Why Tanzania firms are in a race against time

Dar es Salaam. Tanzanian companies are running short of time to comply with regulations which require them to reveal the identity of their beneficial owners.

By December 31, 2021, the firms are required to have registered with the Business Registration and Licensing Agency (Brela) persons who either directly or indirectly have substantial control, economic interest or any other economic benefit in the entities.

The Finance Act 2020 amended the Anti-Money Laundering Act, the Companies Act, and the Trustees Incorporation Act to introduce new reporting requirements in respect of beneficial owners, to be filed for companies (with the Registrar of Companies) and for trusts (with the Administrator General).

The stated purpose was to ensure access to accurate and up-to-date records of beneficial owners of legal entities for information required, among other things, for tax purposes, control of anti-money laundering, and terrorism financing.

Failure to comply with the beneficial ownership filings amounts to an offense under the regulations which attracts a fine of between Sh5 million and Sh10 million.

This step follows the enactment of the Finance Act (No. 8 of 2020) that came with a significant amendment to the Companies Act (Cap. 212), and introduction of the Companies (Beneficial Ownership) Regulations of 2020.

The amendment made it a requirement for companies to file details of their beneficial owners with the Registrar of Companies by January 1, 2021. However, that was extended to Dec. 31, 2021.

This, reports say, was by virtue of the company’s notice that was published on February 12, 2021.

The required information can be filed online through the Business Registration and Licensing Agency (Brela) portal. “Of course, we have to comply because the period was extended, a situation that gave us room to digest the changes,” said a manager who preferred anonymity of both himself and his company.

He said that, although the ownership of the company remains a secret of the company itself in many countries - and, as long as the company respected the requirements of the law, including paying taxes - they have agreed to do so as it is one way to identify loopholes for personal tax evasion.

“We do not have to follow other countries, as Tanzania comes with decisions depending on the context and circumstances that existed before these decisions were made. Basically, the companies have to make sure they comply - and move forward,” he told The Citizen by phone yesterday.

About the development, information required to be filed includes completed statutory forms for the filing of beneficial ownership information, as well as details of the beneficial owner’s identity, passport details, work address and designation.

It also must disclose whether the person is a politically-exposed person - and, if yes, then a declaration to support same, the date when the person became a beneficial owner, as well as the nature of ownership or control the beneficial owner has in the company; percentage of shares, and percentage of voting rights.

Yusuf Mpanji, a lawyer based in Dar es Salaam, said that since the amendment and time extension had been approved, he did not expect to see any company being fined for delaying compliance.

“It is not a bad move, as there are so many people who may be owning big businesses but do not pay taxes... Or even company owners being anonymous; this is a danger to the nation. This is a big step and I believe there has been enough time for the companies to comply,” said Mr Mpanji.