Tanzania has put in place investment incentives which provide a soft landing platform to all investors during the initial stage of the projects implementation. These incentives are both fiscal and no-fiscal and are provided under four major schemes/legislations.
1. Tanzania Investment Act 1997
Certificate of Incentives
Incentives offered to investors under the Tanzania Investment act, 1997 can broadly be categorized into fiscal and non-fiscal incentives.
Fiscal incentives
-Import duty and VAT exemption on project/capital goods.
-Import Duty Draw Back Scheme
• Refund of duty charged on imported inputs used for producing goods for export and goods sold to foreign institutions like UN and its agencies operating in Tanzania.
Non-fiscal incentives
-Immigration quota of up to 5 people
-Guaranteed transfer of:-
• Net profits or dividends of the investment
• Payment in respect of foreign loans
• Remittance of proceeds net of all taxes and other obligations
• Royalties fees and other charges
• Payment of emolument and other benefits to foreign personnel
Strategic Investor Status
For a big project of over US$ 20 million offering specific/great impact to the society or economy, Investors can request for special incentives from the Government
Import Duty Draw Back Scheme
Refund of duty charged on imported inputs used for producing goods for export and goods sold to foreign institutions like UN and its agencies operating in Tanzania.
2. Export Processing Zone Act, 2002
Under this Act, all inputs like raw materials and machinery which are imported and used to process or manufacture goods in the designated areas as EPZ are exempted from import duty and other taxes.
3. Mining Act, 1998
Mineral property and control are vested in the United Republic of Tanzania and that prospecting or mining operation can only take place with a mineral right.
Salient features of the Act;
• Streamlined procedures
• Clarity and Transparency
• Right to trade minerals rights
• Environment management
Under the Mining Act, all capital goods, spare parts, fuel and oils together with explosives and other supplies are zero rated. However, corporate tax is 30% and capital allowance 50% on the first year of income.
In subsequent year:
Class I: 37% of balance per annum
Class II: 25% of the balance per annum
Class III: 12.5% of the balance per annum
4. Special Economic Zone(SEZ) Act, 2005
Special Economic Zone comprises of specific selected geographical areas where economic activities are beingpromoted by a set of policy instruments that may not be applicable elsewhere in the country.
The focus is on priority sectors whose economic activities have a potential for supporting domestic production and exports development and in areas that provide relative advantages for attracting private investment.
Economic activities under SEZ are not subjected to customs duty; value added tax and any other tax payable in respect of goods purchased for use as raw materials, equipment, machinery including all goods and services used in undertaking the licensed businesses.
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