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The Ultimate Guide To
Employment in Tanzania

Tanzania Facts

Population size: 55,155,473
Currency: TZS (0.004 USD)
Capital city: Dodoma
Languages spoken: Swahili, English
Ease of Doing Business: 132

Employing in Tanzania: What You Need to Know

Employment law in Tanzania appears complex and confusing when looking from outside view although in some ways there are many similarities to other countries. Other factors that complicate matters include the differences between regions and an inconsistent approach to adherence to laws in different cities.

For these and many other reasons the following are only guidelines in the broadest sense, and professional legal services are recommended when employing in Tanzania.

Key Factors to Consider When Employing in Tanzania

There are several key areas to be aware of within Tanzanian employment regulatory framework, especially for companies that plan to initiate a full local office and human resources department.  These challenges can be mitigated by use of a locally sourced payroll provider who is familiar with all of the local laws and rules for both local employees as well as foreign nationals.

  1. Contracts

    A contract with an employee shall be of the following types:

    • a contract for an unspecified period of time;
    • a contract for a specified period of time for professionals and managerial cadre,
    • a contract for a specific task.

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

    An employer shall supply an employee, when the employee commences employment, with the following particulars in writing, namely:

    (a) name, age, permanent address and sex of the employee;

    (b) place of recruitment;

    (c) job description;

    (d) date of commencement

    (e) form and duration of the contract;

    (f) place of work;

    (g) hours of work;

    (h) remuneration, the method of its calculation, and details of any benefits or payments in kind, and

    (i) any other prescribed matter.

Employee Entitlements

Information Explanation
Working on Sundays ?

Employees are allowed to work on Sunday with an additional pay.

Disclosure and Confidentiality of Personal Information ?

An employer shall not be obliged to disclose information that:

(a) is legally privileged;

(b) the employer cannot disclose without contravening a law or an order of court;

(c) is confidential and, if disclosed, may cause substantial harm to an employee or the employer;

(d) is private personal information relating to an employee without that employee’s consent.

Employee Protection and Anti-discrimination Rights ?

Every employer shall ensure that he promotes an equal opportunity in employment and strives to eliminate discrimination in any employment policy or practice.

An employer s hall register, with the Labor Commissioner, a plan to promote equal opportunity and to eliminate discrimination in the work place.

Time Off Work ?

Subject to the provisions of the Employment and Labor Relations Act (ELR2004), an employee with less than six months’ service shall not be entitled to paid leave under the provisions of this Part.

Medical Leave ?

An employee shall be entitled to sick leave for at least 126 days in any leave cycle.

Employment Termination in Tanzania

Information Explanation
Resignation / End of Service Payment ?

On termination of employment, an employer shall pay an employee:

  • any remuneration for work done before the termination;
  • any annual leave pay due to an employee under section 31 of the ELR2004 for leave that the employee has not taken;
  • any annual leave pay accrued during any incomplete leave cycle determined in accordance with section 31 of the ELR2004
  • any notice pay due under section 41 of the ELR2004;
  • any severance pay due under section 42 of the ELR2004;
  • any transport allowance that may be due under section 43 of the ELR2004.
Severance / Redundancy Pay ?

For the purposes of this section, ”severance pay” means an amount at least equal to 7 days’ basic wage for each completed year of continuous service with that employer up to a maximum of ten years.

Termination of Employment ?

If a contract of employment can be terminated on notice, the period of notice shall not be less than seven days, if notice is given in the first month of employment and after that 4 days, if the employee is employed on a daily or weekly basis; or 28 days, if the employee is employed on a monthly basis.

Probation

Information Explanation
Probation Period ?

There is no explicit provision in the Employment and Labor Relations Act 2004 about probation period. However, this act implicitly requires a probationary period of 6 months by saying that a worker with less than 6 months of employment may not bring an unfair termination claim against the employer.

Using Shield GEO EOR Services: How We Can Help You

Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in Tanzania. For companies which intend to employ their staff directly through their incorporated Tanzanian entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in Tanzania.

As a Global Employer Organisation (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Tanzania.

The Shield GEO solution is an attractive alternative where

– the company is looking to employ staff quickly

– the company doesn’t have an appropriately incorporated entity in Tanzania

– 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

Shield GEO can contract directly with the company to employ and payroll their staff in Tanzania. Shield GEO supplies local employment contracts for the staff which ensure that local statutory requirements are met covering issues such as termination, probation periods, leave entitlements and statutory benefits.  Shield GEO is able to advise companies how to cover local employment regulations whilst still providing consistent global employment policies. Understand more about outsourced employment through Shield GEO.

A GEO EOR Solution vs DIY Employment in Tanzania

GEO Solutions or DIY Employment

Companies entering Tanzania must make a decision whether to use their own resources for a Do-It-Yourself (DIY) approach, or to use a Global Employment Organization to handle payroll and employment responsibilities.  A GEO or Tanzania Employer of Record solution makes it faster, easier and cheaper to deploy staff if they don’t have a Tanzanian entity established that can run payroll.

