Tanzania offers a wide range of tax and non-tax incentives to attract investment and drive economic growth. These incentives include corporate tax holidays, zero import duty on capital goods, and VAT exemptions, making the country an attractive destination for local and foreign investors.
These incentives are provided by Tanzania’s two investment promotion agencies, the Tanzania Investment Centre (TIC) and the Export Processing Zones Authority (EPZA). LILAC provides this guide on how to obtain the Certificate of Incentives from TIC and EPZ licenses from EPZA.
LILAC is a leading audit, accounting, and advisory service company in Tanzania, specializing in business facilitation, tax advisory, and investment support services.
This guide was prepared under the guidance of Ms. Zawadia Nanyaro, the founder of LILAC and an expert with over 10 years of experience in investment promotion and facilitation in Tanzania.
TIC & EPZA: Tanzania’s Investment Promotion Agencies
The Tanzania Investment Centre (TIC) facilitates investments outside designated Export Processing Zones and caters to investors in sectors such as agriculture, manufacturing, mining, tourism, and energy. Investors meeting the eligibility criteria can access various fiscal and non-fiscal incentives by obtaining the TIC Certificate of Incentives.
On the other hand, the Export Processing Zones Authority (EPZA) manages investments within Export Processing Zones (EPZs) which are tailored to promote export-oriented manufacturing and industrial development. EPZA also manages investments in Special Economic Zones (SEZs) which attracts investments beyond export-oriented manufacturing projects such as manufacturing, trading, hospitality, and services for the local market.
All the above schemes offer a variety of tax exemptions and other benefits that attract local and foreign investors.
TIC: Incentives Offered
Investors registered under TIC enjoy both fiscal and non-fiscal incentives after obtaining the TIC Certificate of Incentives, an official document issued by the Tanzania Investment Centre (TIC) to eligible investors. These incentives include:
- Exemptions on Project Capital Goods:
- Zero Import Duty on capital goods and raw materials.
- 75% Import Duty exemption for deemed capital goods.
- Corporate Tax Relief:
- Reduced corporate tax to 20% for the first five years for projects in pharmaceuticals, textiles, and leather product manufacturing.
- Reduced corporate tax to 10% for the first five years for the assembly of motor vehicles, tractors, fishing boats, or outboard engines.
- Withholding Tax Exemption: for Strategic Investors on interest from foreign loans from commercial banks.
- Capital Allowances:
- Agriculture: 100%.
- Mining (first 5 years): 20%.
- Hotels, Fish Farming, Tourist Services: 50%.
- Depreciation Allowance: ranges from 37.5% to 5% depending on the asset type.
TIC: Investment Categories and Benefits
The TIC classifies investors into three categories based on the size of their investment. While all categories gain access to fiscal and non-fiscal incentives, the scale and nature of benefits differ:
- Normal Investors:
- Eligibility: A minimum investment of USD 50,000 for Tanzanian citizens or USD 500,000 for foreign investors or joint ventures.
- Benefits:
- Zero Import Duty on capital goods and raw materials.
- 75% Import Duty exemption for deemed capital goods.
- Reduced corporate tax to 20% for the first five years for projects in pharmaceuticals, textiles, and leather product manufacturing.
- Reduced corporate tax to 10% for the first five years for the assembly of motor vehicles, tractors, fishing boats, or outboard engines.
- Capital Allowances:
- Agriculture: 100%.
- Mining (first 5 years): 20%.
- Hotels, Fish Farming, Tourist Services: 50%.
- Depreciation Allowance: Ranges from 37.5% to 5% depending on the asset type.
- Non-fiscal benefits, including facilitation of land ownership for foreign investors by way of derivative titles, work and residence permits, and other services offered at TIC’s one-stop center.
- Strategic Status Investors:
- Eligibility: must first hold a TIC certificate of incentives and additionally have a minimum investment of USD 50 million for foreign investors or USD 20 million for local investors.
