The legal system of Tanzania is largely based on English common law; judicial review of legislative acts is limited to matters of interpretation.


Country overviewTanzania flag

Population

59,091,392

President

President John Magufuli (since 5 November 2015)

Capital city

Dodoma - legislative offices have been transferred from Dar es Salaam to Dodoma. The National Assembly meets in Dodoma on a regular basis; the executive branch with all ministries and diplomatic representation are slowly moving from Dar es Salaam  to Dodoma. 

Major industries

Agricultural processing (sugar, beer, cigarettes and sisal twine), mining (diamonds, tanzanite, gold and iron), salt, soda ash, cement, oil refining, shoes, apparel, wood products and fertilizer.

Currency

Tanzanian shilling

Languages

Kiswahili (official language), English (official, primary language of commerce, administration, and higher education) and about 117 indigenous languages.

Major religions

Mainland - Christian 30%, Muslim 35%, indigenous beliefs 35%; Zanzibar - more than 99% Muslim.


Legal information

Capital markets
Listing rules

Rules of the Dar es Salaam Stock Exchange (DSE) 

Principal legislation

Capital Markets and Securities Act 1994 

Corporate Governance Code

Guidelines on Corporate Governance Practices 

Takeover/merger regulations

The Capital Markets and Securities (Foreign Investors) Regulations 2003 

Regulatory body or bodies

Capital Markets and Securities Authority (CMSA) 

Public offers/disclosure regulations

The Capital Markets and Securities (Prospectus Requirements) Regulations 

Exchange

Dar es Salaam Stock Exchange (DSE)

Current number of listed companies

25 listed companies

Competition regulation
Legislation

The relevant legislation is the Fair Competition Act 2003 (''the Act'') which came into effect in 2004. The Fair Competition Commission is the regulatory body which enforces the Act. The object of the Act is to enhance the welfare of the people of Tanzania as a whole by promoting and protecting effective competition in markets. The effect of this object is to bring about:

  • increased economic efficiency;
  • lower prices for consumers (protection of consumers);
  • more innovation; and
  • an increase in the rate of economic growth.

Fair Competition Act, 2003 

Impact of regulatory regime on business

Mergers must be notified where the combined turnover or asset value of the merging entities exceeds three billion, five hundred million Tanzanian Shillings (3,500,000,000). The calculation of the threshold is based on the combined market value of the assets or turnover of the merging firms. 

Scope

The Act covers mergers and acquisitions.

Corruption / transparency
Corruption Perception Index rank worldwide for 2017

103 

Signatories to United Nations Convention Against Corruption (UNAC)?

Yes

UNAC ratified?

Tanzania has ratified UNAC since 25th May 2005

Signatories to the African Union Convention on Preventing and Combating Corruption?

Yes

Ratified?

Yes

Corruption Perception Index score for 2017

36

Signatories to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions?

No

Disputes
Enforcement of foreign judgments

Foreign judgments are enforceable in Tanzania if they originate from countries whose courts are recognised under the Reciprocal Enforcement of Foreign Judgments Act (Cap 8) (''REFJA'') as "superior courts".  Courts of Lesotho, Botswana, Sri Lanka, Mauritius, New South Wales, Zambia, Seychelles, Somalia, Zimbabwe, Kingdom of Swaziland and the United Kingdom have been listed under the REFJA (Extension of Part II) Order and, as such, final (i.e. non-appealable) judgments of superior courts from those countries, under which a sum of money is payable, would be enforceable in Tanzania.

Section 4 of the REFJA and the REFJA Rules set out procedures for the registration of a judgment or award. Registration has to be done within 6 years from the date of the judgment, save where the judgment is subject to appeal, in which case the six year period runs from the date of the determination of the appeal.

Application is done at the High Court of Tanzania by way of Chambers Summons, supported by an affidavit as prescribed in Government Notice No.15 of 1936.

Judgments made in countries not listed in the REFJA can be enforced in Tanzania if the judgment debtor or decree holder institutes proceedings in Tanzania. The applicant has to show cause as to why the judgment has to be enforced, that the judgment was entered by a competent court, and that it was final and conclusive.

Tanzania is not a signatory to the 1971 Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters.

Enforcement of arbitral awards

Recognition and enforcement of foreign arbitral awards in Tanzania is governed by the Arbitration Act (CAP 15 R.E. 2002).

A foreign award is enforceable if:

  • it has been made pursuant to an arbitration agreement valid under the law by which it was governed;
  • it has been made by the tribunal provided in the agreement;
  • it has been made in accordance with the laws governing the arbitration procedure;
  • it is the final award in the jurisdiction it was made; and
  • it has been made in respect of a matter that may lawfully be referred to arbitration under the domestic laws and its enforcement is not against public policy or the laws of Tanzania.

