United Republic of Tanzania Standard Incentives for Investors

Posted in Investment Guide

The Tanzania Investment Act 1997 defines “incentives” as tax reliefs and concessional tax rates which may be accessed by an investor under the Income Tax Act, the Customs Tariff Act, the Tanzania Revenue Authority Act, the Value-Added Act, and any other law for the time being in force, and includes additional benefits that may be accessed by an investor under sections 19 and 20 of the Tanzania Investment Act 1997.

1. Fiscal and Non-Fiscal Incentives offered to Investors

   1. Access to various services related to permits, licenses and approvals in the TIC One Stop Facilitation Centre.
   2. The recognition of private property and protection against any non-commercial risks. Tanzania is an active member of the World Bank Foreign Investment Insurance wing, MIGA (Multilateral Investment Guarantees Agency). Likewise, Tanzania is a member of The International Centre for Settlement of Investment Disputes (ICSID) also a body affiliated to the World Bank.
   3. Zero percent (0%) Import Duty on Project Capital Goods, Computers and Computer Accessories, Raw Materials and Replacement Parts for Agriculture, Animal Husbandry and Fishing, Human and Livestock Pharmaceuticals and Medicaments, Motor Vehicle in Completely Knocked down (CKD) form and inputs for Manufacturing Pharmaceutical Products.
   4. Ten percent (10%) - Import Duty for Semi-processed/semi-finished goods).
   5. 100% capital expenditure to Agricultural sector.
   6. The Income Tax Laws allows 50% Capital allowances in the first year of use for Plant and Machinery used in manufacturing processes and fixed in a factory, fish farming; or providing services to tourists and in a hotel. Thereafter, wear and tear rates apply to the remainder as below:
      1. VAT Deferment granted on project capital Goods such as Plant & Machinery. However, the persons have to carry on an economic activity, keep proper VAT records and file returns, has no Tax outstanding and VAT payable in respect of each unit of the Capital goods is 20 million Shillings or above.

2. Strategic and Special Strategic Investment Status

   1. Additional fiscal incentives to strategic investors who meet criteria under section 20 of the Tanzania Investment Act, 1997 as follows:
      1. If locally owned, the minimum investment capital for the proposed project is not to be less than Tanzanian Shillings equivalent to twenty million US dollars (USD 20,000,000 and If wholly owned by a foreign investor or is a joint venture, the minimum investment capital for the proposed project is not less than Tanzanian Shillings equivalent to Fifty Million US dollars (USD 50,000,000);
      2. The project should contribute significantly in creation of employment opportunities
      3. New and innovative technology to be introduced by the prospective strategic investment project
      4. The project should contribute to capacity to produce for export and contribute to foreign exchange earnings
      5. The investment should be in a special geographical area.
   2. Special strategic investment status. The government may identify projects and grant special strategic investment status, if the proposed projects meet the following criteria:
      1. A minimum of investment capital of not less than the equivalent in Tanzanian Shillings of three hundred million US dollars (USD 300,000,000)
      2. Investment capital transaction is undertaken through registered local financial and insurance institutions
      3. At least one thousand five hundred direct employment is created with satisfactory number of senior positions in the projects that do not require high and sophisticated technology; and
      4. Capacity to significantly generate foreign exchange earnings, produce significant important substitution of goods or supply of important facilities necessary for development in the socio-economic or financial sector.
   3. Upon grant of a strategic or special strategic investment status to a project, the Minister for Finance shall propose to the National Investment Steering Committee additional specific fiscal incentives
   4. Where the National Investment Steering Committee approves additional specific fiscal incentives, the Minister for Finance shall confer such additional fiscal incentive as approved by the National Investment Committee under an order published in the Gazette.
   5. The National Investment Steering Committee may review every project conferred additional specific fiscal incentives in respect of compliance of incentives granted and advise the Government on whether or not to continue issuing the incentives.

3. EAC Customs Management Act provides 0% import duty on Hotel Equipment’s
   

   Any of the following goods engraved or printed or marked with the hotel logo imported by a licensed hotel for its use: Washing machines; Kitchen Ware; Cookers; Fridges and freezers; Air Conditioning Systems; Cutlery; Televisions; Carpets; Furniture; Linen and Curtains; as well as Gymnasium equipment

4. Import Duty Drawback

   1. Import Duty draw back on raw materials used to produce goods for exports and deemed exports. Deemed exports cover locally produced or manufactured goods, which are sold to foreign agencies or entities operating in Tanzania, which are exempt from payment of import duties.
   2. Zero-rated VAT on exports.
   3. The right to transfer outside the country 100% of foreign exchange earned, profits and capital.
   4. Automatic permit of employing 5 foreign nationals on the project holding Certificates of Incentives.

5. Land for Investment in Mainland Tanzania.

Through the land act, foreign investors can obtain land for investment through Tanzania Investment Centre (TIC), where a ‘’Derivative Right’’ is granted while Domestic investors own land directly through the certificate of right of occupancy. TIC has established a land bank registry where land suitable for various investment sectors including manufacturing and agriculture has been identified, surveyed and availed with key infrastructure.