A DIY approach will typically take 6-9 months until there is a properly incorporated WFOE ready to run payroll and cost up to 6 figures if registered capital is required. Shield GEO can deploy foreign staff in 4-6 weeks and local staff in 48 hours. Additionally, Shield GEO is responsible for all compliance issues related to the employment.

Using Shield GEO Employer of Record Services in Tanzania

Payroll

Payroll Tanzania
Management Fee for Employer of Record Services / Monthly Payroll Costs

Please contact us for a quote

Notes

Shield GEO pays the employee on a monthly basis, typically on the last working day of the month although we can adapt to your preferred schedule. Income tax and social security (where applicable) are deducted at source and paid to the local tax authorities.

Currency ?

TZS (0.004 USD)

Tax Amount
Grossed income Tax Rate (%)
Up to TZS 1,620,000 0%
TZS 1,620,001 - TZS 4,320,000 14%
TZS 4,320,001 - TZS 6,480,000 20%
TZS 6,480,001 - TZS 8,640,000 25%
Over TZS 8,640,001 30%
Tax Returns Supplied

Yes, Shield GEO can organise tax returns in Tanzania.

Work Permits

Work Permits
Work Permit cost

Please contact us for a personalised quote.

Payroll and Tax in Tanzania

In 2015, Tanzania made paying taxes more complicated for companies by introducing an excise tax on money transfers. On the other hand, it made paying taxes less costly by reducing the rate of the skill and development levy.

Your Payroll Options in Tanzania

Information Explanation
Remote Payroll ?

A remote payroll system is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Tanzania. Under Tanzanian Law, companies registered in other countries are allowed to obtain a license to do business and have employees in the country.

Local Payroll Administration ?

In some cases, a company will register their business in Israel under one of the forms available: Sole Proprietorship, Private Limited liability companies (LLCs), Public Limited liability companies, Partnerships and Branches and representative offices; but prefer to have another company administering its payroll.

This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.

Internal Payroll ?

Larger companies with a commitment to Tanzania may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff.  There will be a need for in country human resources personnel who have the background needed to manage a Tanzanian payroll, and can fulfil all tax, withholding, and payroll requirements.

This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Israeli employment laws.

Fully Outsourced Payroll & Employment ?

Companies can outsource the employment and payroll of their staff in Tanzania to a GEO, like Shield GEO. This is possible for both foreign workers and Tanzanian nationals. This is the easiest, fastest and safest way to payroll staff in Tanzania.

Shield GEO manages all aspects of payroll for workers in Tanzania, including taxes, withholding, social security payments and other statutory requirements. Shield GEO becomes the Employer of Record and employs the staff on behalf of the client.

Staff are paid monthly with tax and social security deducted at source and paid to local authorities. Shield GEO will invoice the client monthly in advance of the payroll date. The invoice consists of the Total Cost of Employment (Base salary + Employers Statutory Contributions + Additional statutory contributions) and a Management Fee. Shield GEO provides the employees with payslips.

Read more about outsourced payroll and employment through Shield GEO.

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Setting up payroll in Tanzania

Information Explanation
National Currency ?

TZS (0.004 USD)

Employee Information Required ?

The only information that is required for setting up a new start is the employee’s personal data.

A new employee must be registered with the authorities within 80 days from the start date of employment, in which the company has to present its structure to the SII and await authorization to start operations.

The following information is required to set up a new start: –

  • Full Name
  • RUT
  • Date of Birth
  • Address
  • Salary
  • Pension Insurance
  • Health Insurance
  • Other information about hiring
Tax Registration Requirements ?

When an employee first starts employment with a company they must be registered with the TRA (Tanzania Revenue Authority), and the pension scheme.

TRA will provide a TIN (Tax Identification Number) and the pension scheme will also provide a scheme number. All registrations must be made within the first month for the new start commencing work.

Social Security Registration ?

NSSF (National Social Security Fund) is deductible from employee (10% of gross) with the employer paying the same amount on the employee’s behalf. Submissions to the NSSF authority are to be made within one month after the month of deduction.

Skills Levy: Employer is to pay 5% of the gross on behalf of the employee.

Tax Figures

Information Explanation
Corporate Income Tax ?

30% on taxable profits

Income Tax Rate ?
Grossed income Tax Rate (%)
Up to TZS 1,620,000 0%
TZS 1,620,001 - TZS 4,320,000 14%
TZS 4,320,001 - TZS 6,480,000 20%
TZS 6,480,001 - TZS 8,640,000 25%
Over TZS 8,640,001 30%
Sales Tax ?

VAT: 18%

Withholding Tax ?

10% on interest income

Other Tax ?

Property Tax: 0.15%, calculated on property annual average net book value.

Time to prepare and Pay Taxes ?

195 hours

Time required to start a Business ?

26 days

Payments

Information Explanation
Payment Mode ?

