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January 18, 2023
2023-0114

Companies incorporated in Tanzania Mainland are no longer required to register a subsidiary company in Zanzibar

  • Companies incorporated in Tanzania Mainland with a place of business in Zanzibar are no longer required to incorporate a subsidiary company in Zanzibar.
  • Companies incorporated in Tanzania Mainland with a place of business in Zanzibar can either incorporate a local company or register a branch in Zanzibar.
  • The requirement is abolished through the Zanzibar Written Laws (Miscellaneous Amendments) Act, 2022.

Executive summary

On 22 December 2022, the President of Zanzibar assented to the Written Laws (Miscellaneous Amendments) Act, 2022 that amended various laws that apply to Zanzibar.

The Act amended the Companies Act, 2013 by removing the requirement for companies incorporated in Tanzania Mainland with a place of business in Zanzibar to register a subsidiary company in Zanzibar.

Detailed discussion

Prior to 2021, Tanzania Mainland companies with operations in Zanzibar would either set up a branch or incorporate a company in Zanzibar.

In 2021, Zanzibar introduced a requirement for registration of a foreign subsidiary company by all companies incorporated in Tanzania Mainland with a place of business in Zanzibar. The amendment was introduced through the Finance (Public Revenue Management) Act, 2021 that introduced Section 238(3) of the Companies Act, 2013 of Zanzibar. Through this amendment, a company incorporated in Tanzania Mainland was not permitted to set up a branch upon establishing a place of business in Zanzibar but rather incorporate a subsidiary company in Zanzibar.

The requirement was abolished through the Written Laws (Miscellaneous Amendments) Act, 2022 that repealed Section 238 (3) of the Companies Act, 2013 of Zanzibar.

Therefore, companies incorporated in Tanzania Mainland are no longer required to register a foreign subsidiary company upon establishing a place of business in Zanzibar. Such companies can operate through incorporating a local company in Zanzibar or setting up a branch in Zanzibar.

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For additional information with respect to this Alert, please contact the following:

Ernst & Young (Tanzania), Dar es Salaam

Ernst & Young Société d'Avocats, Pan African Tax — Transfer Pricing Desk, Paris

Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London

Ernst & Young LLP (United States), Pan African Tax Desk, New York

 

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