Outline of Tanzania's company, labour and natural resource laws


The investment environment enjoys a multitude of strengths such as the presence of the Tanzania Investment Centre (TIC), Zanzibar Investment Promotion Authority (ZIPA) and Export Processing Zones Authority (EPZA) promote, coordinate and facilitate foreign investments, and provide investment incentives. Tanzania is also signatory to international treaties and a member of global organisations, including the Multilateral Investment Guarantee Agency, and has numerous bilateral agreements benefitting foreign investors.

Company Law

The companies registry at the Business Registrations and Licensing Agency (BRELA) is moving to complete digitalisation of filing practices. BRELA now expects certain details in company returns that those preparing the documents may not be aware of, so it is advisable to review the information that a firm must provide.

Defective filings previously accepted by BRELA are now being rejected for anomalies before files move to the online system to ensure complete accuracy. Anomalies make investment in those companies difficult, as filings must be rectified before BRELA will provide official search results.

The regularisation is undertaken by refiling incorrect or missing documents dating back to incorporation or the last accurate search.

In February 2017 BRELA gave 76,316 companies that had defaulted on certain historic filings three months to rectify them or face being dissolved with legal proceedings instituted against directors and shareholders. Under the Companies Act, these penalties – other than fining and disqualifying directors – would be difficult to sustain. In March 2018 BRELA gave companies six months to correct their reports and move to the online system.

Legal Updates

Although the Companies Act was amended in 2012 to allow for the establishment of single shareholder/director companies, this rule has yet to come into force, as implementing regulations have not yet been issued.

In March 2018 the Registration Insolvency and Trusteeship Agency announced it would work to develop a new insolvency law for companies and bankruptcy law for individuals.

Merger Clearances

Tanzania’s antitrust regulator, the Fair Competition Commission (FCC), has been effective in encouraging fair execution of consumer contracts and preventing counterfeiting. However, on the mergers and acquisitions side, FCC approval can often be the barrier to multimillion-dollar cross-border deals due to timeline and filing costs.

An acquirer who fails to give notification of a deal could face their acquisition being unwound or be subject to fines of between 5% and 10% of their worldwide turnover for the year of the merger. In March 2018 the FCC noted that it received only 308 merger applications in the last 11 years, out of which 247 were unconditionally approved, 46 were conditionally approved, five were rejected and 10 are now in process. It is likely that many other transactions would have required FCC approval, but given the complexity and unwritten nature of rules, were completed without the awareness of the FCC.

Change of Control

The acquisition of shares, a business or other assets resulting in the change of control of a business, part of a business or an asset of a business in Tanzania constitutes a merger that requires FCC approval under the Fair Competition Act of 2003 (FCA) if the combined market value of the assets or turnover of the merging parties meets a minimum threshold. In 2017 the threshold increased to TSh3.5bn ($1.6m).

The FCA does not have a set definition for a change of control for mergers. In practice, the FCC constitutes a change of control to be any “potential ability of the acquiring firm to materially influence the business policy and operations of the target firm in the post-merger scenario, irrespective of the size of ownership change”.

The Fair Competition Tribunal upheld the FCC’s wide interpretation of control in 2015, finding that Toyota Japan had effective control over its nonowned exclusive Tanzanian distributor pursuant to its distribution agreement, thereby imputing the Japanese company with Tanzanian market share. Defining material influence also looks at the sophistication and reputation of an investor, so where a private equity fund or development finance institution acquires even a 1% indirect offshore shareholding, the FCC could argue this constitutes a change of control of a Tanzanian subsidiary. The FCC states its test is based on the UK material influence test, which is wider than the EU decisive influence test, or de jure or de facto company control. However, the FCC’s interpretation is even wider than UK law, as illustrated by the following FCC policies:

• An internal group restructuring, where the ultimate ownership of a corporate group does not change but offshore holding companies are reshuffled, is interpreted by the FCC as a merger.

