Tanzania company registration
Healy Consultants Group PLC
17 March, 2014
Doing business in Tanzania offers many benefits to foreign companies such as i) absence of withholding tax on foreign payments ii) to hire workers from the partner countries without any employment restrictions and iii) giving it barrier-free access to an African market base of over 400 million people. Tanzania company registration has the following advantages:
1. Tanzanias Special Economic Zones offer benefits including i) 10 year exemption from corporate tax and withholding tax ii) 100% VAT exemption on utilities and iii) local Government taxes.
2. Imported machinery and raw materials for production purposes are exempt from import duties.
3. Tanzania is home to 22 million unskilled workers costing an average monthly wage.
4. All goods exported from Tanzania are legally exempt from i) VAT and ii) customs duties on import of raw materials used for manufacturing.
5. Tanzania has one of the lowest consumer cost index in Sub-Saharan Africa. Consequently, business expenses are low.
6. Registering a company is Tanzania is simple. A company can be formed within a week with only two shareholders and two directors who can be of any nationality.
7. A private LLC can be registered with a paid up capital of just US$1. Furthermore, you will not have to travel to complete the engagement.
8. No Government inspection will be required when applying for a business license.
9. Withholding tax on dividends is reduced to 5% if the entrepreneur owns at least 25% stake in the company issuing these dividends.
Before entering the Tanzanian market, investors should consider the following accounting and tax regulations:
1. Tanzania resident companies not registered in SEZ suffer a corporate tax rate of 30% on worldwide income.
2. The standard VAT rate on goods is 17% and must be filed on a monthly basis. This excludes exports goods, which are 100% VAT exempt.
3. A company with tax losses for three consecutive years suffers an alternative minimum tax at 0.3% on turnover.
4. Withholding taxes of up to 15% are levied on i) dividends ii) interests and iii) royalties.
5. Resident companies face a reduced corporate tax rate of 25% for three years if i) they issues at least 30% of share capital to the Tanzanian public and ii) are listed in Tanzania stock exchange.
6. Tanzanias tax on capital gains from business/investment income is 30%. However, capital gains from disposal of immovable assets face 10% tax rate.
It should be noted that Tanzanians prefer modest, non-revealing clothing when doing business. In addition, face-to-face meeting, formal written letters of introduction, personal relationship are strongly valued in Tanzania.
With Healy Consultants, the process of setting up your business in Tanzania is easier. Following Tanzania company registration, Healy Consultants assists our clients with i) Government compliance ii) license registrations iii) visa applications and iv) visa applications. Contact us today for more information.
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