LAND FOR INVESTORS IN TANZANIA - DERIVATIVE TITLE

The Land Act prohibits ownership of land by non-citizens unless the land is for investment purposes under the Tanzania Investment Act. A non-citizen means either a non-Tanzanian individual or a company in which majority shareholders are non-Tanzanians. Unless the foreign investor is looking to enter into a joint venture with a Tanzanian or enter into a long lease, the remaining alternative to the foreign investor is to obtain a derivative title from the Tanzania Investment Centre (the TIC).

There are two procedures for obtaining a derivative title over a land which depends on whether the land has a Granted Right of Occupancy (GRO) or the land has no GRO i.e. un-surveyed land. This summary will focus on the procedure of obtaining a derivative title over a land which has a GRO.

Derivative Title over a land with a GRO

1. Registration of the Project with the TIC – the foreign investor should register his project with the TIC by filing the necessary documents which provide detailed description of his investment. The foreign investor should include in his proposal that he will require land for his investment, clearly describe the size, preferred location etc. and may disclose to the TIC that he has identified a land which is more suitable for his project. Only projects valued at Usd. 500,000 and above can be registered at TIC if the investment is by a foreign investor or a joint venture between foreign investor and a Tanzanian. If TIC agrees with the project, it will issue a Certificate of Incentives.
2. Entering into a sale/purchase agreement - The foreign investor and the owner of the land (the Seller) will enter into a land transfer agreement which must be witnessed, preferably by an advocate.
3. Valuation Report - the foreign investor or the Seller will engage a valuer to prepare a valuation report for the land. The valuation report should be stamped by the Chief Government Valuer prior to being relied up by the foreign investor or the Seller. The Seller or the foreign investor may engage a private valuer to prepare valuation report and submit it to the Chief Government Valuer for review and stamping.
4. Payment of Capital Gains Tax and Stamp Duty – the Seller will file the valuation report, the land transfer agreement and other documents required under the law at the Tanzania Revenue Authority (TRA) which is within the area where the land is situated. TRA will assess the capital gains tax and stamp duty which is payable. Once the relevant taxes have been paid, TRA will issue a capital gains clearance certificate and stamp the land transfer agreement as proof that stamp duty has been paid. Also there is property tax which is now payable with respect to buildings which should also be paid.
5. Approval by the District Land Officer – the Seller will notify the Commissioner for Lands (the Commissioner) of his intention to transfer the GRO to the foreign investor. The Seller will file the relevant forms, the land transfer agreement (stamped by TRA), the capital gains clearance certificate, the Certificate of Incentives and other documents like identification documents, incorporation documents (if Seller and/or foreign investor is a corporate body) TIN certificate of the Seller etc. At this juncture it is critical to ensure that all land rents have been paid otherwise the transfer will not be processed. The District Land Officer will issue a Certificate of Approval of Disposition to the Seller.
6. Registration of the Transfer at the Registrar of Titles - All the documents received from TRA, the Certificate of Disposition, the relevant forms, Certificate of Incentives, valuation report, land transfer agreement (stamped by TRA), incorporation documents/identification documents will be filed at the office of Registrar of Titles. The Registrar of Titles will now issue the GRO in the name of the foreign investor.
7. Surrender of the certificate of the GRO and processing of a Derivative Right;

• Upon receiving the GRO, the foreign investor must surrender the GRO to the Commissioner. The Commissioner will prepare Land Form No.1 (Designation of Land for Investment Purposes) for gazettment for a period of 30 days. The copies of the Land Form No. 1 shall be served upon the TIC and the Authorised Land Officer located where the land is situated.
• After expiry of 30 days from the date of the gazettment, the National Land Allocation Committee (NLAC) will be convened to discuss and approve the allocation of land to the foreign investor. This Committee meets four times per annum on quarterly basis.
• Upon the approval by the NLAC, the TIC will request the Commissioner for Lands to issue an invoice for fees to finance preparation and issuance of a GRO in the name of the TIC.
• The TIC will request the foreign investor to pay the fees assessed by the Commissioner and the foreign investor shall pay the TIC an additional 10% of the fees charged by the Commissioner. The additional 10% payable to the TIC is for financing the follow up of the GRO by the TIC and preparation of a derivative title by the TIC.
• After payment of the relevant fees, the Commissioner shall proceed to prepare the GRO in the name of the TIC, submit it to the TIC for signature. After the GRO is signed, the Commissioner shall submit the GRO to Registrar of Titles who shall register the new GRO in the name of the TIC. The new GRO shall then be issued to the TIC.
• The TIC will then proceed to prepare a derivative title which shall be signed by TIC and the foreign investor. The TIC will submit the derivative title to the Registrar of Titles for Registration. After registration, the TIC will issue one copy of the derivative title to the foreign investor and retain the other copy.
• At this stage, the foreign investor has the right to occupy and use the land for investment purposes as approved by the TIC. If there is any change on the project e.g. time frames, type of investment etc. the foreign investor should notify the TIC immediately to avoid revocation of the derivative title.

Further advice should be taken before relying on the contents of this summary. I and my family shall not accept responsibility for loss occasioned to any person acting or refraining from acting as a result of material contained in this summary. No part of this summary may be used, reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, reading or otherwise without my prior written permission.

Amalia Lui,

Senior Associate,

Clyde & Co Tanzania.