Key Tanzania Land Law Questions by Foreign Investors

📌 Key Tanzania Land Law Questions by Foreign Investors 🔹 1. Can Foreigners Own Land in Tanzania?  Is direct land ownership by foreigners permitted? No. Non Tanzanians and entities which are not majority Tanzanian owned cannot ‘own’ land unless it’s for investment purposes, in which case the ownership can be through derivative title by either the Tanzania Investment Centre (TIC) or Special Economic Zones Authority (SEZ), which are now combined and referred to as ‘Tanzania Investment and Special Economic Zones Authority’ (TISEZA).1 It is important to note that, the concept of ‘ownership’ of land in Tanzania is not similar to freehold tenures i.e. absolute ownership of land. Tanzanians can get ownership of land up to 99 years, renewable. This is a similar derivative title tenure which can be granted to non-Tanzanians under TISEZA for investment purposes2.

Note that, investment in village land by an entity, even if majority owned by Tanzanians and minority owned by non-Tanzanians is restricted. Hence, the only option is to convert from village land to general land where the foreign investor (holding majority or minority in the entity) can obtain the derivative title under TISEZA.  If not, what legal alternatives exist for accessing land (e.g. leasehold, derivative rights)? Aside from derivative rights as explained in the foregoing question, the alternative will be to enter into a long term lease agreement with the owner of the property. Usually, for long term leases, especially if the foreign investor expects to undertake substantial development over the property, it is advisable for the long term lease agreement to include a first right of refusal in favor of the investor in case the owner considers selling the property in the future.

Such first right of refusal can be implemented through the process of derivative title. Long term leases are usually of five years and above, which are compulsorily registrable.  Are there exceptions for foreign-invested companies registered in Tanzania? No. There are no exceptions, despite the Companies Act providing as such. An entity registered in Tanzania which is majority foreign owned cannot own land unless it’s through a derivative title from TISEZA and for village land, it will have to be converted into general land for a derivative title to be issued. 1 https://www.tiseza.go.tz/ 2 https://www.tic.go.tz/pages/certificate-of-incentives

🔹 2. What Legal Mechanisms Allow Foreign Investors to Use Land?  What are Derivative Rights, and how can a foreign investor obtain them? Derivative Right is the right which is given to a foreign investor to use and occupy land in Tanzania for undertaking commercial investment activities. 3 The registered owner on record will be TISEZA, and TISEZA extends the long ‘leasehold’ to the foreign investor to use the land for investment purposes. It is worth noting that, the investment to be undertaken will need to be disclosed to TISEZA and after approval, the derivative title will subsequently be granted to the foreign investor company, which would now have the certificate of incentives. The process usually involves the foreign investor identifying the suitable land that it prefers for investment purposes.

It can either be a land property which is in the existing land bank of TISEZA or it can be a separate property that the foreign investor has come across. After such identification, the foreign investor will undertake the process for acquiring the property by entering into the relevant agreement with the property owner, with a condition precedent that the investor shall satisfy the processes required under the law to complete the acquisition. After signature of the acquisition documents, the foreign investor will then apply for a certificate of incentives and submit the credentials on the land acquired to TISEZA.

Thereafter, a certificate of incentives will be issued and the foreign investor will submit the documents to the relevant Commissioner for Lands and Tanzania Revenue Authority (TRA) for payment of taxes and thereafter, submit the documents, including the certificate of incentives and the original certificate of right of occupancy, to the Registrar of Titles to register the transfer. In the process of registering the transfer, the Registrar of Titles will work closely with TISEZA and the investor in processing the derivative title. Then the foreign investor will submit additional documents to TISEZA which will issue its approval and the Registrar of Titles will approve the transfer, issue the derivative title documents (lease agreement) which shall be signed by the investor and TISEZA.

On completion, the certificate of right of occupancy over the property shall be in the name of TISEZA and the investor appearing as a derivative title holder. Note that, there are ongoing compliance obligations and returns to be filed by the foreign investor to TISEZA.  How does registration with the Tanzania Investment Centre (TIC) help a foreign investor acquire land use rights? 3 https://www.tic.go.tz/pages/land-acquisition

TIC (now part of TISEZA) is mandated to assist investors in identifying and taking advantage of investment opportunities in Tanzania. TISEZA is not only focused on land ownership and real estate investment, rather it has a wider mandate and capabilities even for investments which are not primarily land focused. For land use rights, TISEZA can assist as indicated in the preceding paragraphs. In addition, TISEZA has a land bank which has multiple land properties which are readily available and suitable for investment purposes. If the investor meets the relevant thresholds, the investor can approach TISEZA for the next steps and have access to a number of land properties. It is worth noting that, there could be occupants on the property who have to be paid compensation and/or relocated to allow implementation of the investment project.

