applicable legal regime
Tanzania’s legal system is based on English common and case law, Islamic law and customary law.
Mainland Tanzania and Zanzibar each has its own judicial and commercial system, but, both systems are subordinate to the Appeals Court of the United Republic of Tanzania.
A dispute between a foreign investor and the Tanzania Investment Centre (“TIC”) or the government, which is not settled through negotiations, may be submitted to arbitration in accordance with any of the following methods, agreed on by the parties:
- in accordance with arbitration laws of Tanzania for investors;
- in accordance with the rules of arbitration of the International Centre for the Settlement of Investment Disputes;
- within the framework of any bilateral or multilateral agreement on investment protection agreed to by the Government of Tanzania and the government of the country from which the investor originates.
The commercial court, a division of the High Court of Tanzania, is exclusively intended for the speedy adjudication of commercial disputes.
In the case of disputes concerning natural resource wealth (mining and petroleum) in particular, the government is prohibited, pursuant to the Natural Wealth and Resources (Permanent Sovereignty) Act, from submitting itself to foreign courts or arbitral bodies.
land acquisition, planning and use
All land is owned by the state and is governed by the Land Act, which, besides providing a basic framework for the ownership of land other than village land and the management of land, offers guidance for the settlement of disputes and related matters.
Land may be owned by foreigners only as a “derivative right” for purposes of investment approved by the TIC or a Special Economic Zone.
A derivative right is granted in the form of:
a long term lease created on a right of occupancy granted by the Government; or
in respect of large scale investments, a lease directly from the government, with long-term leases ranging from 33, 66 and 99 years.
|The Fair Competition Act (the “Competition Act”) regulates merger control in Tanzania.|
The Competition Act defines a merger as an acquisition of shares, a business or other assets, whether inside or outside Tanzania, resulting in the change of control of a business, part of a business or an asset of a business in Tanzania.
In calculating merger thresholds, Tanzania uses financial thresholds based on a combined market value of assets or turnover of the merging firms. Mandatory notification applies to mergers where the turnover or asset value is above a threshold amount of TZS3.5-billion.
Merger filing fees are payable on a sliding scale ranging between TZS25-million and TZS100-million.
The Fair Competition Commission (the “FCC”) considers public interest issues in its determination of the merger notification.
Tanzania’s Competition Act has a pre-implementation regime in terms of which the implementation of a notifiable merger prior to the approval by the FCC is prohibited.
Any person who implements a merger in contravention of the Competition Act commits an offence. The FCC may impose a penalty of not less than 5% and not more than 10% of the annual turnover (during the preceding year) in Tanzania of the undertaking or undertakings in question.
Tanzania is a member of a regional competition body, the EAC. The EAC is not, however, operational insofar as merger control.
| prohibited practices|
The Competition Act prohibits horizontal and vertical agreements between undertakings if the object, effect or likely effect of the agreement is to appreciably prevent, restrict or distort competition. It must be presumed that an agreement does not have the object, effect or the likely effect of appreciably preventing, restricting or distorting competition if none of the parties to the agreement has a dominant position in a market affected by the agreement and either of the following applies:
- the combined market shares of the parties to the agreement of each market affected by the agreement is 35% or less; or
- none of the parties to the agreement are competitors.
Cartel conduct (such as price fixing and collusive tendering) is prohibited by the Competition Act.
The Competition Act prohibits abuses of dominance.
Any person who commits an offence under the Competition Act is liable to a fine of not more than 10% but not less than 5% of the offender’s annual turnover. Where a person charged with an offence under the FCC is a corporate entity, every person who, at the time of the commission of the offence, was a director, manager or officer of the corporate entity, may be charged jointly in the same proceedings with such corporate entity and where the corporate entity is convicted of the offence, every such director, manager or officer shall be deemed to be guilty of that offence unless he / she proves that the offence was committed without his / her knowledge or that he / she exercised all due diligence to prevent the commission of the offence.
Expatriates working in Tanzania must hold a valid work permit issued by the Commissioner for Labour and a residence permit issued by the Director of Immigration Services
Every business enterprise granted a certificate of investment under the Investment Act is entitled to an initial automatic immigrant quota of up to five persons.
Any application for additional permits is to be submitted to the TIC, which shall, in consultation with the immigration department, authorise any additional person that it shall deem necessary, taking into consideration the availability of qualified Tanzanians, the complexity of the technology employed by the business enterprise and agreements reached with the investors.
Employers of non-citizens must articulate a succession plan showing when the position will be assumed by a citizen.
|local employment vs secondment|
In terms of Tanzania’s employment legislation, an employee may be seconded to Tanzania as it is not a legal requirement for either a local or foreign employee to be employed by a local entity.
However, in terms of Tanzania’s immigration legislation, employment by a local entity is a prerequisite for applying for a work permit.
|typical employment – fixed term contracts and temporary employment services|
Fixed-term contracts may be entered into with staff for specific tasks and specific duration. Such contracts will terminate on their expiry unless renewed by agreement between the employer and employee.
The law treats fixed-term contracts during their pendency in the same way as long-term contracts, and termination prior to expiry other than as prescribed under the law may be termed as unfair in terms of the employment and labour laws.
Employing staff through labour brokers / employment agencies is allowed in Tanzania, subject to such company holding a valid licence from the Labour Commissioner. However, currently no licences are being issued.
|payment in local currency||It is not a legal requirement for remuneration to be paid in local currency. However, accounting must be done in Tanzanian Shilling as the legal tender.|
|restraint of trade agreements||Any agreement that prohibits one from exercising a lawful profession, trade or business, including restraint of trade agreements is generally not valid and enforceable, unless the restraint is in the interest of the parties involved and the public.|