Many critics find it difficult to see a change of material influence in this scenario, where the same shareholders continue to influence and control Tanzanian subsidiaries. The FCC’s policy means that in an internal group restructuring outside of Tanzania, happening at many levels up a corporate tree, may require FCC approval, but no such approvals are required in foreign jurisdictions.

• Where there is a single offshore acquisition of a non-Tanzanian company that has two or more Tanzanian direct or indirect subsidiaries, the FCC requires separate merger notification for each Tanzanian subsidiary, even if one of the subsidiaries is dormant. There was no alteration of written law outlining this change from the FCC’s previous practice of only requiring one filing for a single offshore transaction.

Other Merger Concerns

Although fees payable to the self-funded FCC for a merger notification may be up to $50,000 per application, investors are generally more concerned with speed, as acquirers are not permitted to complete transactions until the FCC gives its approval.

The maximum approval timetable – approximately 143 days – holds up millions of dollars of investment into Tanzania and are seen as extreme especially for internal restructuring and transactions where there is no competition concerns.

Although an acquirer can submit a confidentiality claim, the FCC now publishes notifications of every merger in newspapers, requesting public comments.

This situation could potentially create market sensitivities and upheavals, especially for listed companies, or make Tanzanian employees fear a takeover when the merger is just a technical filing with no real effect on workers requiring managers to manage the expectations of their employees.

Additional Regulators

Tanzania is not a member of the competition regime under the Common Market for Eastern and Southern Africa, but is part of the EAC, which is launching its own regional merger regime, the EAC Competition Authority (EACCA). In 2017 the EACCA commissioners were sworn in and tasked with finalising EACCA rules. It is yet to be seen if the EACCA will be an alternative to FCC approval or act as an additional consent body before cross-border transactions can be completed.

Employment Law

Tanzania has one of the most employee-friendly labour law regimes in East Africa, governed principally by the Employment and Labour Relations Act of 2004 and the Labour Institutions Act of 2004. These are supplemented by the constitution’s industry-specific legislation and other regimes, including anti-bribery and corruption laws and anti-money laundering laws.

Given Tanzania’s socialist history, a worker’s right to strike and belong to a union is protected. Where a sufficient number of employees are trade union members, an employer must sign a collective bargaining agreement (CBA) with a trade union, with special terms covering annual pay increases, termination payments and leave entitlements.

Recent strengthening of employee rights include the prohibition of casual workers and the requirement to use one of the following contract templates: permanent, fixed-term (12 months or more), seasonal (for a specific occasion or event) or part-time (less than 48 hours per week). Whether a labour contract is formatted as consultant work with contractor rights or as employee work with employee rights is a matter of substance over form, and outsourcing of labour has been discouraged.

Minimum employee rights, with additional protections for non-managerial employees, include maximum working hours and minimum breaks, statutory overtime, restrictions on deductions from salaries, paid leave within certain cycles (annual, sick, compassionate, maternity and paternity leave), and termination benefits.

New Employment Regulations

Additional labour rules were passed in 2017. The Employment and Labour Relations regulations of 2017 created new rules for unions and a new universal statement of employee’s rights. It also lays out a set grievance procedure with staff sensitisation, requires employers to issue written payslips and gives new mothers daily leave rights for breastfeeding. The Labour Institutions regulations of 2017 introduces a new inspection and assessment certification regime for employers. However, the draft of the National Employment Policy 2017, published in March 2017, had yet to be finalised as of early 2018.

Statutory Deductions

All employees must be registered with a statutory social security scheme of their choosing, such as the National Social Security Fund. Payments equal to 20% of an employee’s basic wages must be paid into these schemes, funded 10% by the employer through employee deductions. Workers are taxed at source – pay as you earn – on relatively high graduated bands, and also pay statutory deductions for the skills development levy and the new Workers’ Compensation Fund.

These various taxes make employment costs higher than in neighbouring countries, but Tanzania has relatively low levels of staff turnover.