- Normal benefits: enjoys all benefits that come with having a TIC Certificate of Incentives.
- Additional Benefits:
- Withholding Tax Exemption for Strategic Investors on interest from foreign loans from commercial banks.
- Enhanced tax incentives depending on the project’s contribution to priority sectors.
- Tailored government support, such as fast-tracked approvals for land access and extended support in acquiring permits and licenses.
- Special Strategic Investors:
- Eligibility: must first hold a TIC certificate of incentives and additionally a minimum investment of USD 300 million.
- Normal benefits: enjoys all benefits that come with having a TIC Certificate of Incentives and those for Investors with Strategic Investor Status.
- Additional Benefits:
- Direct government involvement in facilitating large-scale investments.
- Special concessions and agreements to address unique project needs, including extended tax holidays, land access, and regulatory flexibility.
- Prioritized infrastructure and utility support to enable seamless operations.
How to Obtain the TIC Certificate of Incentives
To secure the Certificate of Incentives, investors must meet the minimum investment thresholds and incorporate their company in Tanzania. The application process involves submitting the required documents to TIC. If all documents are in order, the TIC issues the Certificate of Incentives.
EPZA: Incentives Offered
The EPZA provides a unique set of incentives for businesses operating in Export Processing Zones (EPZs), which include:
- Corporate Tax Holidays: Exemption from corporate taxes for 10 years.
- Import Duty Exemptions:
- Zero import duty on machinery, equipment, and construction materials used in SEZ/EPZ projects.
- Zero import duty for deemed capital goods.
- VAT Exemptions:
- Zero VAT on machinery, equipment, and construction materials used in SEZ/EPZ projects.
- Zero VAT for deemed capital goods.
- Withholding Tax Exemptions: Exemptions on utilities, including electricity and water.
- Onsite Customs Services: Dedicated customs services to simplify goods inspections.
- Other Benefits: Automatic immigration quotas for up to five foreign employees during the startup phase.
How to Obtain an EPZA License
Export Processing Zones (EPZs) User License
To qualify for an EPZ license, investors must meet the following requirements:
- New investment.
- At least 80% of goods produced/processed should be exported.
- Minimum annual export turnover of US$ 500,000 for foreign investors and US$ 100,000 for local investors respectively.
- Investment can be located inside the Special Economic or Export Processing Zones Industrial Parks or as a standalone.
- Must undertake value addition, processing or manufacturing projects.
Special Economic Zones (SEZs) User License
To qualify for an SEZ license, investors must meet the following requirements:
- New investment.
- Minimum Investment Capital of US$ 500,000 for foreign and US$ 100,000 for local investors, respectively.
- Goods produced/processed can be sold to the local or foreign market with no restriction on percentage.
- Investment must be located inside the Special Economic Zones Industrial Parks (cannot be standalone).
The application process involves:
- Proof of land by way of ownership or long-term lease in the EPZs or as a standalone
- Submitting required documentation.
EPZA reviews the submissions and provides an EPZ or SEZS License. The License is synonymous with a business license and you will not be required to obtain a business license. depending on your project and land location you may be required to have any or both of these Licenses: EPZ/SEZ operator License or EPZ/SEZ Developer License.
Conclusion
Tanzania’s TIC and EPZA schemes offer compelling tax and non-tax incentives, making them vital tools for fostering investment across diverse industries. From 10-year tax holidays to import duty exemptions and capital allowances, these programs provide a wealth of opportunities for local and foreign investors.
Navigating the processes to obtain these benefits can be complex without expert guidance. LILAC is uniquely positioned to assist investors at every stage. With a deep understanding of the Tanzanian business environment, LILAC helps businesses from initial Entity incorporation in Tanzania through to securing TIC and EPZA approvals, ensuring a seamless process and compliance with all regulations.
Contacts
For further guidance, contact LILAC on WhatsApp: +255 738 726 111 / +255 764 266 009 email: info@lilac.co.tz, website: www.lilac.co.tz.
