Tanzania officially referred to as the Republic of Tanzania is one of the beautiful countries in East Africa not only attractive for its tourist centers but its numerous business opportunities. Business registration in Tanzania is carried out by BRELA i.e. Business Registration and Licensing Agency. The country is known for its food processing, brewing, travels and tourism, construction, real estate and mining industries, etc., these opportunities are not restricted to just nationals but embraces foreigners who decide to carry out their business in the country as well.
Business owners set up businesses majorly to make profit through exchange of goods for goods, goods for services or by exchanging goods for money. It is however important for business owners to understand what type of business structure best suits one’s business idea. Company registration is in Tanzania is mandatory for foreigners looking to do business. Locals can also register a Business Name. The decision process takes a lot of planning and requisite experience and complete knowledge is vital for one’s success when learning how and what type of business to start.
IMPORTANCE OF BUSINESS REGISTRATION IN TANZANIA
Business registration in Tanzania affords the owners the following benefits:
- Tanzania allows free outflow of capital and profits, and does not exercise foreign exchange controls or restrictions thereby promoting investment activity.
- Setting up a business in Tanzania and subsequent operation is quite affordable, as the country has one of the lowest consumer cost indices in Sub-Saharan Africa.
- The special economic zones in Tanzania have several incentives to offer, like 100% exemption of value added tax (VAT) on utilities and no corporate tax or withholding tax for 10 years.
In Tanzania, the Business Registrations and Licensing Agency (BRELA) is the institution involved in business registration in Tanzania. It is the agency responsible for registration of Companies, Business Names, Trade and Service Marks and their respective post registrations, issuance of Patents and Industrial Licenses.
ONLINE COMPANY REGISTRATION IN TANZANIA
BRELA in ensuring ease and efficiency in doing business and registration in Tanzania has completed the development of a modern Online Registration System (ORS) which enables registrations to be carried out seamlessly online.
BUSINESS REGISTRATION IN TANZANIA
In registering a corporate entity in Tanzania, there are various entities to be considered depending on the aims and objectives of the business, the number of people involved in the formation and a host of other considerations. The various entities that are registrable in Tanzania by BRELA are discussed below
- Sole Proprietorship
This is the easiest and cheapest form of starting a business. The sole proprietorship is a popular business form due to its simplicity, ease of setup, and nominal cost.
A distinct disadvantage, however, is that the owner of a sole proprietorship remains personally liable for all the business’s debts. So, if a sole proprietor business runs into financial trouble, creditors can bring lawsuits against the business owner. If such suits are successful, the owner will have to pay the business debts with his or her own money. Below are some of the pros and cons of sole proprietorship.
Partnership is the most common type of business structure for businesses with more than one owner. There are two common types of partnerships; general partnership which can be formed simply by an oral agreement between two or more persons, and each person is full responsible for the business, limited partnership where at least one owner is a general partner and at least one owner is a limited partner. The general partners make everyday business decisions and are personally liable for business debts. However, limited partners simply invest in the business and have little control over business operations.
Partners are often regulated by the Partnership Agreement executed between themselves which should cover clauses on the type of business, amount of equity invested by each partner, division of profit or loss, partner compensation, distribution of assets on dissolution, duration of partnership, provisions for changes or dissolving the partnership, dispute settlement clause, restrictions of authority and expenditures, settlement in case of death or incapacitation.
- Limited Company:
This is the kind of business that has the legal status different from the owners of the business. It can either sue or be sued. It has a limited liability in which it can be declared bankrupt without the owners suffering the same fate. This form of business has a formal management structure and continuity or survival of the business is very high in case of death or retirement of owners. This form of company could be a company limited by shares or limited by guarantee depending on the preferred choice and business objective of the owners.
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- Foreign Company:
A foreign company may establish a business in Tanzania by either:
- Setting up a limited liability Tanzanian company as a group subsidiary; or
- Registering a foreign limited liability company in Tanzania as a branch that is, having an established place of business in Tanzania.
An overseas company can trade directly in Tanzania through a branch by registration of an established place of business in Tanzania. A foreign company is not deemed to have a place of business in Tanzania solely on account of its doing business through an agent in Tanzania at the place of business of the agent. Upon registration in Tanzania, it has the same powers as if it were a company incorporated in Tanzania, therefore subject to the laws of Tanzania.
- Societies and Co-operatives:
This is suitable for persons who intend to form a voluntary association to promote the common interest of members. Members join voluntarily to achieve a common need, make equitable contributions to the capital required for the formation of the organization, accept the risks and benefits of the undertaking in which they actively participate in.
- Non-Governmental Organizations
These are appropriate for voluntary, autonomous, non-profit-sharing organizations. Members of this organizations operate without government control, this does not however mean that they are not regulated by an Act or law of the jurisdiction in which they operate.
A trust is an arrangement where trustees hold assets for the benefit of beneficiaries, this arrangement can be formed by a will, an order or declaration of court or by operation of law.
An application for the incorporation of a trust is submitted to the Administrator-General (AG) at the Registration, Insolvency and Trusteeship Agency (RITA) and not the Business Registrations and Licensing Agency (BRELA). The application must be made on specific forms and must include a trust deed and the names and details of the trustees and at least two of the trustees must be residents of Tanzania. Registered Trusts are able to sue and be sued in their own name, have perpetual succession and a common seal, and own property under the outlines conditions.
LEGAL STEPS TO STARTING A BUSINESS IN TANZAZNIA
Having thoroughly researched and decided the type of business structure to venture into, the business owner is able to go ahead with the process of registering the business with the Business Registrations and Licensing Agency (BRELA), obtain specific business license(s) depending on the area of operation, obtain Tax Identification Number as a Taxpayer in Tanzania, register with the other relevant agencies as prescribed under the Tanzanian corporate laws.