Courts & Tribunals

To circumvent delays often faced when lodging a complaint with the courts, Tanzania has compulsory mediation for employment disputes, followed by arbitration at the Commission for Mediation and Arbitration (CMA), with limited right to appeal to the High Court. The CMA may extend the statutory deadline of 30 days to bring employment claims when good reason is shown.

Grievance & Termination

Procedures for employee grievances, termination and disciplinary action are largely based on UK law, but with significantly higher minimum damages for unfair termination. These are often unanticipated by foreign investors from jurisdictions that allow termination at will. In general, if terminated after six months of employment, an employee can claim unfair termination, which will shift the burden of proof to the employer to show that the basis for dismissal was within certain reasons deemed to be just, and that the procedure used was fair. Employees may also claim breach of contract and termination payments under the law, employment contracts and CBAs.

Local Content Requirements

Following new local content provisions in the Petroleum Act of 2015 and the amended Mining Act of 2017, additional regulations were promulgated that apply to licensees, contractors, subcontractors and other persons involved in petroleum and mining activities. The new regulations include:

• The Petroleum Local Content (PLC) Regulations of 2017, which apply to all oil and gas segments (upstream activities are typically overseen by the Petroleum Upstream Regulatory Authority [PURA], while midstream and downstream activities are generally controlled by the Energy and Water Utilities Regulatory Authority [EWURA]); and

• The Mining Local Content (MLC) Regulations of 2018, which apply to the mining, processing and exploitation of non-petroleum minerals, and are to be overseen by a new Mining Commission and its local content committee, neither of which were constituted as of March 2018. Both sets of regulations include new local content supply chain requirements to better utilise Tanzanian expertise, goods and services, as well as promote technology transfer, and research and development. The rules also outline the compulsory hiring and training of Tanzanians described below, with significant penalties for breaches, including fines, imprisonment and licence revocation. The PLC and MLC regulations impose a “complete supply chain” requirement, meaning that licence holders/ contractors, their suppliers and their suppliers’ suppliers must comply and report their compliance to their customers and/or the regulator. Stakeholders’ employment obligations include:

• Giving qualified Tanzanians first priority in employment and on-the-job training.

• Employing only Tanzanians in semi-skilled petroleum roles (unless the EWURA or the PURA permit otherwise) and in junior or mid-level positions in mining, and in unskilled labour positions.

• Achieving minimum percentages of Tanzanian employees in certain other roles through five-year staggered goals, such as for management staff or core technical staff.

• Employing expatriates only in limited circumstances, such as with the consent of the Mining Commission or via understudy requirements for mining stakeholders, and ensuring that approved succession plans are put in place.

• Implementing forward-looking five-year and annual employment and training plans approved by the regulator, while submitting periodic backwards-looking reports. Regulators may request further information and can reject local content plans, thereby preventing stakeholders from operating in the mining and petroleum industries. The Mining Act also prevents discriminatory salaries between employees of the same calibre, irrespective of colour, faith or nationality, and prevents additional benefits to expatriates.

These new requirements are in addition to work and residence permit laws, which limit the ability of expatriates to work in Tanzania to areas where their skills are not otherwise available locally.

Immigration & Work Permit Laws

The Non-Citizens (Employment Regulation) Act of 2015 (NCER) and its 2016 regulations brought large-scale changes to the employment of non-Tanzanian citizens. Previously, expatriates only required a residence permit from the Ministry of Home Affairs pursuant to the Immigration Act, and many employers side-stepped residence permits by obtaining cheaper visas known as carry-on temporary assignment (CTA) stamps, which permitted work for three months at a time and were frequently renewed.

The NCER Act introduced work permits from the Ministry of Labour. Expatriates now face double requirements, as immigration officials must be satisfied with a person’s skills to grant a residence permit after a work permit. The labour commissioner must approve or reject work permit applications within 14 days, although it can take longer. There are no statutory deadlines for granting residence permits, and expatriates often receive their permits with a few months already expired. Work and residence permits for employees are now usually granted for two years and limited to five years in aggregate, resulting in many long-term expatiates having permit renewals denied. The new requirements do not give preferential treatment to EAC nationals, which led the East African Business Council to request Tanzania to reconsider its immigration practices.