Foreign awards will not be enforceable if:

  • the award has been annulled in the country in which it was made;
  • the party against which enforcement is sought was not given notice of the arbitration proceedings in sufficient time to enable it to present its case or was under some legal incapacity and was not properly represented; or
  • the award does not deal with all the questions referred to or contains decisions on matters beyond the scope of the agreement for arbitration. In which case, the court may postpone the enforcement of the award or order its enforcement subject to the giving of security by the person seeking the enforcement.

The schedules to the Arbitration Act incorporate the Geneva Protocol on Arbitration Clauses of 1923 and the Geneva Convention on the Execution of Foreign Arbitral Awards of 1927. Tanzania ratified the New York Convention on 13 October 1964 and it entered into force on 12 January 1965. There were no declarations made according to articles I, X or XI of the Convention.

Tanzania is a contracting state for the purposes of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States of 1965 and the Multilateral Investment Guarantee Agency of 1985.

Arbitration

Tanzania's domestic arbitration law is governed by the Arbitration Act (CAP 15 R.E. 2002). The Act was introduced in 1931 and later amended in 1971. The domestic law is not based on the UNCITRAL Abitration Rules (''the UNCITRAL rules''). The major differences between the domestic arbitration law and  the UNCITRAL rules are:  the latter provides that, in the absence of  agreement between the parties, three arbitrators will be appointed; whereas Schedule 1 of the Arbitration Act provides only a single arbitrator is necessary. The Abitration Act requires arbitrators to conduct themselves in an impartial manner, whereas the UNCITRAL rules prescribes the additional requirement of independence.

There are two principal arbitration bodies in Tanzania, both with their own set of arbitral rules: (1) Tanzania Institute of Arbitrators (TIA); and (2) National Construction Council (NCC).

Structure of the court system
  • Court of Appeal
  • High Court of Tanzania
  • Resident Magistrates Court
  • District Courts
  • Primay Courts

There is one Court of Appeal. There are separate divisions of the High Court (Commercial, Land and Labour). The High Court has jurisdiction on any matter which is not specifically precluded by either the Constitution or any other law. There is only one division of the Resident Magistrates Court and the same for the District Court. The Primary Courts are established in every district and are the lowest courts in the judicial ladder.

Effectiveness of the court system

The court timetable is often congested, which means that it can be slow to progress cases through the courts. The time it takes for a case to be heard is dependent on the complexity of the case. As a guideline, however, it often will take at least 10 to 14 months to obtain a judgment from the High  Court. If the judge or the magistrate is of the opinion that the case requires more than 14 months, the timeframe can be extended to the maximum of 24 months. Cases referred to the Court of Appeal take up to 12 -18 months. 

Judiciary

The judiciary are appointed by the President after consultation with the judicial commission. Judges remain in office until they attain the compulsory retirement age of 55 years. They can however can continue to occupy office after the age of retirement, upto the age of 62 years, if the President considers that it is in the public interest.

Perception of the local courts

In general, the courts are perceived by the local population to be fair and are seen as the best way to administer justice in Tanzania. This is particularly true of the higher courts. 

Foreign investments
Foreign investment incentives

The Tanzanian Investment Centre (TIC) is able to grant a Certificate of Incentives to investors that satisfy the requisite criteria. This provides investors with a package of tax incentives, relaxed immigration requirements, a guarantee against nationalisation and expropriation, and the opportunity to obtain long term leases of land. The TIC acts to assist an otherwise complicated procedure for investing.

Foreign investment rules

The Capital Markets and Securities (Foreign Investors) Regulations 2014, allow foreign investors to purchase securities of listed companies. Participation of foreign investors in primary market of the government securities will be subject to conditions as may be prescribed by the Bank of Tanzania.

Regulation
General legislation
  • The Broadcasting Service Act, 1993
  • The Broadcasting Services (Content) Regulations 2005
  • The Public Consultation Document on Code of Ethics for Advertising and Sponsorships for the Broadcast Media (2007) (Note: This is not legally enforceable as it is currently a draft.)
  • Film and Stage Plays Act 1976
  • The Illala Municipal Council (Billboards, Signboards and Advertisements) Control Byelaws 2011 (Note: This is not nationally-applicable but is indicative of the type of local restrictions on outdoor advertising.)
  • Electronic and Postal Communication Act 2010 (further allows the TCRA to take a role in regulating certain types of advertising)
  • The Consumer Protection Regulations 2011 (deals with marketing of services and electronic means of advertising to the public (reg 7))
Industry specific legislation
  • Media Council of Tanzania Code of Ethics for Media Professionals
  • Tanzania Food, Drugs and Cosmetics Act 2003 and TFDC (Pharmaceutical Business Standards) Regulations 2006
  • The Tobacco Products (Regulation) Act 2003
  • Capital Markets and Securities (Advertisements) Regulations
Taxation
Corporation tax

Resident companies pay 30% on all sources of worldwide income and deemed income. 