Hence, visit to the relevant property and undertaking of reconnaissance survey is critical before the investor commits investment initiatives over the property.  Can a foreign investor form a joint venture with a Tanzanian to hold land? Yes. This is possible, to the extent that the Tanzanian(s) own not less than 51% of the issued capital in the entity to acquire the land and the land is acquired solely for investment purposes. For village land, it will be necessary to convert the village land to general land for joint venture model to be implemented. Otherwise for village land, the entity has to be 100% Tanzanian owned meaning joint venture option would not work.

It is important to ensure that the joint venture is valid and not just on paper as it can pose a risk if the entire joint venture arrangement is a ‘sham’ mean to allow the foreigner to circumvent the restrictions imposed under the law. 🔹 4. What Types of Land Rights Are Available to Foreign Investors?  What is the difference between: o Granted Right of Occupancy (GRO) GRO is the tenure granted to Tanzanians and foreign investors through TISEZA. It is granted over general land, which is usually land in cities, towns and districts, which are not otherwise reserved.4 o Customary Right of Occupancy (CRO) CRO is the tenure granted to Tanzanians only over village land.

5 The restrictions imposed on CRO is that foreigners, including entities in 4 https://www.tic.go.tz/pages/land-acquisition 5 https://www.lands.go.tz/uploads/documents/sw-1682059676 The%20Village%20Land%20Act%201999.%20Cap %20114.pdf

which foreigners own any shareholding cannot be issued with CRO. Under the law, CRO and GRO have the same value/status i.e. none is stronger than the other. It is possible to convert village land into general land and on that conversion, it will be possible to obtain a GRO. o Derivative Right Derivative Right is available over general land only and is applicable to entities which are majority foreign and would like to possess and occupy land for investment purposes. Derivative Right is a type of a leasehold which is issued to the investor by TISEZA, where TISEZA appears as the registered owner of the property in the GRO.  What durations are typical? The tenures whether it’s through GRO, CRO or Derivative Right from TISEZA cannot exceed 99 years. It can be issued for 33, 66 or 99 years.  Can rights be renewed or extended? Yes.

They can be renewed or extended, provided there are no breaches of the conditions. 🔹 5. What Are the Legal Restrictions or Conditions on Foreign Land Use?  Are there limitations on land use (e.g., industrial, agricultural, tourism)? Yes. Foreign investors can be allocated land through derivative rights only for investment purposes. The investment can be across various sectors from industrial, agriculture, real estate, tourism etc. Unfortunately, currently the only option for investors seeking to access land for personal/residential uses is through entering into lease agreement with property owners.  Can land acquired be used for speculative purposes or must it be developed within a timeline? GRO, CRO or Derivative Right is always issued with conditions which must be complied with.

One of the conditions is the timeline for development of the land, and this is usually strictly enforced under Derivative Right. Accordingly, acquisition of land for speculative purposes by a foreign investor is unlikely to be tolerated and it can lead to the Derivative Right being revoked, subject to payment of compensation (if any) as per the laws of Tanzania.

 Are there minimum investment thresholds for foreign investors? Yes. Minimum investment threshold for foreign investors wishing to use and occupy land for investment purposes under TISEZA is USD$ 500,000. 🔹 7. Can Foreign Investors Lease Land?  Is long-term leasing legally secure for foreign investors? Yes. Foreigners can lease general land in Tanzania for a term not exceeding the remaining term/tenure under the GRO. For village land, foreign investors are not allowed to lease because of the restrictions imposed under the Village Land Act, unless converted to general land and GRO is issued.  Can lease agreements be registered and enforced under Tanzanian law? Yes. Long term leases, five years and above must be registered.

Lease agreements whether mandatorily registrable or otherwise are recognized and can be enforced under the Tanzania laws.  Can leased land be used as collateral (e.g., for bank loans)? Yes. Leased land can be used as a collateral but such collateral is attached the leasehold. Meaning, if the lease expires, then the security is terminated. Such encumbrance is registrable at the Registrar of Titles. 🔹 9. What Risks Should Foreign Investors Be Aware Of?  How common are land disputes, and what causes them? Land disputes are common in Tanzania and usually, the main cause is lack of proper records, title documents and title documents differing with the situation on the ground.

There are mechanisms stipulated in the law for resolution of disputes, which can be challenging to navigate if the person lacks legal background and expertise and usually take time for the matter to be resolved.  What are the risks of fraud, double allocation , or incomplete land records?

