December 2nd 2022 saw a new Investment Act being passed by Parliament in Tanzania. The new law is Investment Act No. 9 of 2022 repealed and replaced the previous Investment Act of 1999. Notably the Act has been drafted in Kiswahili language as per the provision of law which now require all laws to be drafted in Kiswahili language.
Notable changes in the Act are
The Act reduces the minimum investment capital for locally owned businesses to a minimum of USD 50,000 from the previous USD 100,000 under the Tanzania Investment Act, 1997 (Repealed Act).
The new Investment Act removes the automatic immigration quota incentive of up to 5 foreign nationals which was previous provided for under section 24 of the repealed Act to every business enterprise granted a certificate of incentives. The law now requires an investor comply with the section 19 of the Non-Citizens (Employment Regulation) Act Cap. 436 which provides for a company to enjoy a maximum of 10 non-citizens.
The new Investment Act requires Tanzania Investment Centre (TIC) to create an integrated electronic system as a means of promoting investment in Tanzania. The system shall be accessible by all Government regulatory bodies responsible for issuance of varying licenses, permits etc the purpose is to speed up and synchronize approval processes and efficiently manage the processes for investors.
The new Act also provides for expiry of fiscal incentive (5 years) from issuance date but will be renewable on expiry while non-fiscal incentive will last throughout the project lifetime.
Additionally, under the new Investment Act, fiscal incentive certificates expire after a period of 5 years from the date of their issuance on provision of sufficient reasons while the non-fiscal incentive certificates now available throughout the life of the project.
Moreover, the new Investment Act provides for circumstances that shall result in cancellation of the issued certificates of incentives. Such circumstances include obtaining the certificate by fraud or false information; breaching the conditions of the certificate by the holder; transferring the certificate to another investor or investment without prior consent of the Centre; failure to commence operations within the first two years of issuance of a certificate without satisfactory reasons; and failure to submit annual performance reports of the project for two consecutive years. This move is in a bid to attract serious investors who will stick to their investment plans as per their application to the Centre.
Apart from the above, the new Investment Act removes the automatic immigration quota incentive which was expressly provided for under section 24 of the repealed Act and reference is made to the Non-Citizen Employment Act which provides for an initial immigration quota of up to 10 foreigners.
Regarding settlement of disputes, the new Investment Act has retained the same position as provided for under section 23 of the Repealed Act which provides that where a dispute between a foreign investor and the Centre/Government is not settled through negotiations, the dispute may be submitted to arbitration in accordance with arbitration laws of Tanzania for investors; rules of procedure for arbitration of International Centre for the settlement of Investment Disputes (ICSID); or 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 where the investor originates (BITs). The retention of the right to international arbitration is vital in creating a stable and friendlier environment for foreign investors in the country.