Tanzania: Companies (Beneficial Ownership) Regulations GN NO. 478 of 2023
Tanzania: Updater on the New Investment Regulations GN No. 477 of 2023
Développement en droit 29 août 2023 29 août 2023
Droit des sociétés
In a bid to bolster domestic investments and promote economic growth, the Government of Tanzania (the GoT) recently revoked the Tanzania Investment Regulations, 2002 (the TIR) and enacted the Tanzania Investment Regulations GN No. 477 of 2023 (the New Investment Regulations).
This regulatory framework aims to create a conducive environment for investors and businesses while ensuring transparency and accountability. The new regulations introduce several changes to the investment landscape in Tanzania as set out in this legal update and have significant implications for both local and foreign investors.
The Board of the Tanzania Investment Centre
One of the key changes brought about by the New Investment Regulations is the redefined role of the Board of the Tanzania Investment Centre (TIC). The Board's functions now include a constant reviewing of the functions of the TIC to ensure its objectives are achieved, monitoring the national and global investment climate, proposing measures to enhance Tanzania's competitiveness as an investment destination, and overseeing the ethical conduct of TIC staff. Additionally, the quorum for the Board's meetings has been increased from four to five members.
To note, the qualification of the board members is not provided under the New Investment Regulations.
The Technical Committee (the Committee)
The Committee was established by the Tanzania Investment Act GN No. 395B of 2023 (the TIA) and is comprised of members from public institutions dealing with investment.
This includes the Permanent Secretary from the Office of the President for Planning and Investment (the Planning and Investment Office), who serves as the Chairperson, and the Deputy Permanent Secretary from the Ministry of Finance (the MoF), who acts as the Vice Chairperson, Commissioner for Policy Analysis from MoF; Commissioner for Lands; Director of Contracts and Treaties from the Office of the Attorney General; Commissioner for large Taxpayers from the Tanzania Revenue Authority; Director of Investment Development from the Planning and Investment Office and Director of Industry Development from the Ministry of Industries and Trade. Furthermore, the Chairperson has the authority to invite individuals from relevant sectors to contribute to discussions on specific matters.
According to the New Investment Regulations, the Committee is required to hold at least quarterly meetings and regulate its procedures for conducting its meetings with a minimum of four members present to establish a quorum.
According to the New Investment Regulations, the functions of the Committee include:
- Receiving and processing various matters from the Secretariat of the National Investment Steering Committee (the NISC) aiming at improving the investment environment and advising the NISC;
- receiving and processing applications for additional fiscal and non-fiscal benefits from the Secretariat of the NISC and advising the NISC; and
- performing any other function as may be directed by the NISC.
The establishment of this Committee reinforces Tanzania's commitment to facilitating a conducive investment environment. By involving key stakeholders, the Committee ensures that investment-related matters are comprehensively addressed. Ultimately, the Committee's actions contribute to the growth and development of the investment sector in Tanzania.
The procedure for submitting matters to the NISC
The New Investment Regulations have established a procedure for submitting an application for strategic and special strategic investment for additional fiscal and non-fiscal benefits. This application must be made in a prescribed form and submitted to the Secretary of the NISC upon payment of a prescribed fee. The application must be accompanied by a copy of the certificate of incentives; an analysis of the project showing actual costs, profits to the nation and investor, additional benefits requested from the NISC to enable the investor to implement the project effectively; and a brief statement showing key issues within the investor’s application.
Upon receipt of the application, the Secretary of the NISC will submit it to the Committee for processing and its recommendations and the Committee shall make such recommendations to the NISC within 14 days after the last meeting of processing such application.
Once the NISC receives the recommendations, it is required to decide whether to accept or reject the recommendations. Where the recommendations are accepted, NISC will direct the Secretariat of the NISC to communicate such decision to the respective Ministries, Department and Agencies or persons concerned.
Additionally, the New Investment Regulations also require investors who are applying for strategic investment in areas that pose challenges (such as issues with infrastructure or a lack of trained manpower) to identify and propose solutions to overcome these challenges. Further, any other matters related to investment that require a decision from the NISC must be submitted using the prescribed form.
