Compliance issues for foreign contractors in Tanzania

The construction industry is exponentially growing in Tanzania, with both local and foreign contractors widening their tentacles to new projects sprawling across the country.

For a foreign company to perform any project or any of those construction works in Tanzania it needs to comply with regulatory laws of the construction industry, specifically registration with Contractors Registration Board [CRB].

The controlling Legislation in this regard is the Contractors Registration Act, 1997, as amended from time to time and its by-laws, Contractors Registration [Amendment] By – Laws, 2004.

A foreign contractor under the laws is defined thus: any firm or company that is registered in Tanzania and majority of its shareholders are non-Tanzanians. Thus, in reference to the registration with CRB the criteria of knowing whether or not a company or firm is foreign one has to look at the shareholding structure of the company. If a foreigner owns more than fifty per cent of the share, then such an entity will be regarded as a foreign company for the purpose of registration with CRB. The law restricts any non–citizen to form a local contracting firm/company unless he proves that majority of the shares are owned by the Citizen of Tanzania.

Before undertaking any project in Tanzania, foreign contracting firm/company is required to comply with the registration requirements with CRB. However, before registration to CRB, the foreign firm/company is required to establish its place of business in Tanzania.  This means that a company has to be registered by the Registrar of Companies at Business Registration and Licensing Authority (Brela).

After registration with Brela, secures a Taxpayer Identification Number, gets registered with the CRB, and then obtains a business licence before carrying on any business as a contractor.

There are two categories of registrations with CRB. The first is registration as a permanent establishment; the second is on a temporary basis where a foreign company is registered for the purpose of completing/undertaking a particular project only.

In this article I will cover the compliance matters relating to registration of a foreign company for a temporary basis/for carrying a special task only for a specified time.

To register with CRB the foreign contracting firm is required to fulfill the following requirements: (i) a dully filled application form [CRB – F2]; (ii) company profile explaining the capacity of the firm/company and its technical qualification; (iii) Certified copy of the memorandum and articles of association of the company from the country of origin and if the same is not in English a translation of the same shall be accompanied with; (iii) Curriculum vitae of the shareholders/partners; (iv) Curriculum vitae of key personnel these personnel must have a corresponding qualification and experience with the project they are about to undertake; (v) a dully signed anti-bribery pledge showing that they will not engage in any bribery activities and they will fully comply with the registration conditions; (vi) a signed affidavit that shows the company shall not engage in any other project after a completion of the project  for which they sought registration; and, (vii)  and a letter of acceptance from the client this can also be a contract signed between the client and the contractor. The CRB may request for additional documentation or information as she deems fit.

Once the form dully filled and the accompanying documents are submitted CRB will examine the forms and attachments. If  found the application has fulfilled all the requirements CRB will proceed with issuance of a letter showing that the application has fulfilled all the requirements and the applicant should proceed with payment of the registration fees and annual fees for the year of registration.

Obtaining a go ahead letter will not prove registration of the company/project, therefore, before payment of the prescribed fees and issuance of certificate of registration the applicant is not allowed to undertake any construction work at the site until it gets a letter from CRB informing it of the registration and allowing the company to carry on with the proposed works.

Getting registered and being allowed to carry on with the proposed work is not the end of compliance with CRB for a foreign construction company. The law requires the company to, immediately after being awarded or obtaining an offer to perform construction work within 14 days, register the project with CRB and be issued with a project registration sticker with CRB logo and unique serial number.

The sticker is required to be displayed on the project site. Failure to register a project attracts a penalty that will be determined by CRB depending on the value of the project the defaulting part is undertaking. In case the contractor is undertaking a project that has multiple locations for example road works, the contractor is required to paint the CRB – Project registration sticker on each of the project signboard.

Lastly, the contractor is required to notify CRB of any cancellation, renewal or completion of the project within 21 days from the date the contractor is issued with cancellation, renewal or completion certificate.  It is an offence for any contractor to: a) execute any project without registration with CRB; b) execute a project without affixing a sticker on the signboard; or c) failure to inform CRB on the completion or termination of the project. Commission of the above offence attracts a penalty of 1 per cent of the contract/project value or Sh500,000 whichever is greater.

Stanley Mabiti is an Advocate at NexLaw Advocates

CORRECTION

In this space last week, we erroneously attributed the article titled ‘The essence of regulating broadcasting services’ to Juma Mwapachu. The piece was written by Dr Saudin Mwakaje. The error is regretted.

The Editor