Incorporating A Company at the Company Registry: –
- The first step in incorporating a Company at the Company Registry in Tanzania is for the proposed Company seeking an approval of the proposed Company Name at the Company Registry. This is stated at Section 30 (1) and (2) of the Companies Act that reads as
- The Registrar may, on written application, reserve a name pending registration of a company or a change of name by a company. Any such reservation shall remain in force for a period of thirty days or such longer period not exceeding sixty days, as the Registrar may, for special reasons, allow, and during such period no other company shall be entitled to be registered with that name.
- No name shall be reserved and no company shall be registered by a name which, in the opinion of the Registrar, is the same or as too like name appearing in the index of company names or is otherwise undesirable.
- It therefore follows that the first step is to seek the approval and reserve the proposed name of the Company. The next step is contained in Section 3 of the Companies Act that states the requirement of any persons that seek to form a Company. Section 3(1) of the Companies Act
states that: –
- Any two or more persons, associated for any lawful purpose may, by subscribing their names to a memorandum of association and otherwise complying with the requirement of this Act in respect of registration, form an incorporated company, with or without limited liability.
- Such company shall be either
- A company having the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them (in this Act termed “a company limited by shares”); or
- A company having the liability of its members limited by the memorandum to such amount as to the members may respectively thereby undertake to contribute to the assets of the company in the event of its being wound up (in this Act termed “a company limited by guarantee”); or
- A company not having any limit on the liability of its members(in this Act termed “an unlimited company”).
It is important to note that the proposed memorandum of association should be in English language and shall state clearly the following:-
- The name of the company, with “public limited company” as the last words of the name in the case of a public company or with “limited” as the last word of the name in the case of a company limited by shares or guarantee;
- The objects of the company;
- The memorandum of a company limited by shares or by guarantee must also state the liability of its members is limited;
- The share capital and its share division structure; and
- The memorandum shall also have to be dated and shall be signed by each subscriber in the presence of at least one attesting witness.
Lastly, it is also important to note that in the case of a company limited by shares, or companies limited by guarantee or unlimited companies, they have to be registered together with their proposed articles of association of the Company. The Articles of Association shall have to be signed by all subscribers to the Memorandum of Association and shall contain the regulations for the company.
The Articles of Association shall have to be:-
- in the English language
- divided into paragraphs numbered consecutively and
- signed by each subscriber to the memorandum of association in the presence of at least
one witness, who shall attest the signature and add his occupation and postal address.
Procedure to obtain a Tax Payer Identification Number
Pursuant to section 133 of the Income Tax Act, the Company shall need to apply to the Commissioner General for Income Tax for a Taxpayer Identification Number (“TIN”). The application must be made within fifteen (15) days of the company commencing business in Tanzania. The application must be made using the prescribed form (or online using the Tanzania Revenue Authority (“TRA”) website). For this purpose, the Company will need to complete the relevant form estimating tax payable by the company, as well as a TIN application form. A lease agreement and copies of its certificate of incorporation and memorandum and articles of association will also need to accompany the application. Once the company is granted a tax identification number, it will be issued with a TIN certificate. Generally, provided all information and documentation is duly submitted, it takes 5 business days to obtain a TIN certificate. Once issued, the TIN certificate must be displayed in a conspicuous place at all of the Company’s offices in Tanzania.
- Every company wishing to commence business in Tanzania must obtain a business license as required by section 3 of the Business Licensing Act. The license must be applied for and obtained within 21 days from when a company commences its business as per section 11(1) (b) of the Act.
