A Comprehensive Guide to Company registration in Tanzania

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Starting a business in Tanzania is an exciting venture, whether you’re a local entrepreneur or an international investor. The country offers a range of business structures and a straightforward registration process, primarily managed by the Business Registration and Licensing Agency (BRELA). Here’s a detailed guide to navigating the company registration process in Tanzania.

Introduction

A company is a legal entity formed by a group of individuals, whether natural or legal persons, to engage in commercial, investment, or industrial activities. The members share a common purpose pooling their talents and resources to achieve specific goals. A company, as a legal person, can assume limited liability for civil and tax obligations arising from its members’ actions or omissions. To establish a company in Tanzania under the Companies Act (Act No. 12 of 2002), a Memorandum and Articles of Association among other requirements are necessary. The right to register a company in Tanzania is available to those wishing to form such an entity according to the Companies Act (Act No. 12 of 2002).

Types of business Entities

In Tanzania, several business entities are available, each with distinct characteristics and requirements:

1. Sole Proprietorship: The simplest and most cost-effective structure, owned and managed by one individual who is personally liable for the business’s debts.
2. Partnership: Involves two or more people who share ownership. Partnerships can be general or limited, with varying liability levels.
3. Limited Liability Company (LLC): This popular structure among both local and foreign investors provides limited liability to its shareholders. It requires at least two shareholders and two directors.
4. Public Limited Company (PLC): Allows the public to purchase shares and requires a minimum of three directors. It is ideal for large-scale businesses aiming to raise capital through the stock market.
5. Company Limited by Guarantee: Commonly used by non-profit organizations, it has no share capital but involves members who guarantee to cover the company’s liabilities.
6. Branch Office: Foreign companies can operate in Tanzania through a branch office, which acts as an extension of the parent company by obtaining a Certificate of Compliance from BRELA (s. 433(1) of the Companies Act. A company is treated as a foreign company when it is incorporated by the laws of the foreign countries or its management, the majority number of the shareholders are foreigners and where management control is exercised outside Tanzania.

Steps to Register a Company in Tanzania.

1. Choose the Business Structure: Determine the most suitable business entity for your needs based on factors like liability, capital, and operational scale.
2. Reserve a Business Name: All businesses must register their names with BRELA. The name should be unique and not already in use by another entity. This step involves submitting an online application and awaiting approval.
3. Draft the Articles of Association and Memorandum: These documents define the company’s objectives, management structure, and shareholder rights.
4. Apply for a Certificate of Incorporation: Submit the Articles of Association, Memorandum, and other required documents to BRELA. Upon approval, BRELA issues a Certificate of Incorporation, officially recognizing the company as a legal entity.
5. Obtain a Taxpayer Identification Number (TIN): Register with the Tanzania Revenue Authority (TRA) to receive a TIN for tax purposes. This process involves submitting the company’s incorporation documents and filling out TIN application forms.
6. Apply for a Business License: Depending on the nature of the business, licenses may be issued by either the Ministry of Industry and Trade or local government authorities. Some businesses may require additional sector-specific licenses.
7. Register for VAT: Businesses with a significant turnover must register for Value Added Tax (VAT). This involves submitting a VAT registration form along with the company’s TIN certificate and other relevant documents.
8. Register with Social Security and Workers Compensation Funds: It is mandatory for businesses to register with the National Social Security Fund (NSSF) or Public Service Social Security Fund (PSSSF) as well as the Workers’ Compensation Fund (WCF).

Key Considerations.

Starting a business in Tanzania involves careful planning and compliance with legal and regulatory frameworks. Understanding the various business structures and the registration process can help ensure a smooth and successful incorporation​. Here are the key considerations to undertake when starting business in Tanzania;

• Capital Requirements: Different business structures have varying capital requirements. For instance, Public Companies require a minimum share capital investment whereas Limited Liability Company’s have no stipulated minimum capital.
• Foreign Ownership: Companies with foreign shareholders may have additional requirements, such as obtaining work and residence permits for foreign nationals.

Conclusion.

In modern corporate law, a company is treated as an artificial living legal entity, implying that its responsibilities do not cease upon registration. Post-incorporation, a company must continuously comply with various regulatory and statutory obligations. Below are the key post-registration requirements for companies in Tanzania:

1. Filing Annual Returns with BRELA (Online): Companies must regularly update their annual returns with the Business Registrations and Licensing Agency (BRELA) through the online portal. This ensures that company details are accurate and up to date in the public registry.
2. Tax Compliance: Companies are required to pay various taxes, including:
o Income Tax: As withholding agents, Companies must deduct, and remit Pay As You Earn (PAYE) taxes on behalf of their employees.
o Corporate Tax: Companies are liable to pay tax on their profits.
o Value Added Tax (VAT): Applicable Companies must charge and remit VAT on taxable goods and services.
3. Social Security Contributions: Companies must contribute to social security schemes on behalf of their employees, ensuring compliance with relevant laws and regulations, such as the National Social Security Fund (NSSF) Act and the Public Service Social Security Fund (PSSSF) Act.
4. Corporate Social Responsibility (CSR): Engaging in CSR activities is increasingly recognized as an essential aspect of corporate governance. Companies are encouraged to contribute to the well-being of the communities in which they operate, in line with sustainable development goals.
5. Maintenance of Financial Records: Companies must keep proper books of accounts and other financial records. This includes preparing and maintaining accurate financial statements and ensuring transparency in financial reporting, as mandated by the Companies Act and other relevant legislation.

These obligations are not only crucial for legal compliance but also foster trust and integrity in the business environment. Adhering to these requirements ensures that a Company operates within the legal framework and contributes positively to the economy and society.

Reach out directly to our esteemed team at (info@gerpatsolutions.co.tz)

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A GUIDE TO COMPANY REGISTRATION IN ZANZIBAR

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