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INVESTMENT
AIDS AND INCENTIVES
GENERAL
INCENTIVES
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.
"NATIONAL INVESTMENT
(PROMOTION AND - PROTECTION) ACT 1990"
PART IV
INVESTMENT
INCENTIVES
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.
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