The CTA visa class was abolished when the NCER Act introduced new short-term permits (STPs) for up to six months as a substitute. In 2016 immigration regulations also introduced new three-month business visas for expatriates. Then, in 2017, permit exemptions were created to allow foreign spouses of Tanzanian citizens to work.

Although the move to the current system was viewed negatively by some, the regularisation is now more aligned with other jurisdictions that only permit expatriates where there are proven local skills gaps or for investment purposes. In certain regulated professions, such as accountancy or engineering, expatriate candidates may also be barred unless they obtain the proper Tanzanian qualifications. Companies registered with the TIC, ZIPA or the EPZA may also find it easier to obtain work and residence permits for their foreign employees.

Work Permits

Work permits are issued under the following categories:

• Class A: investors who are self-employed, costing $1000;

• Class B: prescribed professions, including medical and health care professionals, experts in oil and gas, and teachers and university lecturers in science and mathematics, costing $500;

• Class C: other professions, costing $1000;

• Class D: registered religious and charitable activities (volunteering), costing $500; and

• Class E: refugees seeking work, no charge. STPs cost $500 and allow expatriates to work in Tanzania for up to six months, with no renewal. The labour commissioner is hesitant to issue STPs for managerial positions other than consultants and technicians. It usually takes between seven and 30 days to obtain an STP, and an applicant also requires a residence permit from the immigration authorities.

Residence Permits

Residence permits are issued under the following categories:

• Class A: expatriates engaged in trade, business, agriculture, animal husbandry, prospecting of minerals or manufacturing, costing $3000;

• Class B: specified employment where the Immigration Commissioner is satisfied that the candidate possesses qualifications or skills necessary for that employment and that his or her employment will be of benefit to Tanzania, costing $2000; and

• Class C: purposes other than Class A and B, including for dependants, students, researchers, volunteers and those attending court, winding up affairs or seeking medical services, costing $500. Holders of residence permits must also obtain a re-entry pass that costs $50.


Since the 2017 regulations were passed, the following types of temporary visas are available:

• Ordinary visas that allow a single entry for tourists for up to three months in the country;

• Transit visas that allow for up to seven days of transiting through Tanzania;

• Business permits issued to citizens of the EAC and the Southern African Development Community, costing $200, and business visas issued to other expatiates for $250, which can be single or multiple entry; and

• Gratis visas that allow single or multiple entry to diplomats and the like on official duty, representatives of international organisations on official duty and other similar persons as allowed by the Commissioner General. Visas are issued by immigration officials at airports and other ports and entry points, as well as at Tanzanian embassies and consulates abroad or in Dar es Salaam and Zanzibar.

Land Law

The freehold in all land is owned by the president of Tanzania, who grants lower land rights in three categories, namely:

• Reserved land for public purposes, including national parks;

• Village land, where customary rights of occupancy are granted to villagers; and

• General land, being all remaining land. For general land, rights of occupancy are essentially ownership rights, governed by the Land Act of 1999, the relevant ministry and regional land registries. A right of occupancy may be granted for 99, 66 or 33 years, with the expectancy of renewal (subject to legislative change). Leasehold interests can be granted from a right of occupancy for a slightly shorter period and may be registered.

New Mortgage Rules

The Written Laws ( Miscellaneous Amendments) Act No. 1 of 2018 amended the Land Act of 1999 such that if mortgaged land is undeveloped, meaning without improvement, or underdeveloped – not developed in accordance with the conditions of the right of occupancy – the mortgage monies must be used to develop the land. Reports on money use must be made to the Commissioner for Lands and non-compliance could result in revocation of the title.

Foreign Ownership & EPZA Rights

A foreigner, a term also used to describe Tanzanian companies when shares are not majority owned by Tanzanian citizens, is prohibited from acquiring a right of occupancy after May 1, 2001, except in limited circumstances. The workaround has been to obtain private leases or – for greater protection – a derivative right lease from the TIC. Derivative titles have durations of one year less than the unexpired term of the underlying rights of occupancy. However, these titles are expensive, and can take over 12 months to obtain, as the process involves surrendering the right of occupancy and the land being re-allocated to the TIC.

