Tanzania Economy Overview

Currency

Tanzanian Shilling (TZS)

Working hours

45 hours/week

Public/bank holidays

15 public holidays

Capital

Dodoma

Languages

Swahili & English

Population

62 million

Minimum hourly salary

1,709 TZS

Tax year

1st Jan – 31st Dec

Date format

DD/MM/YYYY

Misclassification penalties

Employers may be required to pay back taxes, social security, health insurance contributions, and any applicable fines for misclassifying employees as contractors.

Fun fact

Tanzania is home to Mount Kilimanjaro, the highest mountain in Africa and the highest single free-standing mountain above sea level in the world.

Tanzania is known for its robust economy, rich natural resources, and increasing foreign investment. The African country has a fairly strong GDP, reaching $79.14 billion in 2023. Tanzania’s economic stability is attributed to its monetary policies that have reduced inflation and food prices. Structural reforms and a business-friendly environment have further contributed to stable financial performance. 

Tanzania is a favorable choice for doing business in Africa because of its mineral and metal resources, including gold, tanzanite, copper, and iron ore. The country offers investment opportunities in the energy, agricultural, and tourism sectors. Another attractive feature is the low labor costs, making it more affordable for businesses to hire a workforce and expand in Africa. 

To learn about the value of doing business in Tanzania, this guide covers important professional regulations along with the benefits and options for expansion from subsidiaries to hiring an Employer of Record (EOR).

Overview of Tanzania's Economy

Tanzania’s economy experienced year-on-year growth over the last 20 years, increasing by an average of 6%. The country’s economic success is attributed to its agricultural, mining, and services sectors. In the tourism industry, around 1.8 million people visit Tanzania annually, with attractions including the Serengeti and Mount Kilimanjaro. Tourism accounts for 17% of its GDP, while the services sector contributes to 40% and improved productivity and employment rates, further strengthening the economy. 

Tourism in Tanzania is among its fastest-growing industries offering investment opportunities for global companies. The mining sector is another major economic contributor, with the government aiming for the sector to reach 10% of GDP in 2025. Along with the tourism sector, businesses can venture into mining, manufacturing, renewable energy, agriculture, and communication technology.

Taxes

Employer Tax: Up to 24%

National Social Security Fund (NSSF) – Private Sector

10%

Public Service Social Security (PSSF) – Public Sector

15%

Workers Compensation Fund (WCF)

0.5%

Skills Development Levy (SDL)

4% (if 4+ employees)

Employee Tax: 10%

National Social Security Fund (NSSF) – Private Sector

10%

Public Service Social Security (PSSF) – Public Sector

5%

Income Tax

In Tanzania, individual income tax for residents follows a progressive structure ranging from 0% to 30%, based on monthly earnings. Non-residents are taxed at a flat rate of 15% on employment income.

Gross Income (TZS)

Up to 270,000

270,000 – 520,000

520,000 – 760,000

760,000 – 1,000,000

More than 1,000,000

Tax Rate

–

–

20,000

68,000

128,000

Tax Rate on Excess

0%

8%

20%

25%

30%

Business Regulation in Tanzania

Employers should be aware of local business regulations, such as foreign investment and establishing a subsidiary, as described below:

Investment Policies

The Tanzania Investment Act of 1997 governs international investment by creating more attractive local and foreign investor conditions. It excludes the mining and oil sector, Zanzibar investments, and international investments below $300,000. For foreign investors, capital of no less than $500,000 is required for professional expansion. 

The Financial Laws Act covers sections of the Tax Act, Sales Act, and Customs Tariff Act. The Mining Act of 1998 was created to facilitate mineral mining and trading, while the Banking and Financial Institutions Act helps regulate credit and financial operations. 

Each investment policy and law in Tanzania strives to create transparency and an easy-to-follow legal framework for FDI. Tanzania has also undergone several reforms, which have stabilized inflows, reaching a total of $193 million in 2000.

Company Incorporation Processes

The Companies Act of 2002 in Tanzania includes corporate law governance. Based on the Act, anyone can register a company in Tanzania, provided they are at least 21 years old. Company registrations are completed online under the Business Registrations and Licensing Agency (BRELA). Foreign companies pay a $750 registration fee and must deliver requested documents to the registrar for $220. 

Documents include a certified copy of a Certificate of Incorporation, Articles of Association, and the completion of Form 434.

Tax Laws

Corporate tax rates are 30% imposed on a company’s taxable profits. In Tanzania, an Alternative Minimum Tax is issued at 0.5% on the turnover of companies with perpetual unrelieved tax losses. 

Tanzania currently has tax treaties with nine countries, including Norway, South Africa, Italy, Denmark, Finland, and Canada.

What Are the Benefits of Doing Business in Tanzania?

  • Abundant Natural Resources: Tanzania’s gold exports alone amount to approximately 40% of export earnings. In 2022, mining and quarrying contributed an estimated $5.9 billion to Tanzania’s GDP. The country’s abundant natural resources offer investment opportunities in mining, including natural gas, coal, and petroleum.
  • Government incentives: The Tanzanian government offers businesses incentives such as lower tax rates and exemptions. Capital deduction provisions are awarded to the manufacturing, agricultural, infrastructure, and tourism sectors.

    Special benefits are also given to businesses in export processing zones and special economic zones. All companies that are newly listed on the Dar es Salaam Stock Exchange will receive a reduction in CIT rates for the first three years.

    Furthermore, Tanzania has bilateral treaties with 18 countries to improve foreign investment and create more trade opportunities.
  • East African market access: Tanzania is located along the border of the Indian Ocean and is considered strategically positioned for trade with Asia. Many landlocked African countries use the port of Dar es Salaam for imports and exports.