- The type of business license which the Company will require will depend in on the nature of its business operations. There are separate and distinct business categories, therefore if the Company is looking to pursue a combination of these business categories; it will need to obtain separate business licenses for each activity. The licensing authority for business licenses is generally the Ministry of Industries and Trade. However, there are certain business categories which are licensed by local municipal authorities. A new system of issuing business licenses has been put in place pursuant to the Finance Act. Under the Finance Act, business licenses are to be issued and renewed annually for twelve (12) months periods subject to payment of annual fees. The licenses are set to expire 30 June 30 every year. The fees payable depends on the category of business pursued and the nationality of the applicant. The fees applicable for business licenses can be found in the Business Licence Fees Regulations. Please note that in terms of section 3(2) of the Business Licensing Act, should the
Company looks to carry on its business in Tanzania in more than one premise, it will need a separate business license for each premise. Registration of a branch attracts slightly less fees than that of the principal office.
- In order to obtain a business license, the Company will need to complete the prescribed application form and submit it to the relevant authority together with the fee payable. The form is intended to extract certain particulars of the applicant, including, the nationality and registration details of the shareholders and the nature of the core activity of the business and any proposed auxiliary activities. The application form must be
accompanied by the following documents:
- a copy of the Company’s certificate of incorporation and memorandum and
articles of association;
- the power of attorney granting a citizen of Tanzania authority to lodge the
application on their behalf;
- proof by the applicant having suitable business premises for the business
applied (this can be in the form of a title deed, tenancy agreement, rent receipts
or property payment); and
- TIN number of business
- Please note that it is an offense for anyone to operate a business in Tanzania without the respective business license. Pursuant to section 11 of the Business Licensing Act, such an offense attracts a fine of 25% of the unpaid fee. Further, there is an additional penalty of 2% imposed every 30 days’ period thereafter if the amount remains unpaid. The consequence for conducting a business without a business licence is not simply confined
to monetary penalties. In terms of section 3(4) of the Business Licensing Act, the relevant licensing authority also has the authority to close any business premises which has not been licensed as required by the Business Licensing Act.
Value Added Tax (“VAT”)
- Pursuant to section 19 of the VAT Act read together with regulation 3(1) of the VAT Registration Regulations, every company is required to register for Value Added Tax (“VAT”) if its turnover if its taxable turnover exceeds or is likely to exceed:
- 40 million in any period of 12 consecutive months; or
- 10 million in any period of 3 consecutive months.
- The taxable turnover of a company is defined by regulation 2 of the VAT Registration Regulations read together with section 5(1) of the VAT Act to be that part of the turnover of a business which stems from the supply of goods or services in furtherance of the business. The application for VAT registration must be made within 30 days of a company becoming liable to make such an application. The application is made to the TRA in the prescribed form. The application must be accompanied by copies of the company’s memorandum and articles of association, certificate of incorporation, a copy of the applicant’s lease agreement (together with evidence of payments of all stamp duty and withholding tax payable) and a letter from the local government authority confirming the location of the company’s premises. Irrespective of when an application for VAT registration is made, an applicant is deemed to have been registered for VAT purposes from the first day of the month subsequent to the month when the company was liable to apply for registration as per regulation 4(3) of the VAT Registration Regulations.
We hope that the above has provided you with ample information as to how to commence business operations in Tanzania.
DOCUMENTS, INFORMATION, AND LAW RELIED UPON
In rendering this opinion, we have relied on the following:-
- Companies Act 2002, Act No. 12 of 2002 (the “Companies Act”);
- Companies (Forms) Rules 2004;
- the Business Licensing Act (Cap 208 R.E 2002) (the “Business Licensing Act”);
- the Business Licensing Regulations (Cap 208 R.E. 2002) and the Business Activities Registration Regulations 2009 (collectively referred to as the “Business Licensing Regulations”);
- the Income Tax Act, No 11 of 2004, as amended from time to time (the “Income Tax Act”);
- the Stamp Duty Act, Cap 189 R.E. 2006 (the “Stamp Duty Act”);
- the Value-Added Tax Act, Cap 148 R.E. 2006 (the “VAT Act”);
- the Valued Added Tax (Registration) Regulations 1998 (the “VAT Registration
- our knowledge based on the research conducted.