The Written Laws (Miscellaneous Amendments) Act No. 1 of 2017 amended the Land Act of 1999 to clarify that, as an alternative to derivative titles from the TIC, foreigners registered in economic processing zones or special economic zones may obtain similar titles from the EPZA.

Once finalised, Tanzania’s draft National Land Policy, drawn up in 2016, is expected to include a restriction on foreigners acquiring land rights for more than 33 years, while also establishing new rights assisting foreign investors to develop properties for outright sale of unit titles.

Zanzibar, which has its own land law, is keen to encourage foreign investment through new rights that allow expatriates to own condominium units.

Mining & Natural Resource Overhaul

In July 2017, following the inspection of the minerals mining industry by President John Magufuli, the National Assembly quickly enacted the following new natural resources laws:

• Natural Wealth and Resources (Permanent Sovereignty) Act of 2017 (PSA);

• Natural Wealth and Resources Contracts (Review and Re-Negotiation of Unconscionable Terms) Act of 2017 (UTA); and

• Written Laws (Miscellaneous Amendments) Act No. 2 of 2017, amending the Mining Act of 2010 and other laws. However, critics of the move say the rapid implementation could leave the international community viewing Tanzania as a risky investment destination.

Natural Resources Laws

The PSA and UTA apply to natural wealth and resources (NWRs), meaning materials and substances – living and non-living – naturally occurring in Tanzania, which can be extracted, exploited or acquired and used for economic gain, processed or not. Examples include agriculture, paper, fish, water, gas and minerals.

The UTA allows the government to renegotiate terms in government contracts relating to NWRs where the National Assembly finds them to be “unconscionable”, a term which is widely defined. If not renegotiated within 90 days, the terms in question may be unilaterally deleted by the state. The PSA introduces wide-ranging principles relating to NWRs under the overarching basis that Tanzanians have permanent sovereignty, ownership and control over all NWRs. This includes:

• The inalienable nature of NWRs, with all exploration of NWRs to be conducted by the government on behalf of Tanzanians.

• Prohibiting the exploitation of NWRs except for the benefit of Tanzanians, requiring that all international cooperation arrangements aim at furthering the independence and self-reliance of Tanzanians.

• Guaranteeing returns from earnings of NWRs into the local economy (the amended Mining Act also requires re-investment of profits into Tanzania).

• Enacting compulsory government shares – and the ability of citizens to acquire stakes – in NWRs ventures.

• Prohibiting the export of raw NWRs for beneficiation outside Tanzania, and requiring commitments to establish local beneficiation facilities.

• Requiring earnings from disposal or dealings in NWRs to be retained in Tanzanian banks or financial institutions.

• Restricting adjudication of disputes relating to NWRs to Tanzanian bodies and in accordance with Tanzanian law, thereby removing the right to use the International Centre for Settlement of Investment Disputes or other international courts or arbitration.

Mining Act Changes

The amended Mining Act significantly altered the mining legal regime. High-profile changes include awarding the government shares in companies with special mining licences (SMLs) or mining licences (MLs), giving at least 16% of shares as non-dilatable free carried interest (FCI) and up to 50% of shares if the mining company has enjoyed tax incentives (TI shares). These requirements apply to existing companies, thereby diluting investors’ possible returns – a rule some stakeholders have argued against. The MLC regulations suggest a new National Mining Corporation be created to hold these government stakes. The Mining Act, as amended, outlines three categories of mineral rights licences:

• Primary mining licences (PMLs) for small-scale mining, characterised by minimal machinery or technology and capital of less than $5m. PMLs must always be 100% owned and controlled by Tanzanians. The amended act prevents foreigners from entering into joint ventures with Tanzanians owning PMLs, which had been prevalent.