What Are the Downsides of Doing Business in Tanzania?

  • Bureaucratic hurdles: While Tanzania offers businesses a legal framework for ease of setting up an entity or pursuing foreign investments, bureaucratic challenges, including underdeveloped digital infrastructure, can hamper processing times to obtain licenses and permits.
  • Infrastructure gaps: Infrastructure issues in Tanzania include road problems and interrupted power supply in rural areas. However, according to the World Bank, Tanzania has invested in the Bus Rapid Transit (BRT) system to improve transportation and the Electrification Expansion Program, which has supplied six million people in rural areas with power.
  • Regulatory challenges: Tanzania’s investment laws may be challenging to understand. For instance, regulations imposed by the Southern African Development Community (SADC) provide reduced tariffs and limit customs barriers in addition to tax incentives that apply to specific sectors or “zones.” Fortunately, the expertise of an EOR or a Professional Employer Organization (PEO) can guide your business in compliance matters.

International Expansion into Tanzania

To help you expand internationally into Tanzania, it is important to understand the options available to you, from setting up a subsidiary to hiring a recruitment agency or an EOR.

Tanzania Employer of Record (EOR)

An EOR in Tanzania acts as the legal employer of the labor force and assumes liability. The Tanzanian EOR is recommended for companies that do not have an entity established in the country and need to adhere to the Tanzania Employment and Labor Relation Act. The Employer of Record offers quick and compliant hiring solutions along with payroll, onboarding, benefits administration, and offboarding.

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Recruitment Agency

A recruitment agency in Tanzania helps companies hire employees with the right skills and experience for job vacancies. The professional recruiter will screen employees and perform interviews and background checks. Their role is to make hiring local talent more efficient and cost-effective.

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Tanzania Professional Employer Organization (PEO)

Companies with a legal presence in the country can hire the services of a Tanzanian PEO. The PEO helps with handling HR and compliance more efficiently. Also known as an HR service provider, a PEO assists with payroll, benefits administration, and employee onboarding.

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Staffing Agency

A staffing agency in Tanzania assists by placing qualified employers in temporary positions, such as contract work. If you are interested in temporary workforce management, then hiring the services of a staffing agency is best.

Subsidiary Incorporation

In Tanzania, you can register a subsidiary by applying for a company name with the BRELA. 

The next step is to submit a notarized declaration of independence to the Registrar of Companies. Based on Tanzania’s law, companies can only be registered in Dar es Salaam. Documents that are required for incorporation include: 

  • A Memorandum of Association. 
  • Articles of Association. 
  • Form 14a First Directors and Secretary. 
  • Form 14b Declaration of Compliance.

Once registration and stamp duty fees are paid, a Certificate of Incorporation is issued in two days. In addition to the registration process, businesses must have a Tax Identification Number (TIN) and apply for a business license.

Branch Registration

Foreign companies that set up a branch office in Tanzania have the benefit of easy market entry along with tax advantages based on the country’s tax treaties. 

To register a branch office, a Certificate of Compliance must be sought. A branch office in Tanzania is not an independent legal entity but does adhere to local company laws.

Business Opportunities in Tanzania

Tanzania offers strong business potential in sectors like agribusiness, mining, renewable energy, tourism, and infrastructure development. With vast natural resources, a growing population, and strategic access to East African markets, the country attracts investors in food processing, solar energy, logistics, and manufacturing.

Government initiatives and investment incentives further support foreign and local entrepreneurs seeking long-term growth in a stable and resource-rich environment.

Business Opportunity Reason
Foreign Direct Investment (FDI) Tanzania’s Investment Act simplifies conditions for local and foreign investors, offering a favorable business climate.
Natural Resources & Mining Rich in gold, tanzanite, copper, and iron ore; strong export potential and investment opportunities in the extractive sector.
Tourism & Hospitality A top African destination with attractions like the Serengeti and Mount Kilimanjaro, driving economic growth and job creation.
Trade & Market Access Strategic East African location with trade connections to China and Africa; major trade hub for imports and exports.
Government Incentives Trade and tax incentives available for new businesses, including reduced corporate tax rates and benefits in special economic zones.

With its expanding economy and untapped market potential, Tanzania presents promising opportunities for businesses ready to invest in sustainable growth. Whether you’re entering agriculture, energy, or infrastructure, aligning with local needs and regulatory frameworks is key to long-term success in this dynamic East African market.

Expand into Tanzania, with RemotePeople

Tanzania is considered a front-runner in Africa for foreign direct investment (FDI). The country’s legal business framework, including the Investment Act, simplifies conditions for local and foreign investors and offers various trade and tax incentives for expansion.  

The African country is a popular tourism destination and rich in natural resources, offering vast opportunities for growth in these sectors. In addition to lucrative business ventures, Tanzania’s location in East Africa makes it a trading hub between China and Africa. 

To pursue professional opportunities in Tanzania, why not connect with RemotePeople, the trusted employment service provider that helps businesses with seamless market entry and workforce expansion? 

RemotePeople has continued to assist client companies with hiring global teams quickly and cost-effectively. Their professional and experienced team will guide you on international hiring and establishing a global workforce. 

To learn more about expansion into Tanzania, get in touch with RemotePeople’s local business expansion experts.

Frequently Asked Questions

The main investment sectors in Tanzania include mining, tourism, agriculture, and infrastructure development, such as electrical, transportation, and digital communication. The mining sector is led by the major export of gold.

Tanzania offers an investor-friendly legal framework that encourages FDI; however, businesses must be aware of restrictions in sectors such as mining and telecommunications that involve forming joint ventures with nationals or obtaining specific licenses to operate in the country. These requirements can stall business operations.