There are untrustworthy individuals who commit fraud, just like in any other jurisdiction. Double allocation instances are common especially when the previous occupant or owner never processed title documents and another person, with or without intention to defraud applies for title documents over the land. Also, boundary disputes are common, especially when persons purchase as ‘farms/’shamba’ whilst the area may already be planned meaning when purchased as farms, the boundaries are shown manually on the ground, while the land registry retains plans which may not match with boundaries on site. Eventually, applications to adjust the plan become necessary which is subject to different processes.  What is the process and timeline for resolving land disputes? The process and timeline for resolution of dispute differs greatly as it depends on the nature of the dispute.

Usually, the easiest and the fastest way is to resolve amicably between the parties without involving authorities. Otherwise, if the matter is to be litigated, usually, the timeline is not less than 24 months, and that is excluding the right of appeals. 🔹 10. Are Foreign Investors Protected from Expropriation?  Can the government repossess land from a foreign investor? Yes. This is possible but there are strict requirements which warrant such repossession and there are steps and processes which must be followed prior to such repossession. Under the law, the repossession cannot be arbitrarily undertaken and compensation is payable for the land and any unexhausted developments undertaken on the land.  Is fair and prompt compensation guaranteed in case of compulsory acquisition? Yes.

Fair and prompt compensation is guaranteed in case of compulsory acquisition and this is subject to rights of the complainant to file a complaint before courts/tribunals in Tanzania. The foreign investor has other international options to challenge the acquisition and/or compensation paid through international tribunals and conventions signed by Tanzania. 🔹 11. What Taxes and Fees Are Involved?  Is Land rent, Stamp duty, Property tax and Capital gains tax etc.

Yes. The above are applicable in various instances. Land rent is payable every year. Property tax is payable to the TRA annually, whilst capital gains tax and stamp duty are payable on acquisition or transfer. Also, stamp duty and other official fees are payable on applications made at the Registrar of Titles and/or Commissioner for Lands over the land property. In most instances, the amounts payable usually differ depending on the type of land, location, size, uses, etc.  Are tax incentives or exemptions available for foreign investors through TIC or EPZ/SEZ zones? Yes. These are available although exemptions have become harder to come by and now involve negotiations with the Government.

The key is to ensure that the avenues for exemptions which do not necessarily bring benefit to the Tanzania economy are curtailed, and any exemptions granted must have a time cap, subject to revision/renegotiations after every couple of years. 🔹 12. Are There Any Environmental or Social Requirements?  Is an Environmental and Social Impact Assessment (ESIA) required before land development? Yes. ESIA is mandatory before any land development is undertaken for commercial purposes. Also, after obtaining the relevant ESIA certificate, it is necessary to undertake audits annually and file returns to the National Environment Management Council (NEMC).  Do local communities need to be consulted prior to land allocation? Yes. Usually there are local communities’ involvement in the process of land allocation, including when there are land planning activities.

In addition, for some sectors, there are CSR requirements which mandates involvement with the local communities. Any investor wishing to undertake investment is required to have community engagements and usually there are agreements reached with the village authorities on the various areas of priority, which the investor is supposed to implement in the course of implementation of commercial activities on the land. 🔹 13. Are There Upcoming Reforms or Policy Changes Affecting Foreigners?  Are there any recent or upcoming changes in the Land Act, Village Land Act, or Investment Act? The most recent change is the combining of TIC and SEZ into one authority called TISEZA. This is meant to streamline the investment activities and bring

efficiency in supporting investment and investors in the country. Also, the other change which was very attractive to investors is allowing the mining, oil and gas investors to apply and obtain certificate of incentives, which was not possible before.  Is the government moving to tighten or relax foreign access to land? The Government is targeting to bring efficiency in land use and ensure that land is used in a manner which allows investors to realize their commercial objects, whilst protecting the rights of Tanzania’s access to and use of land. There have been speculations of foreigners being allowed to own land, especially through unit titles in the housing estate projects undertaken in the country. However, this has yet to be addressed in the current legal framework, including allowing the Tanzania diaspora who have taken other citizenships to own land through a specified category.

It remains to be seen how these will be structured. 🔹 14. Are There Upcoming Reforms or Policy Changes Affecting Foreigners?  Is the land structure and laws the same between Tanzania mainland and Tanzania Zanzibar? No. The land structure is similar but not the same. Zanzibar retains its own land laws and procedures. Whilst there are differences, overall the laws have some similar provisions, restrictions and processes.  Are investors allowed to own land in Tanzania Zanzibar? Both Tanzania mainland and Tanzania Zanzibar impose similar restrictions regarding ownership of land by non-Tanzanians. Accordingly, investors wishing to own land in Zanzibar have to process the acquisition through the Zanzibar Investment Promotion Authority (ZIPA). In Zanzibar, there is a permitting process which allows acquisition of land properties by foreigners for residential use.

Individuals can be issued with permits which allows them to ‘own’ residential properties. 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 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.