This is in response to the visitors of this site.. after reading the article “BUSINESS RECESSION: What a recession mean to your small business, one visitor inquired on the possibility of establishing a HIGH-TECH BUSINESS IN AN ECONOMIC DOWNTURN ECONOMY, ESPECIALLY IN DEVELOPING COUNTRIES SUCH AS TANZANIA. Following a period of visiting different officials and offices today, I am bringing you the article titled “Establishing a Business Entity in Tanzania: Part One.
Establishing Business in Tanzania
The most common business entity is limited liability entity. For foreign companies, it is possible to establish a branch or subsidiary. In certain sectors, businesses can only be established in a form of a local company. All businesses operating in Tanzania, whatever their legal form, must register with the Business Registration and Licensing Agency (BRELA), which is under the Ministry of Industries and Trade.
The following are the steps that can be followed include the following:
Proposed Company Name Clearance:
The first step is to apply for name clearance at the BRELA for the proposed company name. Incorporation of companies in Tanzania is done under the Company’s Act, Chapter 212 of the laws of Tanzania. Investors wishing to establish a limited liability company must first clear the name for the proposed company before filing an application with BRELA.
Estimated Time to Complete: This is a single day exercise.
Estimated Cost to Complete: There is no direct cost involved with this exercise to BRELA.
Observe: A letter of application for clearance for a proposed company name should be submitted by hand, or mail to the Registrar of Companies, which clears the name upon search automatically. The search sets up the availability of the proposed name. If the name is not available the process repeats. The easy way is to propose several desired company names as possible for clearance and eventually one of them will be available.
Filing the Appropriate Documents and Fees for a certificate of incorporation and of commencement
Leading the receipt of notification of the availability of the name, the applicants prepare the Memorandum and Articles of Association and submit them for the company registration process. It is not enforced that the documents should be prepared by a legal advisor, those it is a best practice to do so. When these documents are prepared and presented for registration without name clearance, the search is done during the registration process with a chance of rejection if the search reveals a similar name in the Register.
The filing of an application is accompanied with the appropriate registration fees, which are available at BRELA Website http://www.brela-tz.org/services.html#companyreg (denominated in dollars in the case of foreign investors and Tanzania shillings in the case of local investors). Companies, both local and foreign, are treated equally under the law.
Estimated Time to Complete: It is estimated that this may take 7 working days.
Estimated Cost to Complete: The cost is dependent on the following:
a) Filing fees;
b) The authorized capital of the company;
c) Stamp duty (Number of Copies of Memorandum and Articles of Association);
For example, for a company of authorized share capital of TZS 1,000,000/- and Five copies of Memorandum and Articles of Association, will a cost up to TSZ 154,000/-. These costs do not include legal services from your legal counselor.
Observe: Business trade names (Cap 213) and companies (Cap 212) can be registered only in Dar es Salaam.
To apply for a certificate of incorporation, a subscriber, secretary, or a person named in the articles of association as a director must submit the following to the Registrar of Companies:
Form-14a (First Directors and Secretary and Intended situation of Registered Office)
Form-14b (Declaration of Compliance on Application for the Registration of a Company)
The Memorandum and Articles of Association are also filed with the forms.
After the forms are filed, the certificate of incorporation is usually processed 2-3 days after the forms are filed. Registration forms are free, and applicable registration fees (according to the New Companies Act 2002) are shown below.
Although there are no standard articles of association, Table A of the Schedules to the Companies Ordinance may be adopted. The fee for incorporating companies with capital below TZS 1 million is 10% but is negotiable.
Company registration fee (based on share capital):
- 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 submitted)
Stamp duty fee:
- Original memorandum and articles of association: TZS 6,200.
- Additional copies: TZS 5,000.
Filing and Application for Taxpayer Identification Number (TIN) with the Tanzania Revenue Authority (TRA).
In Tanzania tax registration has been fully computerized. So the business after being registered by BRELA, it can file an application for Taxpayer Identification Number (TIN) at TRA.
Estimated Time to Complete: It takes a minimum of 2 days to obtain TIN number, depending on the number of request made to the Revenue Authority at the time.
Estimated Cost to Complete: TIN is available free of charge.
Income Tax Officials Inspect the Office Site of the New Company
This exercise is done simultaneously with the application of the TIN with TRA. Therefore, it takes one day and there are no charges involved.
Apply for PAYE with the Tanzania Revenue Authority
The application for Pay as You Earn is done at the same day with the application for TIN and Income Tax Officials inspection of the new company office site. There are no charges involved with this activity.
Apply for Business License from the Regional Trade Officer (depending on the nature of business).
Estimated Time to complete: it is estimated that this may take 6 working days.
Estimated Cost to complete: there are no charges in this exercise.
Observe: The business license automatically registers the company for various taxes imposed by the Dar es Salaam City Commission (for example, the development levy). The application is at no charge for companies with a turnover of less than TZS 40 million and certain health providers.
The land and Town-planning officer Inspect the Premises
It is imperative that you let the Land and Town Planning Officer to inspect the office premises to obtain his signature.
Estimated Time to complete: 1 day, simultaneous with (vi) above.
Estimated Cost to complete: transport cost, trivial.
Observe: the promoters must provide transportation for the Land and Town Planning Officer to inspect the company premises.
The Health Officer inspection to the premise
The Health Officer inspection to the premises, the promoters must provide transportation for the Health Officer to inspect the company premises.
Apply for VAT Certificate with the Tanzania Revenue Authority
Estimated Time to complete: 4 days
Estimated Cost to complete: no charge
Observe: VAT registration takes 3–5 days if the proposed company will have a threshold income of TZS 40 million.
Revive VAT/stamp duty inspection
Estimated Time to complete: 1 day, simultaneous with (ix) above.
Estimated Cost to complete: no charge
Manufacturing firms can submit Form 225 to the VAT Commissioner for exemption of VAT on capital goods. VAT registration and inspection takes 4 days, so it is assumed that the inspection takes 3 days. When the annual company turnover is less than USD 20,000, the company must register for stamp duty instead of VAT. The composition number gives the right to pay a lower stamp duty than otherwise
Register for the Workmen’s Compensation Insurance at National Insurance Corporation or any preferable Insurance Policy.
Estimated Time to complete: 1 day
Cost to complete: no charge
To register for workers’ compensation insurance, employers must complete the Workmen’s Compensation Tariff Proposal Form. This form should be completed once the firm begins hiring employees and just before the firm becomes operational. However, because the insurance industry is privatized in Tanzania, employers may opt to take an insurance policy instead of workmen’s compensation claims.
Obtain registration number at the National Social Security Fund (NSSF)
Estimated Time to complete: 7 days
Estimated Cost to complete: no charge.
With arrangement we can help you with all the paper works at a reasonable fee.
Filed under: Business Economics