An employer shall pay to an employee any monetary remuneration to which the employee is entitled in cash, unless the employee agrees otherwise, in which case the payment shall be made either by check payable to the employee; or direct deposit into an account designated by the employee in writing.

Minimum Wage ?

Minimum Wages in Tanzania vary according to the business area. For a detailed list it is possible to consult AfricaPay.

Tanzania Immigration and Work Permits

Foreign workers are required to have the proper visas and work permits in Tanzania, as established by immigration laws.  Work permits must be secured for employees, and sponsored by a locally licensed and incorporated entity, which can be a problem for companies just entering the Tanzanian market.  If you have yet to complete the incorporation process you can use an outsourced management company or GEO Employer of Record to sponsor the employee for the necessary permits.

Your Options

Have Your Own Business?

There are three types of residence permits available in Tanzania. Self-employed foreigners (investors) are required to apply for a Class A permit while foreign employees must be approved for a Class B permit. Applications for Class B permits should be forwarded to the Director of Immigration Services through the Labor Commissioner. The Labor Department is only involved in the issuance of Class B permits.

Application Process for Class A Permit

Application Form TIF.1 can be obtained at the Department of Immigration Services. There is no charge for the form and no processing fee. Along with a completed application form, the following items must be attached, Memorandum and Articles of association, CV of investor, verified birth Certificates plus 5 photographs passport size and a project write-up.

There is a fee of US S 1,600 for a Class A permit, which is generally valid for two years. Permits can be renewed for an additional period of two years for US $ 800.

Application Process for Class B Permits

To hire a foreign employee, a Class B permit must be applied for by the firm. The application form is available from the Department of Immigration (Form TIF. 1) at no cost and there is no processing fee.

The application form should be accompanied with the following: five photographs, birth certificate, curriculum vitae, academic qualifications, proof of experience, organisational chart, offer of employment, proposed contract. The Labor Department reviews the application and makes a positive or negative recommendation to the Department of Immigration.

Class B residence permits have a fee of US $ 600 for two years. There is a renewal fee of US $ 300.

Use the Shield GEO Employer of Record Solution?

Once you get in touch with us, one of our consultants will take all the work off your hand, co-ordinate with our local partners to get all the required permits organised, provide the processing time, costs, document-checklist and keep you informed through the process. Contact us to know more.

Types of visas in Tanzania

Category Description of Visa
Ordinary Visa

This is a Visa granted to foreigners other than prohibited immigrants seeking to enter the United Republic of Tanzania upon application for the purpose of visit, leisure, holiday, business, health treatment, studies, or any other activity legally recognized by the Laws of the United Republic of Tanzania for validity not exceeding three months for a single entry only.
Documents required for this Visa are as follows:

•  application form duly filled in;
•  security Bond duly filled in(for Multiple Visa);
•  five passport size photographs (if required);
•  copy of the Applicant’s  valid Passport;
•  copy of the valid Passport or any other identity of the person to be visited (applicant’s host if required);
•   documents of  the Company or Business to be visited; (for Multiple Visa)
•  any other evidence to prove that the applicant is bound to travel frequently into the United Republic of Tanzania(for Multiple Visa)

Fee: US $ 50

Transit Visa

This is a Visa granted to foreigners other than prohibited immigrants intending to pass through the United Republic of Tanzania to other destinations for a period not exceeding fourteen days provided that such persons should have onward tickets, sufficient fund for subsistence while in the United Republic of Tanzania and an entry Visa to the country of destination (where applicable) or any other proof to satisfy that such person will be allowed entry to that other country.

Documents required for this Visa are as follows:

•  application form duly filled in;
•  security Bond duly filled in(for Multiple Visa);
•  five passport size photographs (if required);
•  copy of the Applicant’s  valid Passport;
•  copy of the valid Passport or any other identity of the person to be visited (applicant’s host if required);
•   documents of  the Company or Business to be visited; (for Multiple Visa)
•  any other evidence to prove that the applicant is bound to travel frequently into the United Republic of Tanzania(for Multiple Visa)

Fee: US $ 30

Multiple Entry Visa

This is a Visa granted to persons who are nationals of countries which require Visa for United Republic of Tanzania and who by nature of their businesses or circumstances require making frequent visits to the United Republic of Tanzania. Multiple Visas may be issued for a period of three, six or twelve months to permit the holder to enter and re-enter subject to the validity of the visa, provided that a single stay of the holder should not exceed three months.

Documents required for this Visa are as follows:

•  application form duly filled in;
•  security Bond duly filled in(for Multiple Visa);
•  five passport size photographs (if required);
•  copy of the Applicant’s  valid Passport;
•  copy of the valid Passport or any other identity of the person to be visited (applicant’s host if required);
•   documents of  the Company or Business to be visited; (for Multiple Visa)
•  any other evidence to prove that the applicant is bound to travel frequently into the United Republic of Tanzania(for Multiple Visa)

Fee: US $ 100

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.

.

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.

 

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