TRENDS AND IMPACTS OF FOREIGN INVESTMENT IN DEVELOPING COUNTRY AGRICULTURE

is no maximum set for the number of foreign
nationals working on a particular project, they
are more likely to be granted working permits
where it can be shown that the required
expertise cannot be found locally. 46 The
Certificate also confers benefits such as ease
of obtaining residence and work permits, and
industrial and trading licenses. Land rent on
commercial agricultural farms, livestock ranches
and forests is set at a nominal fee of 200 Tshs.
per acre annually. Furthermore, it also grants the
right to transfer out of the United Republic of
Tanzania the entire amount of profit, capital and
foreign exchange earned; royalty fees and similar
charges; and payment of emolument and other
benefits to foreign personnel. 47 It should be
noted that capital transfers still require approval
by the Bank of Tanzania. 48
The Certificate of Incentives provides investors
with tax exemptions, particularly import duties
and certain VAT exemptions on project, capital
and deemed capital goods; 49 capital expenditure
allowances; a special rate of corporation tax set
at 30 percent, a withholding tax rate on dividends
set at 10 percent and zero tax on loan interest in
the priority sectors. 50 The Investment Act makes
provisions for additional benefits and incentives in
order to promote ‘strategic or major investment’
projects of over US$20 million, determined at
the discretion of the minister for those that are
considered to be strategic to the economy.
A problematic clause has been identified
in the Tax Revenues Appeals Act 2000 section
12(3) which declares that where a person
46 ‘An Investment Guide to Tanzania: Opportunities and
Conditions’, United Nations Conference on Trade and
Development (UNCTAD) and International Chamber of
Commerce (2005).
47 http://www.tic.co.tz
48 SADC Trade, Industry, and Investment Review 2006.
Country Profiles - Tanzania, available at http://www.
sadcreview.com/country_profiles/frprofiles.htm
49 http://www.tic.co.tz
50 MkonoN and Wilms BJ, ‘Gateway to Foreign Investments
in Tanzania’, Mkono and Co Advocates, Dar-es-Salaam
http://www.iflr.com/?Page=10&PUBID=33&ISS=20856&SI
D=595031&TYPE=20
Part 3: Policies for attracting FDI and impacts
on national economic development
objects to a tax assessment, the amount which
is not in dispute or one third of the assessed tax
(whichever is greater) must be paid. This has been
noted to give rise to a sense of unpredictability,
and restrains cash flows, together with claims
that unsubstantiated tax assessments are made
to meet revenue targets and do not reflect the
income of the businesses that are assessed. 51 In
this regard, there have been recommendations
for a clear and simple tax appeals process, which
indicates clear timeframes for each stage, to avoid
abuse of the system through stalled payments,
and with payments made only for undisputed
assessments. 52
In Zanzibar, incentives under the 1986
Investment Act charge zero duty for capital goods
during the beginning stages of operation of the
business, although a service charge of 5 percent
is still levied. For the first five years, tax holidays
are granted at the discretion of the responsible
minister.
The United Republic of Tanzania has signed
a number of bilateral treaties which promote
FDI by preventing double taxation with Canada,
Denmark, Finland, India, Italy, Norway, Sweden,
United Kingdom and Zambia, and with pending
treaties subject to ratification with Kenya, South
Africa, Republic of Korea, Uganda and Zimbabwe.
While an EAC double taxation treaty was signed
in 1997, the absence of ratification on the part
of Uganda poses an impediment to intra-regional
transactions, raising the tax rate by 50 percent. 53
6.2 Export Processing Zones
Programme
Frequently, EPZs are used to attract FDI in
countries where infrastructure is a challenge;
industrial parks are then developed separately
51 Blue Book on Best Practice in Investment Promotion and
Facilitation – Tanzania, United Nations Conference on
Trade and Development (UNCTAD) and Japanese Bank
for International Cooperation (JBIC) 2005.
52 Ibid.
53 Blue Book on Best Practice in Investment Promotion and
Facilitation – Tanzania, United Nations Conference on
Trade and Development (UNCTAD) and Japanese Bank
for International Cooperation (JBIC) 2005.
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