Tanzania provides several business forms for investors, of which the main forms include:
- Company (Private Limited Company or Public Limited Company)
- Partnership
- Sole Proprietorship
- Foreign Business (Subsidiary or Branch or Representative Office / Liaison Office)
Company
Companies can be formed as private or public limited companies.
The key aspects of Private Limited Company include:
- Shareholders’ liability is limited to their contribution in the company
- Minimum capital requirement is TZS 20,000
- Minimum 2 and maximum 50 shareholders, of any nationality, are permitted
- Minimum 2 directors and 1 company secretary are required and need not be resident in the country
- Shareholders and directors can be individuals or companies
- Cannot offer shares to the public and shares are not freely transferable
- Mandatory to submit audited financial statements to Business Registrations and Licensing Agency (BRELA)
The key aspects of Public Limited Company include:
- Shareholders’ liability is limited to their contribution in the company
- Minimum share capital requirement for listing on the Dar es Salaam Stock Exchange (DSE) is TZS 1 billion for Main Investment Market (MIM) and TZS 200 million for Enterprise Growth Market (EGM)
- Minimum 7 shareholders, of any nationality, are required
- Mandatory to have 1 Tanzanian national shareholder (out of 7) having atleast 40% shareholding in the company
- For listing on MIM, minimum 1000 shareholders are required and atleast 25% of the shares are required to be held by the public
- For listing on EGM, minimum 100 shareholders are required and atleast 500,000 shares are required to be held by the public
- Minimum 2 directors are required
- Shares can be offered to the public. However, prior to incorporation, such companies are required to issue an offer document for the purpose of public offering, which needs to be approved by the Capital Markets and Security Authority.
Partnership
A partnership is formed when two or more persons agree to carry on a business for profit as co-owners. The partners are jointly and severally liable for the obligations of the partnership firm. Under the tax laws of Tanzania partnerships are not liable to pay income tax in respect of their total income. The income of a partnership is allocated to the partners in proportion to each partner's share and taxed accordingly.
Sole Proprietorship
A sole proprietorship is formed by an individual who is liable for all the debts and obligations of the company.
Foreign Business (Subsidiary or Branch or Representative / Liaison Office)
Foreign companies can conduct their operations in Tanzania through the constitution of a Subsidiary or Branch Office or a Representative Office. A Subsidiary can be formed as a private or a public limited company with foreign holding, subject to certain restrictions.
Branch is not considered as a separate legal entity in Tanzania. Its operations are pre-defined by the foreign parent company. Branch Office is required to appoint a resident representative on behalf of the foreign parent company in Tanzania.
Representative / Liaison Office is not regarded as separate legal entity in the country. It is not permitted to carry out business or commercial activities in the country. It is only permitted to conduct market research and to promote products and services of the parent company within Tanzania. A Representative Office may assist the foreign parent entity in promoting export / import business in Tanzania, promote technical and financial collaborations with Tanzanian resident firms.