Foreign-source losses can only be offset against foreign-source income.

Allowable deductions include trade expenses. 

Branches of foreign corporations pay an additional tax of 10% on branch profits. 

A resident company is one that is incorporated in Tanzania, has a permanent domestic establishment in Tanzania, or a company which has its management and control exercised in Tanzania during the tax year.

30% for non-resident companies on income sourced in Tanzania.

25% for newly listed companies (on the Dar es Salaam Stock Exchange) that have issued at least 30% of their share capital to the public. This rate is valid for three consecutive years from the date of listing.

Personal income tax
Individual Income Tax Rates (Tanzania mainland)

Income range (monthly) in Tanzanian Shilling (TSHS) – Tax rate

  • 0 to 170,000 –  NIL
  • 170,000 to 360,000 – 9% of the amount in excess of 170,000
  • 360,000 to 540,000 – 17,100 plus 20% of the amount excess of 360,000
  • 540,000 to 720,000 – 53,100 plus 25% of the amount in excess of 540,000
  • 720,000 and above – 98,100 plus 30% of the amount in excess of 720,000

Non-taxable annual income threshold - TSHS 2,040,000.

Individual Income Tax Rates (Zanibar)

Income range (monthly) in Tanzanian Shilling (TSHS) – Tax rate

  •  0 to 180,000 – NIL
  •  180,000 to 360,000 – 9% of the amount in excess of 180,000
  •  360,000 to 540,000 – 16,200 plus 20% of the amount excess of 360,000
  •  540,000 to 720,000 – 52,200 plus 25% of the amount in excess of 540,000
  •  720,000 and above – 97,200 plus 30% of the amount in excess of 720,000

Threshold per annum income is TSHS 2,160,000/ is not taxable.

Residents are taxed on worldwide income. Non-residents are taxed on income accrued in, or derived from, their activities in Tanzania.

Residents are those individuals who are:

  •  present during the tax year and possess a permanent home in Tanzania;
  •  present in Tanzania for an aggregate of 183 days or more in a year;
  •  present in Tanzania during the year and in each of the 2 preceding years, averaging more than 122 days in each tax year; or
  •  an employee / official of the Government of Tanzania posted abroad.

Deductions - medical expenses, health insurance premiums, onsite meals and social security.

Value Added Tax

18% standard rate - taxable value of taxable imports and supplies of goods and services within mainland Tanzania. (Zanzibar is subject to its own VAT law, which is similar to that of the mainland.)

Exports and supplies of human and livestock medicine are zero-rated.

VAT on capital goods (plant and machinery, excluding motor vehicles), goods and services provided under technical aid, donor-funded projects, or voluntary and charitable organisations are relieved from taxes upon application by the applicant.

Stamp duty

1% - Applies to the transfer of property, lease agreements and transfer of shares (subject to conditions set out in legal and commercial instruments).

TZS 500 levy - Applies to the transfer of agricultural land and it is payable within 30 days from the date an instrument is signed.

TZS 50,000 levy - Applies to the transfer of motor vehicles.

0% exempted - Receipt on sales of goods or cash or services for business.

Dividends

10% - Dividends paid to resident and non-resident companies.

5% - Dividends paid by a listed company.

NIL - Dividends passed between resident companies are exempt if the recipient holds 25% or more of the shares of the paying company.

Capital Gains Tax

Gains and losses are included in the corporation tax calculation and taxed at 30%.

A 10% single installment is payable on land and buildings (rising to 20% for non-resident companies) at the time of transfer.

Real property tax

Dar es Salaam Region - 0.15% (residential property) and 0.2% commercial property.

Real property in other regions is taxed at the relevant municipal rates in accordance with the local authority laws.

Technical service fees

5% - Paid by a resident mining company to a resident company.

15% - Paid by a resident mining company to a non-resident company.

Payroll tax and social security

6% - Skills and development levy

Social security - The rate of contribution is twenty per cent (20%) (i.e. 10% employer portion and 10% employee portion). Failure to contribute will result in a penalty of 5%.

Interest

10% - On interest paid to both resident and non-resident companies. Exemptions available.

Export processing zone

NIL for the first 10 years in respect of income tax, dividends, rent and interest.

Royalties

15% - Paid on royalties to both resident and non-resident companies.

Losses

Tax losses can be carried forward indefinitely, subject to the “same business” and “continuity of ownership” tests.

Any company who has tax losses for 3 consecutive years pays a minimum tax of 0.3% of turnover.

Restrictions exist in respect of claiming losses when the ownership of a company (as compared to the last three years) has changed by more than 50 percent. Such a company will be deemed to have realised any assets owned and liabilities owed by it at market value.