The Government recognises the importance of effective incentives in mobilizing appropriate local and foreign investments. The following categories of incentives will be made available. Such incentives will be extended to those investors covered by a Certificate of Approval, issued by IPC in line with conditions laid down under this policy, and in accordance with the operational guidelines to be established by IPC.
 
Benefits to approve enterprise 

20- (1) An approved enterprises shall be entitled to the benefits herein specified.(2) The benefits conferred upon an approved enterprise shall apply in relation to that enterprise notwithstanding the provisions of any other law save that where there is any law, such that the benefits conferred  under this Act would be less favourable,   the Minister shall adjust such benefits correspondingly.

Tax on profit 21Act No.10 of 1992 - (1) As from the operative date, and within the initial period of five years, the whole of the tax payable with respect to the gains and profits in respect of an approved new enterprise shall be remitted, thereafter the tax shall be chargeable at the following rates:

                 
(a) In the case of corporations and companies, fifty percent on taxable profits from an investment project by a non-resident; and forty five percent on taxable profits from a new investment project by a resident;

Act 1991 15       

(b) In the case of co-operative societies  registered under the Co-operative Societies Act, 1991, twenty two point five percent;

Act  1973 No 33 

(c) In the case of a sole proprietor, the rate shall be as specified in the Income Tax Act, 1973.(2) Notwithstanding the provisions of  subsection (1) where the approved enterprise  involves the rehabilitation or expansion of an exiting enterprise;

(a) Depreciation shall be taken into account in computing its gains or profits to write off the cost of such rehabilitation or  expansion in five years from the operative date; and
                  
(b) tax shall be charged at the following  rates in the first five years from the operative date;
 

(i)  in the case of corporations and companies, forty five percent on taxable profits from an investment project by a non resident and forty percent on taxable profits from an investment project by a resident;

(ii) in  the case  of co-operative  societies registered under the Co-operative Societies Act, 1991, fifteen percent; and

(iii) in  the case  of a  sole proprietor  the rate  shall be  as specified in  the Income Tax Act 1973 subject to maximum marginal rate of thirty percent;

Provided that  at the  expiry of  five years  after the operative date tax shall be payable according to the normal rates

22.-(1) As from the operative dates and within the initial period of five  years, the whole of the withholding tax in respect of an approved enterprise  shall be  remitted, thereafter  the rate  of withholding tax shall be :-

(a) in respect of dividends paid from the profits of the approved enterprise, ten  percent in  the case of non-residents and five percent in the case of residents

(b) in  respect  of  royalties  on  imported  technology,  twenty percent on the gross amount payable;

(c) interest  payable on  foreign loans, twenty percent on the gross amount payable.

Provided however  that  where  the  approved  enterprise  is  the rehabilitation or expansion of an existing enterprise or where an approval enterprise   is  rehabilitated,the enterprise as rehabilitated or  expanded shall  be deemed  to be  the  approved enterprise for  the purpose  of this  section and  tax  shall  be calculated and  charged on  the income  in respect  of the  total dividends, royalties, or interest paid.

23.-(1) As from the date approved by the Centre for import duties in respect  of all  machinery and  equipment necessarily required for the  establishment of an approved enterprise and imported for use, solely and exclusively  in such approved enterprise shall be remitted.

(2) Where  approval is  given by  the Centre  with respect  to an investment  in   rehabilitation  or   expansion  of  an  approved enterprise and  the  investment  is  not  less  than  the  amount prescribed by  the Centre  from time  to  time  in  the  case  of investment by  a national;  the rehabilitation or expansion shall be deemed  to be  an approved  enterprise for the purpose of this section and  be entitled  to remission  of duty  as provided from subsection (1)  commencing from the date of approval granted with respect to  the enterprise  and continuing  thereafter until  the operative date of the enterprise as rehabilitated or expanded.

(3) Where  approval is  given by  the Centre  with respect  to an approved new  enterprise remission  of import duties shall extend to spare  parts, materials  and supplies necessarily required and imported for the establishment of such approved enterprise.

Exemption from Sales Tax Act No.10 of 1992

24.-(1) As from the  date of approval by the Centre, sales tax in respect of  all machinery, equipment necessarily required for the establishment of  an approved  enterprise, are  imported for  use solely and  exclusively in  such  approved  enterprise  shall  be remitted.