• SMLs for the largest scale of mining, with capital investment of at least $100m. SML owners may be hardest hit by the legal changes, as they have to list 30% of their shares, and may have FCI and TI implications. Furthermore, they lost the largest former advantage of an SML, which was a mineral development agreement (MDA) with the government that had attractive negotiated tax and investment terms. MDAs now have shortened lives and may have added fiscal or other stability clauses, while the UTA could see some terms of MDAs renegotiated or unilaterally deleted. Gold SMLs were the target of probes that led to the July 2017 laws and the basis of the state’s claims of unpaid taxes against some companies.

• MLs are for mining projects with capital investment between $100,000 and $100m. These are the only licences for foreigners not able to obtain SMLs. The MLC regulations currently oblige MLs to be at least 5% owned by indigenous Tanzanian companies (defined as at least 51% owned by nationals with 100% Tanzanian non-managerial staff and at least 80% Tanzanian managerial staff, who must benefit from technology transfer and know-how). The 5% is in addition to the government FCI and potential TI shares. Indigenous companies now also get first preference to the granting of MLs. The Mining Act now permits just one type of exploration-only licence, or prospecting licence (PL), after the amendments abolished retention licences without compensation. PLs are a precursor to an ML or SML. The amendments also reduced the overall term of PLs and suggests that future PLs will only be issued to local mining companies. Furthermore, future PL investment by foreigners may need specific government approval. Other notable changes to the Mining Act include:

• New calculation mechanisms for the market value of minerals extracted (on which government royalties are payable) and a right for the government to purchase mined minerals at a price it sets, instead of taking royalties, when it feels that the valuation agreed upon with state officials is too low “on account of deep negative volatility”.

• Establishment of a new set of mining regulators, including the new Mining Commission, as well as widened enforcement rights of regulators.

• Tight controls, processes and timetables on mining, storage and moving of extracted minerals to new government repositories, with penalties for breach, including confiscation of the minerals.

This regime is likely to be unworkable for minerals processed at mine sites, but there are no exceptions noted in the legislation.

SML Listing Requirement

The Mining Act of 2010 had envisaged future regulations requiring holders of SMLs to list on the Dar es Salaam Stock Exchange (DSE). Regulations in 2016 required companies with SMLs to list 30% of their shares on the DSE, to be owned by Tanzanians. The deadline was set at October 6, 2017 for existing SMLs or within one year from the grant of new SMLs. In February 2017 the deadline to list was suddenly brought forward through regulations, requiring existing SML holders to list by August 23, 2017 and new SML holders to list upon commencing mining operations. Although fewer than 20 companies hold SMLs, most had not listed by March 2018.

Telecoms Regulations

The Tanzania Communications Regulatory Authority licenses mobile network operators (MNOs) and other electronic communications operators pursuant to a converged licensing framework under the Electronic and Postal Communications Act of 2010 (EPOCA). MNOs require network services licences, and may require other licences depending on their respective activities.

In July 2016 amendments to the EPOCA required that entities with network services, network facilities and application services licences list 25% of their participating shares on the DSE – to be held by Tanzanians – before 2017. However, only a handful of MNOs submitted their prospectus by the deadline, and the capital markets regulator subsequently rejected a number of MNO listing applications for non-compliance with the requirements.

Vodacom was the first to meet the requirements and launch its initial public offering. However, due to insufficient interest and/or liquidity from local investors, in July 2017 the EPOCA was amended again to allow foreigners to purchase the listed shares, and removed application services licences from the requirement.

Vodacom remained the only listed MNO as of the end of the first quarter of 2018.

Recent Telecoms Changes

Tanzanians are among the largest users of mobile financial services (MFS) in the world. Recent telecoms legal developments include a National Payment Systems regime for MFS and their interoperability between MNOs, new capped interconnection rates and the encouragement of shared infrastructure among MNOs.

In March 2017 Tanzania introduced mobile number portability, aimed at boosting competition between MNOs, as subscribers can now migrate between networks without changing their numbers.

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The Report: Tanzania 2018

Legal Framework chapter from The Report: Tanzania 2018

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