Are the current business licence fees legal?

The business community has been complaining against business licence fees which were re-introduced by the government in July last year. When I visited the website of TCCIA in mid March this year I found the following words: “Tanzania Chamber of Commerce, Industry & Agriculture (TCCIA) has introduced a New Mobile system of collecting views from the Business Community concerning the re-introduction of business licence fee. Speaking with journalists, TCCIA President Eng. Peter Chisawillo said the move follows complaints from businesspersons over the move which was effected since July, last year which the government has done without consulting the private sector.” Apart from the TCCIA website, I have heard people complain about the fees rates, the life span of the licences issued, multiple licences required for companies having more than one place of business in the country etc. The said complaints are what prompted me to do my own research, the finding of which I want to share with you today.

At the outset, I would like every reader to know that in the course of my research I noted that the legality of the licence fees is questionable and leaves a number of questions unanswered. I am not talking about the lack of consultation which TCCIA complained of; it is about the substantive law which regulates business licences and which introduced the fees.

To appreciate the legality of the current business licence fees, I started reading a notice to the general public which was published by the Ministry of Industry and Trade in Mwananchi newspaper dated July 29, 2013, informing the business community of the re-introduction of the business licence fees effective from July 1, 2013. The Public Notice cites the Business Licensing Act No. 25 of 1972 (the 1972 law) together with the Finance Act, 2011 as the basis of reintroducing the fees, but reading the Finance Act, 2011 there is no mention of the 1972 law. The Finance Act, 2011 amends, among other laws, the Business Activities Registration Act, 2007 (the 2007 law). I will explain what is confusing or may be wrong about this situation.

It is important to remind each other that the Business Licensing Act No 25 of 1972 ( the 1972 law) was assented to by the President on 18th August 1972, and became operational on 1st September 1972 and was amended from time to time. The 1972 law has a fee schedule made under section 8 for various categories of licences. Section 8 of the 1972 law was amended by section 5 of the Finance Act, 2004 whereby the fees were abolished to any business whose turnover was less than twenty million per year. Also the licence fees were abolished to all businesses which were being regulated under other laws which required those businesses to be licensed under those other laws. The fee of twenty thousand shillings was payable by businesses whose turnover was twenty million or more per year.

In the year 2007 a new legislation was enacted, that is the Business Activities Registration Act, 2007 (the 2007 law) which was assented to by the President on 30th March 2007. To be operational, section 1 of this new law requires the minister to publish in the gazette the date of operation. Personally and despite efforts, I have failed to get the notice of the minister which may have made the law to be operational; this makes me assume that the 2007 law is not yet operational.

The connection between the Business Activities Registration Act, 2007 (the 2007 law) and the Business Licensing Act No 25 of 1972 (the 1972 law) is that section 31 of the 2007 law repeals (abolishes, annuls or revokes) the 1972 law. That being the case, if the 2007 law at some point became operational it means that the 1972 law is a repealed law and therefore, it is illegal for the current licence fees to be found under the repealed law; that is the first scenario. The second scenario is that if it is true that the 2007 law has never been operational, it means the 1972 law is still operational. However, it is still illegal to charge fees based on the 1972 law because under that law the fees were abolished by the Finance Act, 2004 and no other Finance Act has re-introduced licence fees under the 1972 law. This also means the public notice of the Ministry of Industry and Trade dated July 29, 2013 is not correct to refer to the 1972 law

Another confusing situation is found under the 2007 law. As I pointed out above, the 2007 law is not yet in force, but the Finance Act, 2011 which re-introduced the current fees amends this law! Part II of the Finance Act, 2011 provides for the Amendment of the Business Activities Registration Act, 2007 (the 2007 law) and the fees are introduced under section 4 by repealing and replacing section 15 of the 2007 law. In my view, assuming the Finance Act 2011 is the proper law to re-introduce the fees, still the Finance Act 2011 introduced the fees by amending the law which has never been in force and therefore the fees arising under that law are also illegal as the underlying law is not operational.

On the other hand, assuming the 2007 law is in force, still that law has not specified any fees. What section 15 (4) as amended by the Finance Act 2011 does, is to require the local government authorities to make by-laws for the imposition of the fees upon consultation with the minister responsible for trade and with the approval of the minister responsible for finance. Are there by- laws in place? Again, I have not seen any by-law under the 2007 law, but what I have seen and which is being used by licensing organs is a fee schedule (just a table) titled “Regulations to the Application of Business Registration Act, Miscellaneous Amendment 2011-First Schedule: Business Licences Fees.” You may wish to note that first; there is no law or regulation under that title, secondly, the fee schedule is a replica of the fee schedule made under section 8 of the 1972 law as amended by the Finance Act No. 18 of 2002 which as pointed above was abolished in the year 2004. Third, the Finance Act 2011 is about licence fees which are to be imposed by local governments, but as it is, the central government is also charging fees for licences of national character.

Based on the above, I am convinced that the fees that have raised complaints are not backed by any law, and for that reason are illegal. This situation is appalling because some of the fees charged are huge, for example some businesses are required to pay $20,000 (Sh34,400,000) per year for a principal place of business and $10,000 for a subsidiary place (branch); mind you the same company may have paid registration fees of $26,000 at the Contractors Registration Board and a substantial fee at the Engineers Registration Board.

I therefore do call upon the government to rectify this anomaly and regularise the charging of licence fees. If possible the government should consider reimbursing persons who have paid the fees without any legal obligation.

The government should suspend charging licensing fees pending rectification of the anomaly. I think the government had good reasons to abolish the fees. There is no point in slapping start-up companies or new businesses with such fees as some of them are huge and an obstacle to doing or establishing businesses in Tanzania.

To make matters worse, the said fees are imposed inconsistently, adding the much dreaded uncertainty in the business environment in Tanzania.