(2) Where  approval is  given by  the Centre  with respect  to an investment  in   rehabilitation  or   expansion  of  an  approved enterprise  and  the  investment  is  no  less  than  the  amount prescribed by  the Centre  from time  to time,  in  the  case  of investment by  a national;  the rehabilitation or expansion shall be deemed  to be  an approved  enterprise for the purpose of this section and  shall be  entitled to remission of sale tax provided for in  subsection (1)  commencing from the date of approval with respect to  such enterprise  and continuing thereafter until  the operative date  of the  enterprise as rehabilitated or expanded.

Duty of Commissioners

24A. The  Commissioner of  Income Tax  and  the  Commissioner  of Customer in  discharging their  duties in relation to income tax, import duties  and sales  tax on  investors, shall have regard to the provisions  of section  21, 22,  23 and  24 of  the  National Investment (Promotion and Protection) Act, 1990.
 

24B. A  certificate of  Approval granted  by the  Centre shall be conclusive evidence  that the  remission of  duties and  sale tax payable  in  relation  to  goods  or  articles  involved  in  the enterprise in  questions is  in the public interest in accordance with section  7 of the Customs Tariff Act, 1976 and section 28 of the Sale  Tax Act, 1976 and the Commissioner shall, on production of the  Certificate or  a  certified  copy  of  its,  permit  the investor to  import or  purchase the  goods or  articles involved free of duties or sales tax.

Commissioner of Customs to verify compliance

24C. The  Commissioner of  Customs shall have access to the goods or items  imported by  an investor,  with a  view  to  certifying compliance with  the list  of goods or items in respect of which, remission of duties and sales tax has been granted and where such list has not been complied with, the Commissioner  shall demand from such investor necessary tax and duties.

24D. The  remission of  customs duty and sales tax shall cease to have effect the same shall become payable as if remission has not been made,  if any  of the  goods or  items are sold or otherwise disposed of to any person not entitled to enjoy similar exemption without prior approval of the Minister of Finance.

The provisions of the written laws set out in the first column of the Schedule to this Act are hereby amended in the manner set out opposite them in the Second column.

25. Any foreign exchange earning enterprise shall be permitted by the Bank  of Tanzania  to retain in an external account under the supervision of  the Bank  of Tanzania  a portion of their foreign exchange earnings  for use  in acquiring  inputs required for the enterprise which would otherwise not be readily available without the use of such earnings:

Provided that  in the  case  of  net  foreign  exchange  earnings enterprise the  Bank of  Tanzania shall  permit a  holder  of  an external account  to utilize up to any percent of such an account to effect  overseas  remittances  in  respect  of debt servicing, profits and  settlements of external obligations.

26.-(1) Where an investor is granted a Certificate of Approval by the Centre under the Act, the Minister responsible for land shall grant him  such terms and conditions as may be prescribed a lease of appropriate  land for  a term suited to the requirement of his enterprise:

Provided that  land belonging  to an registered village shall not be leased  for comment  for activities  other than joint ventures with  the   village  government   of  the  village's  co-operative societies, save  that such  land may be subleased by the village itself for  small or  medium scale,  public or  private  economic activities. Any  lease this section shall be for a term not exceeding ninety nine years.

(2) Not  withstanding the  provisions of subsection (1), prior to the expiry  of a lease granted pursuant to subsection (1) of this section the  investor may apply for an extension of his lease and the Minister  responsible for lands may  grant an extension for such period as he deems fit.

Provided that  no such  extension shall exceed a period of ninety nine years.

Designated Special Growth Area

27.-(1) The Minister may on the advice of the Centre designate any area  in the United Republic to be a special growth centre in accordance with  the provision  of sub-section  (1), any approval enterprise established  in  such  area  shall  be  accorded  such special incentives, on such terms as the Minister may prescribe.
 

Investment Protection

The Government recognizes the importance of the investors, attach to  the protection of investments and to both fair and stable  opportunities and predictable treatment.  In this light, the  Government undertakes to maintain a legal framework that gives due  guarantee of protection to investments in Tanzania, whether of  domestic or foreign origin.  Thus, contractual and property rights  will be protected under the Tanzanian legal system, in the light  of the fundamental principles on which the Constitution of the United Republic of Tanzania is based.  In accordance with the  Tanzanian Constitution, each person has the right to receive from  society the protection of his/her life, freedom, and lawfully  acquired property, as confirmed by the following sections of the  Constitution:

(1) Not withstanding the provisions of any other law to the   contrary, every person shall have the right to own private  property and to receive protection of lawfully acquired property.

(2) Without prejudice to the provisions of clause (1) of this  article, it is hereby prohibited to expropriate or acquire for  the purpose of nationalization or any other purpose, private  property lawfully acquired without due process of law providing  for payment of full and fair compensation.