Business Compliance

The basic Tanzanian legislations which deal with licensing and permits for various businesses are:

The Companies Act, Act No. 12 of 2002nThe Income Tax Act, Cap. 332 R.E. 2004nThe Value Added Tax Act, Act No. 5 of 2014nThe Tax Administration Act, No 10 of 2015nThe Business Licensing Act, Act No. 25 of 1972nThe Occupational Safety and Health Act, Act No. 5 of 2003nThe Workers Compensation Act, Act No. 20 of 2008nThe Social Security Registration Act, Act No. 8 of 2008

In this monthly highlight, we are going to provide a high level summary regarding the basic licences and permits which are required for setting up a business in Tanzania. We are confident that our analysis will provide you with a basic understanding (among others) of the applicable laws for your business and reporting requirements.

Kindly note that, this updater focuses on the standard permits and licences which cuts across various business sectors. However, this is not an exhaustive list and depending on the nature of your business, additional licences and permits may be required.

The Companies Act, 2002

This is the principal legislation in Tanzania dealing with the incorporation of public and private companies.

Certificate of Incorporation

Issuing Authority: The Business Registration and Licensing Agency

Duration: The Certificate of Incorporation once granted remains valid until the company is either wound up or struck out from the register of companies by the Registrar of Companies (the Registrar) due to non-compliance.

Reporting: A company which has been issued with a Certificate of Incorporation is required to file annual returns supported by audited financial statements with the Registrar on the anniversary of the incorporation date.

Penalties: Failure to strictly observe the necessary reporting requirements may lead to imposition of penalties by the Registrar. If there is continuous breach, the Registrar may strike off the company from the register of companies.

The Business Licensing Act, 1972

This is the principal legislation in Tanzania which deals with issuance of business licenses.

Business License

Issuing authorities: The Ministry of Industry, Trade and Investment, or relevant municipalities.

Duration: The business license lasts for a period of one year and is renewable annually.

Reporting: Other than notifying the issuing authority of cessation of business, the company is required to renew its business licence annually.

Penalties: Failure to renew the business license within the required time or commencing business without a business license may lead to imposition of penalties by the issuing authority. One may be liable to pay, in addition to the license fee, a fine of 50% of such fee.

The National Social Security Fund Act, 1997

This is the principal legislation in Tanzania which deals with collection, safekeeping, responsible investment, and distribution of retirement funds of all private sector employees.

Social Security Registration Certificate

Issuing Authority: National Social Security Fund

Duration: The registration certificates remains in force throughout the business.

Reporting: An employer is required to remit funds on behalf of his employees within 30 days from the date of payment of salaries.

Penalties: Failure to remit the social security contributions of an employee as required under the applicable law is an offence and may lead to imprisonment, fine or both.

The Workers Compensation Act, 2008

This legislation deals with provision of compensation to employees who are injured or suffer incapacitation in the course of employment. The Act applies to public and private sector employees.

The Workers Compensation Fund Registration Certificate

Issuing Authority: The Workers Compensation Fund

Duration: The certificate once issued remains valid for as long as the company is doing business.

Reporting: All employers are required to make monthly contributions to the Workers Compensation Fund.

Penalties: Failure to make monthly contributions is an offence and may lead to imprisonment, fine or both.

The Occupational Safety and Health Act, 2003

This legislation focuses on work safety of employees, employer and visitors.

The Occupational, Safety and Health Authority Certificate

Issuing authority: The Occupational Safety and Health Authority (OSHA)

Duration: Upon registration of a workplace, the certificate will be issued and it will remain valid for the registered workplace.

Reporting: All occupiers or owners of a workplace have a legal obligation to register themselves with the Occupational Safety and Health Authority for a general inspection and registration of their work place.

Penalties: Any occupier or owner who operates a business without registering the workplace as required in the relevant legislation commits an offence and may be liable to a fine, imprisonment or both.

The Compliance Certificate

Issuing authority: OSHA

Duration: Upon registration of a workplace, the Compliance Certificate will be issued. The Compliance Certificate is applicable only to the registered workplace.

Reporting: The Compliance Certificate is renewable annually and during the renewal process, the workplace may be inspected by the relevant officials from OSHA.

Penalties: Any occupier or owner who fails to renew the compliance certificate commits an offence and may be liable to a fine, imprisonment or both.

The Income Tax Act, 2004

This is the key tax legislation which provides on income tax in Tanzania. The Tanzania Revenue Authority requires at least one director should register and obtain a Tax Identification Number (TIN) together with the company.

Taxpayer Identification Number (TIN) for the Company

Issuing authority: Tanzania Revenue Authority (the TRA)

Duration: The TIN certificate remains valid for as long as the company is doing business.

Reporting: A company which holds a TIN certificate is required to file quarterly returns at the TRA and remit the relevant taxes as required under the law.

Penalties: It is prohibited for a person to undertake a business without registering and obtaining a TIN certificate. Also, failure to file the relevant tax returns and remit the applicable taxes to the TRA may lead to imposition of fines and interest. In some circumstances, the person can be imprisoned for tax related offences.

The Taxpayer Identification Number (TIN) for the Directors

Issuing authority: The TRA

Duration: The TIN certificate remains valid for as long as the company is doing business.

Reporting: There are no specific reporting requirements to the TRA for the directors. However, any income received by the directors from the company will be subject to tax deductions.

Penalties: Tax evasion, failure to pay the relevant taxes or file the relevant quarterly reports to the TRA may lead to sanctions against the directors.

The Value Added Tax Act, 2014

All businesses which expect to earn income of TZS 100 million or above are required to register and obtain a Value Added Tax Certificate.

Value Added Tax Certificate (VAT)

Issuing authority: The TRA

Duration: The VAT certificate once issued is valid during the time the company is earning TZS 100 million and above. Notification should be made to the TRA upon cessation of business or when the company has not attained the minimum benchmark for registration.

Reporting: The company which has a VAT certificate is required to file reports and remit the VAT collected to the TRA.

Penalties: Normally, failure to register for VAT and/or failure to file the relevant reports and remit the collected VAT to the TRA attract fines and interest. It may also lead to imprisonment.

Given the reporting requirements highlighted above and those which may be unique to your business and the penalties which follow for failure to strictly observe the reporting requirements, AssureThing have come up with a tool which, at an affordable cost, will assist you in keeping track of your reporting requirements and avoid interference with your business.

Disclaimer

The views expressed in this paper are those of the author only and should not be considered as an official interpretation, defamatory or interference of any legislation, laws or policies of any country including Tanzania. The contents of this paper should not under any circumstances be reproduced or used without our express written consent. It should not be considered as a legal advice to any of its recipient(s) and should not be relied upon without obtaining further legal advice. We accept no liability for any loss occasioned or suffered due to the contents of this paper.