the maximum number of public company members, while a minimum of seven members is  required.

The process of registering a company in Tanzania may take up to 4 weeks and includes:

First step: Application for company name at the BRELA agency.

The company name reservation can last up to 30 days and can be renewed for a similar period. The associated cost is TZS 50,000 per each name submitted for reservation.

Preparation of the Memorandum of Association.

A public company will require at least 7 subscribers.

Completion of several forms.

Including:

  • Statement of Nominal Capital;
  • Particulars of Directors and Shareholders;
  • Situation of Registered Office and Certificate of a Lawyer involved in the Formation of the Company.
  • Consent to Act as Directors;
  • List of Persons who have Consented to Act as Directors;
  • Statement in Lieu of Prospectus forms.

Stamp for the Memorandum of Association, Articles of Association and Statement of Nominal Capital.

Stamp duty payable is 1% of the capital (subject to a maximum of TZS 300,000) plus a fixed fee of TZS 5,000 for the stamping of each copy of the Memorandum and Articles of Association and filing fees of TZS 51,200 for statutory forms 14(a) and 14(b).

Issue of a Certificate of Incorporation by the registrar of Companies.

Processing Time: 14 weeks

Fee: Approx USD 16,650

Branch and representative office

An overseas company is allowed to establish a representative office/branch by registration of an established place of business in the country.

The company is not deemed to have a place of business in Tanzania solely on account of its doing business through an agent in Tanzania at the place of business of the agent.

Upon registration in Tanzania, a branch has the same powers as if it were a company incorporated in the country, and is therefore subject to the national legislation.

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The Registration procedure of a branch includes the submission of the following documents:

  • Certified copies of Memorandum and Articles of Association.
  • Evidence of the situation of the registered office in the original country.
  • Details of Directors of the company.
  • Details about representatives of the company in the country.
  • Copy of most recent accounts of the company.

Upon submission of the above mentioned documents a certificate of compliance is issued.

Fee structure can be consulted at the BRELA website.

Outsourcing Employment Through a GEO Employer of Record Service

Outsourcing Employment Through Shield GEO

Whether to incorporate in Tanzania, and what sort of entity to setup are just two of the many choices companies must make when expanding into a new market.

If the company intends to have staff in Tanzania they must also decide whether they will administer that employment internally or use a Global Employment Organisation to handle payroll and employment responsibilities.

A GEO Employer of Record solution is an attractive alternative where

– the company is looking to setup an office quickly

– the company wants to work within a defined budget

– the company wants to limit its initial commitment in Tanzania

– the company needs help with tax, employment, immigration and payroll compliance in Tanzania

The complexity of employment regulations in Tanzania makes the use of a GEO advisable coupled with local legal counsel to ensure full compliance with employment laws, for example the drafting of local contracts for workers.

Shield GEO provides a comprehensive service in Tanzania allowing companies to deploy their staff quickly with reasonable, clearly stated costs and timeframes. The company contracts directly with Shield to employ and payroll their staff on their behalf in Tanzania.

Shield GEO then becomes the Employer of Record. Shield GEO assumes the legal responsibility for these employees, sponsoring them on work permits, complying with local employment law and running their monthly payroll. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Tanzania. Read more about outsourced employment through Shield GEO.

 

Tanzania

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