The Tanzanian Ministry for Mineral Resources is the sole regulator of all mining-related activities in Tanzania. There is a special commission charged with issuing licenses authorizing extraction of precious metals in Tanzania. Though it is the commission’s exclusive prerogative to issue mining licenses in Tanzania, some regional mining departments are authorized to do that as well.
Types of Mining Licenses in the State of Tanzania
The Law “On Extraction of Minerals” has no provision regulating exploration rights, which is why an exploration license is required. However, surveyance works can also be carried out after obtaining a license authorizing extraction of precious metals in the state of Tanzania. If you want to obtain a mining permit in Tanzania, you should keep in mind that there’s four categories of licenses authorizing mining activities:
- special mining licenses (SML)
- standard mining licenses (ML)
- precious stones mining licenses (GML)
- basic mining licenses (PML)
Oil & Gas Production in Tanzania
The main regulatory act governing the exploration and production of oil and gas in Tanzania is the Law on Oil, which regulates all activities related to oil extraction.
Under the law, the National Oil Company (NOC) has the exclusive rights, including licenses, for activities related to oil production and refining. However, these licenses are not transferable.
Those considering to obtain a license authorizing oil extraction in Tanzania should keep in mind that private individuals can apply for:
- Partnership with NOC. The NOC may form partnerships with Tanzanian or non-Tanzanian entities through an open bidding process. In this case, NOC must retain at least 25% interest in any JV.
- Сonclusion of contracts. This is possible only after a transparent & competitive public bidding process is completed.
In addition, companies or individuals seeking to conduct surveying must obtain a survey permit from PURA.
In addition to the restriction on obtaining a basic mining license in the state of Tanzania (PML) & a precious stone mining license (GML) for foreigners, there’s a requirement whereby Tanzanian companies must be ensured at least a 5% stake in foreign companies. To meet this requirement, foreign companies must obtain a mining license (ML). Shares of Tanzanian companies cannot get transferred to non-domestic entities.
Except for the above rules & limitations, no other special regulations exist which apply to obtaining mining licenses in the state of Tanzania by foreign individuals, both physical and legal.
Is the Government Allowed to Partake in Mining-Related Projects?
Under mining legislation, the Tanzanian government is to have a 16% stake in mining companies, which depends on mineral types & investment level.
Processing of Minerals
According to Tanzanian legislation, license holders must allocate some minerals for local processing.
There is a limit on export of raw minerals & concentrates of minerals. For this reason, mining companies in the state of Tanzania must apply for a license authorizing export of raw minerals in the state of Tanzania. Tanzanian law also prohibits the sale, disposal, or export of any unprocessed gold or precious stones, the sole exception being companies having license authorizing dealer activities in the state of Tanzania.
Export and import of any radioactive minerals is to be done according to the Atomic Energy Act. However, holders of licenses authorizing extraction of minerals in the state of Tanzania are not required to have the said license to get permission for export of precious metals from Tanzania.
Alienation of Rights & Controlling Interest
Those planning on registering a mining company in the state of Tanzania should keep in mind that SML or ML license holders can assign their rights to others without securing written consent of licensing authorities. Consent of licensing authorities is not required for assigning rights to affiliates if the obligations of the affiliate are guaranteed by a parent company approved by licensing authorities, bank or other financial institution. A guarantee like this can be provided in the form of a mortgage or a fee provided as a security for any loan or guarantee with regard to mining-related operations in Africa.
Companies having a license authorizing mining activities in Tanzania can only transfer their shares after securing consent of licensing authorities. Such consent must be secured only if their recipient acquires control over a company.
Taxation and Royalties
There’s a special tax regimen for mining companies in the state of Tanzania, namely:
- USD Those seeking to register a mining company in the state of Tanzania & using the US dollar for financial statements should keep in mind that their tax liabilities will also be calculated in US dollars;
- Corporate income tax. It does not exceed 30%. The company's income is calculated as per current legislation;
- Deducting of depreciation. Depreciation will be deducted from exploration & development of mineral resources;
- Dividend tax. The dividend tax rate in the state of Tanzania is equivalent to 10%;
- Tax on payment of technical and management services. In this case, we are talking about a 5% tax rate for residents and 15% for non-residents;
- Customs duties. No customs duties are levied on import of mining equipment during the exploration period & within the first 12 months this equipments is used. Following that period the rate doesn’t exceed 5 percent;
- Value added tax. To date, special VAT incentives have been limited only to activities connected to exploration of mineral resources. Holders of SML licenses can conclude an agreement with the Tanzanian government whereby tax regime existing at the date of conclusion of the agreement is frozen.
Individuals planning on obtaining a mining license in Tanzania should remember about royalties accrued on gross residual value of minerals mined under a license. They include 5% for uranium, precious stones, diamonds and 6% for metals, including gold and other minerals, respectively.
Seeking to get a mining and export license in Africa? Leed legal advice on mining regulations in Tanzania? IQ Decision UK can provide you with professional advice on this matter, including legal support at all stages of obtaining a mining permit in Tanzania.