Business entities in Tanzania

Business entities in Tanzania

Since 2003, Healy Consultants has successfully assisted our Clients willing to do business in Tanzania with establishing the best corporate structures to suit their interest. The most common legal corporate structure preferred by many entrepreneurs is the setup of a limited liability company (LLC), locally known as a private limited company. A public limited company (PLC) is also a very interesting alternative option for investors who are able to afford the €70,000 required for share capital. Foreign companies are also permitted to register branches or representative offices in Tanzania.

The Tanzania Limited Liability Company

    how to setup a business in Tanzania for foreigners
  • This is the most commonly used business structure in Tanzania. A private Tanzania LLC must appoint at least 2 directors and 2 shareholders, who can be of any nationality. Furthermore, there is no minimum paid up share capital requirement. This entity is generally used for the formation of small businesses in Tanzania, without lesser capital needs and simple shareholding structure;
  • Following Tanzania business setup, this entity must submit audited financial statements to the Business Registrations and Licensing Agency (BRELA). The company is also required to register for VAT, unless its annual sales are below US$45,000 (TNS100 million).

The Tanzania Public Limited Company

A Tanzania public LLC must appoint at least i) 2 directors and ii) 7 shareholders with 1 Tanzanian national as a 40% shareholder. Furthermore, a minimum paid up share capital of US$300,000 must be deposited before Tanzania company setup. This entity is used when the promoters intend to raise capital from the Tanzanian public or list the company on the national stock exchange.

Branch of a Foreign Corporation

A branch office functions within the scope of operations defined by the parent company. This allows the company to i) invoice Tanzanian customers ii) sign local sales contracts and iii) receive income from local customers. Before the government issues a license to these entities, a Certificate of Compliance must be obtained from Business Registrations and Licensing Agency (BRELA). Foreign branches pay additional remittance tax of 10% on net profits.

Representative/Liaison Office

A liaison office assists the parent company in i) promoting export/import to and from Tanzania and ii) promoting technical and financial collaborations with other resident firms. This entity can engage only in activities like i) promoting the business of the parent company and ii) market research.

Table of comparison between different business entities

 Private LLCPublic LLCBranch OfficeRep Office
How long to set the company up?7 weeks7 weeks10 weeks10 weeks
How long to open company bank account?4 weeks4 weeks4 weeks4 weeks
Directors and bank signatories must travel to open the account?YesYesYesYes
Minimum deposit (USD)?1,0001,0001,0001,000
Multi-currency corporate bank account?NoNoNoNo
Multi-currency corporate debit cards?NoNoNoNo
Corporate ATM card available?YesYesYesYes
Legal liability?LimitedLimitedUnlimitedUnlimited
Wholly foreign owned?YesYesYesYes
Minimum paid - up share capital?US$2,500US$300,000US$2,500US$100,000
File annual tax return?YesYesYesYes
Tax registration certificate required?YesYesYesYes
Recommended corporate bank account?SCBBarclays BankEcobankStanbic Bank
Does our Client need to travel?NoNoNoNo
Resident director required?NoYesNoNo
Resident shareholder required?NoYesNoNo
Minimum number of directors required?2222
Minimum number of shareholders required?1722
Tax identification code needed?YesYesYesYes
Tanzania resident corporate agent required?NoYesYesYes
Corporate shareholders allowed?YesYesYesYes
Corporate director(s) allowedNoNoNoNo
Statutory audit required?YesYesYesNo
Tanzania corporate tax rate?30%30%30%30%
Withholding tax rate on dividends remitted to the parent company?10%10%10%10%
Branch remittance tax?N/AN/A10%N/A
Does the entity have to register for VAT?YesYesYesYes
When must VAT filings must be submitted? (if any)MonthlyMonthlyMonthlyMonthly
Access to Tanzania’s double taxation treaties?YesYesNoNo
Regulatory licenses required?YesYesYesYes
What is the licensing authority?MITMITMITMIT
How long to obtain operating license(s)?3 months4 months3 months2 months
Must sign a lease agreement for physical office premises?YesYesYesYes
Public register of shareholders and directors?YesYesYesYes
Resident country legal representative required?NoNoYesYes
Can the entity hire expatriate staff?YesYesYesYes
How many months to secure work permit?2 months2 months2 months2 months
Annual financial statements required?YesYesYesYes
Independent statutory audit required?YesYesYesNo
Allowed to issue sales invoices?YesYesYesNo
Allowed to sign contracts?YesYesYesNo
Allowed to import and export goods?YesYesYesYes
Can rent an office space in Tanzania?YesYesYesYes
Can buy Tanzania property?YesYesYesYes
Total Tanzania business setup costs in yr. 1?US$25,750US$27,900US$32,850US$28,370
Subsequent annual costs (incl. accounting and tax fee)?US$4,550US$6,550US$12,050US$11,150
Sample engagement invoice?draft invoice for Tanzaniadraft invoice for Tanzaniadraft invoice for Tanzaniadraft invoice for Tanzania

Contact us

For additional information on our business setup services in Tanzania, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Ms. Karen Lee, directly:
client relationship officer - Karen