Access to guarantees and transfer of profits
Pursuant to the TIA, the TIA is inapplicable to business enterprises authorised to conduct reconnaissance prospecting or mining operations under the Mining Act or seeking authorisation to conduct any such operations and to business enterprises authorised to conduct exploration or production operations, construct exploration or production facilities, operate a pipeline under the Petroleum Act, or seek authorisation for any such operations.
Furthermore, as per the TIA, guarantees of the transfer of capital, profits, and dividends, as well as guarantees against expropriation apply to the business enterprise that holds a mineral right granted under the Mining Act or a license granted under the Petroleum Act, even without a certificate of incentives, as though the holder has been granted a certificate of incentives and protection. However, with the enactment of the New Investment Regulations, the TIC can now automatically issue a certificate of incentives to the business enterprises holding mineral rights granted under the Mining Act or a license granted under the Petroleum Act, enabling them to enjoy the guarantees of the transfer of capital, profits, and dividends, as well as guarantees against expropriation. As a result, this development is expected to attract more investors to the mining and petroleum sector, offering reassurance regarding capital transfers and expropriation concerns.
Procedures for extension of time for additional benefits and a certificate of incentives
According to the New Investment Regulations, an application for an extension of time for additional benefits by a strategic or special strategic investor entails submission of a letter to the Secretary of the NISC, before the expiry of the initial period of grant of such benefit. This application letter should outline the reasonable grounds for the application.
Upon receipt, the Secretary to the NISC will forward the application to the NISC for a decision. The decision will then be communicated in writing to the investor by the Secretary to the NISC. The NISC will take into account factors such as delays in land allocation, investment capital approvals, and other relevant licenses and permits when considering the application.
Whereas an application to extend the time for a certificate of incentives should be made through a letter to the TIC, stating the reasons for the extension. However, the New Investment Regulations do not specify the time duration before the expiry of the existing certificate of incentives that an investor must apply for the extension. The TIC is required to process the application within seven (7) days from the date of receipt of such application and communicate the decision in writing to the applicant.
Submission of an annual report
Before the enactment of the New Investment Regulations, investors who were registered with the TIC were required to submit a report detailing the progress of their projects at least every six (6) months throughout the implementation period. However, following the introduction of the New Investment Regulations, investors are now mandated to submit the report on an annual basis.
Residence and work permit, certificate of registrations and requisite licence
The New Investment Regulations reduce the timeframe for an investor to secure the issuance of work and residence permits, certificate of registration of business, and requisite licences through applications made at the One Stop Centre at the TIC to seven days instead of 14 days.
With the New Investment Regulations, investors may appeal a decision of the TIC in relation to the rejection of an application for a certificate of incentives, rejection of an application relating to rehabilitation or expansion of the business enterprise, rejection of an application for extension of time of certificate of incentives or revocation of certificate of incentives. The appeal must be made by writing a letter to the Minister within 21 days from the date on which the decision was made. The Minister holds the authority or power to affirm, reverse, vary from the decision, and may issue specific directives with respect to the decision made by the TIC. Nevertheless, the decision made by the Minister is deemed final. The finality nature of the decision of the Minister may limit the investors from seeking further recourse and may impact their investments.
According to the New Investment Regulations, an investor dissatisfied with the decision of the NISC on the grant of incentives or other matters submitted relating to investment other than investment disputes may apply for review by way of a letter to the NISC clearly stating the grounds for the review. The application must be made within 21 days from the date of receipt of such decision and submitted to the Secretary of the NISC.
It should be noted that the determination made by the NISC is considered final this may have adverse consequences for the investor.
Investment disputes resolution
The New Investment Regulations have introduced a mechanism for the resolution of disputes of investment registered by the TIC. Accordingly, the TIC is required to resolve the disputes within 30 days of receipt of such disputes. An investor facing any dispute is required to submit a statement of the dispute and the relief sought in writing to the TIC within 21 days from the date the dispute arose. Upon receiving the submission, the TIC is required to convene a meeting with responsible parties to resolve the dispute amicably and timely.
It is crucial to highlight that the New Investment Regulations validifies all acts done under the revoked TIR as long as they do not conflict with the provisions of the New Investment Regulations.
If you would like more information on the regulations, please contact one of the authors below.