Land for Investors in Tanzania: Derivative Title

Land for Investors in Tanzania - Derivative Title The Land Act prohibits ownership of land by non-citizens unless the land is for investment purposes under the Tanzania Investment Act. A noncitizen means either a non-Tanzanian individual or a company in which majority shareholders are non-Tanzanians. Unless the foreign investor opts for a joint venture ( JV) with a Tanzanian or a long lease, the only alternative available to the foreign investor is to obtain a derivative title from the Tanzania Investment Centre (the TIC) or from the Export Processing Zones Authority. For the purpose of this note, we will focus on the TIC. There are two procedures for obtaining a derivative title over a land. This depends on whether the land has a Granted Right of Occupancy (GRO) or not i.e. un-surveyed land.

This summary will focus on the procedure of obtaining a derivative title over a land which has a GRO. Derivative Title over a land with a GRO 1. Registration of the Project with the TIC – the foreign investor should register his project with the TIC by filing the necessary documents which provide a detailed description of his investment. The foreign investor should clearly state in his proposal that, he requires land for investment purposes, clearly describe the size, preferred location etc. of the land and may disclose to the TIC that he has identified land which is more suitable for his project. Only projects valued at Usd. 500,000 and above can be registered at the TIC. The investment can be 100% foreign owned or a JV with Tanzanian(s). If the TIC approves the project, it will issue a Certificate of Incentives. 2.

Entering into a sale/purchase agreement - the foreign investor and the owner of the land (the Seller) will enter into a land transfer agreement which must be witnessed, preferably by an advocate, judge or magistrate. 3. Valuation Report - the foreign investor or the Seller will engage a valuer to prepare a valuation report for the land to be acquired. The valuation report should be stamped by the Chief Government Valuer prior to being relied upon by the foreign investor or the Seller. The Seller or the foreign investor may engage a private valuer to prepare the valuation report and submit it to the Chief Government Valuer for review, verification and stamping. 4.

Payment of Capital Gains Tax and Stamp Duty – the Seller will file the valuation report, the land transfer agreement and other documents e.g. prescribed forms as required under the Tanzanian law, at the Tanzania Revenue Authority (TRA). The TRA will assess the capital gains tax and stamp duty payable. Once the relevant taxes have been paid, the TRA will issue a capital gains clearance certificate and stamp the land transfer agreement as proof that stamp duty has been paid. Also, there is land rent and property tax which is payable, normally before the transfer. 5. Approval by the District Land Officer – the Seller will notify the Commissioner for Lands (the Commissioner) of his intention to transfer the GRO to the foreign investor.

The Seller will file the relevant forms, the land transfer agreement (stamped by the TRA), the capital gains clearance certificate, the Certificate of Incentives and other documents, e.g. identification cards, incorporation documents (if Seller and/or foreign investor is a corporate body), TIN

certificate of the Seller etc. At this juncture, it is critical to ensure that all land rents and property taxes have been paid otherwise the transfer may not be processed. The District Land Officer will issue a Certificate of Approval of Disposition to the Seller. 6. Registration of the Transfer at the Registrar of Titles - All the documents received from TRA, the Certificate of Disposition, the relevant forms, Certificate of Incentives, valuation report, land transfer agreement (stamped by the TRA), incorporation documents/identification documents will be filed at the office of Registrar of Titles. The Registrar of Titles will now issue the GRO in the name of the foreign investor. Surrender of the certificate of the GRO and processing of a Derivative Right Issuance of Derivative Title by the TIC 1. Upon receiving the GRO, the foreign investor must surrender the GRO to the Commissioner.

The Commissioner will prepare Land Form No.1 (Designation of Land for Investment Purposes ) for gazettment for a period of 30 days. The copies of the Land Form No. 1 shall be served upon the TIC and the Authorised Land Officer located where the land is situated. 2. After the expiry of 30 days from the date of the gazettment, the National Land Allocation Committee ( NLAC) will be convened to discuss and approve the allocation of land to the foreign investor. This Committee meets four times per annum, on quarterly basis. 3. Upon the approval by the NLAC, the TIC will then request the Commissioner for Lands to issue an invoice for fees to finance the preparation and issuance of a GRO in the name of the TIC. 4.

The TIC will request the foreign investor to pay the fees assessed by the Commissioner and the foreign investor shall pay the TIC an additional 10% of the fees charged by the Commissioner. The additional 10% payable to the TIC is for financing the follow up of the GRO by the TIC and preparation of a derivative title by the TIC. 5. After payment of the relevant fees, the Commissioner shall proceed to prepare the GRO in the name of the TIC, submit it to the TIC for signature. After the GRO is signed, the Commissioner shall submit the GRO to the Registrar of Titles who shall register the new GRO in the name of the TIC. The new GRO shall then be issued to the TIC. 6. The TIC will proceed to prepare a derivative title which shall be signed by the TIC and the foreign investor. The TIC will submit the derivative title to the Registrar of Titles for Registration.

After registration, the TIC will issue one copy of the derivative title to the foreign investor and retain the other copy. 7. At this stage, the foreign investor has the right to occupy and use the land for investment purposes, as approved by the TIC. If there is any change on the project e.g. time frames, type of investment etc. the foreign investor should notify the TIC immediately to avoid revocation of the derivative title.

Our support for your business We assist our clients to: (a) undertake legal due diligence on the land (including physical visits) and issue a comprehensive due diligence report; (b) prepare the relevant transfer documents, liaise with the relevant government authorities and undertake the transfer process; (c) register the project with the TIC and secure a derivative title; (d) prepare the relevant security documents for creating a charge over land; (e) process issuance of granted right of occupancy (title deed) over unregistered land; (f) representing clients in land disputes; and (g) registering charges over land. 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 content of this article should not under any circumstances be reproduced or used without the express written consent of the author. Also, it should not be relied upon without obtaining further legal advice and we accept no liability for any loss occasioned or suffered due to the contents of this article.