How does the law of Tanzania address the issue of repatriation of profits?

The law of Tanzania addresses the issue of repatriation of profits through the Foreign Exchange Act, which governs the repatriation of profits and dividends by foreign investors. According to the Act, foreign investors are allowed to repatriate profits and dividends earned from their investments in Tanzania, subject to certain conditions and regulations.

Foreign investors are required to obtain approval from the Bank of Tanzania before repatriating profits and dividends. The approval process involves submitting relevant documents, such as audited financial statements, to the Bank of Tanzania for review. Once the approval is granted, foreign investors can repatriate their profits and dividends through authorized dealers, such as commercial banks.

Additionally, the Foreign Exchange Act sets limits on the amount of profits and dividends that can be repatriated by foreign investors. The Act also requires foreign investors to pay any applicable taxes on their repatriated profits and dividends.

Overall, the law of Tanzania aims to strike a balance between attracting foreign investment and ensuring that the country's economy benefits from such investments. By regulating the repatriation of profits and dividends, the law seeks to protect the interests of both foreign investors and the Tanzanian economy.

Repatriation of Profits in Tanzania

Foreign Investment (Protection and Promotion) Act, 2017 (FIPA)

- Article 15: Foreign investors have the right to freely remit profits, dividends, and other returns on investment outside Tanzania.
- Article 16: Remittances must be made through authorized dealers licensed by the Bank of Tanzania.
- Article 17: Taxes on remitted profits are governed by the Income Tax Act.

Income Tax Act, Cap. 332

- Section 16(2): Withholding tax is imposed on dividends and interest paid to non-residents at a rate of 10%.
- Section 17: Foreign investors may claim a refund of withholding tax if they can demonstrate that the dividend or interest has been subjected to tax in their home country.
- Section 34: Losses incurred by a foreign investor may be carried forward indefinitely and offset against future profits.

Other Relevant Laws:

- Foreign Exchange Act, 1995: Regulates the foreign exchange market and requires authorized dealers to obtain approval from the Bank of Tanzania for all foreign exchange transactions.
- Exchange Control Regulations, 2019: Sets out specific requirements for the repatriation of profits.

Additional Considerations:

- Tanzania does not have any restrictions on the amount of profits that can be repatriated.
- The Tanzanian government may impose additional conditions or limitations on repatriation in certain circumstances, such as during periods of foreign exchange shortages.
- Foreign investors are advised to consult with authorized dealers and legal advisors to ensure compliance with the relevant laws and regulations.

Benefits for Foreign Investors:

- The FIPA provides clear legal protection for the repatriation of profits.
- The Income Tax Act allows for the refund of withholding tax and the carryforward of losses.
- Tanzania's foreign exchange market is relatively liberalized, allowing for easy repatriation of profits.