To
a Lay person the obtaining of Company’s Certificate of Incorporation seems to
be the last step before the final take off of the Company’s Business. Corporate
Lawyers know this being untrue and in most cases their deeper involvement on
Company’s affairs seems like an act to squeeze more cash from their Clients.
This
Article aims at a practical approach after the incorporation of the Company on
which most cases is the duty of the Company Secretary to ensure the Company
complies with all requirements before commencing the day to day business of the
Company.
The
Following are mandatory requirements that every Company Secretary appointed at
the very first beginning prior the incorporation of the Company needs to be
familiar with when taking the position;
1st Step:
Company’s Taxpayer’s Identification Number (TIN)
The
Income Tax Act provides two categories of TIN, one is TIN for Individuals which
is subdivided into two groups, one being Individual TIN for Licences Purpose
(Driving Licence) and the Other is Individual TIN for Business Purpose (Sole
Proprietorship Business Undertakings), on the other hand, the second category
is TIN for Corporate entities.
Our
focus here is mainly on “Corporate TIN”
as the title suggests. Though there are no direct fees involved in obtaining
the same (No Fees), indirect costs are inevitable at this point. The normal
procedure at the TRA is that one fills in Form
ITX100.01.B available at the TRA official website www.tra.go.tz
or at their many branch offices National wide.
The
Form is to detail all information of the newly incorporated Company including
its physical address that is, its actual business premises. Information
regarding its Directors and the actual date/expected date for the commencement
of the Company’s business must be provided as well.
It
should be noted that all Directors of the Company regardless the number must
fill as well specific forms detailing their particulars and other relevant
information for the issuance of the Company’s TIN.
After
the undertaking above, the Company needs to fill in Form ITX202.01.E which is a Statement of Estimate for the Company
on its expected yearly/annual income. The mainly purpose of the annual estimate is
one thing only, deriving the Corporate tax expected to be met by the Company on
its Fiscal year.
At
the moment, Corporate Tax is at 30%
of the total Company’s Income and 25%
for a company that is already incorporated and has been listed at the Dar es
Salaam Stock exchange.
After
the filling in and submission of the same, an estimated corporate tax is
derived thereinafter and the amount derived after assessment by a Tax officer
must be paid in quarterly instalments, that are, 31st of March, 30th June, 30th
September and 31st December of the Company’s Business year (It
should be noted that, In cases whereby the Company fails to meet the estimated
target or exceeds the estimated sum, the Company shall fill amended Estimate
relevant forms and account for the amount not met/exceeded the estimated amount
on the following accounting/Business year).
After
the successful payment of a quarterly estimated corporate tax, it is the
responsibility of the Company Secretary to submit all relevant documents prior
the issuance of the Company’s TIN which documents includes but not limited to;
§ Company’s
Memorandum and Articles of Association;
§ Lease
Agreement regarding the Company’s place of business or any other proof of
ownership of Business Premises;
§ A
Letter from the Local Government recognizing the place of Business of the
Company;
§ Directors
photographs and Passport or other form of Identification; and
§ Company’s
Certificate of Incorporation.
Lastly but not least, is a Tax Clearance Certificate which is
issued only to entities that have paid for and complied with all requirements,
including payment of Withholding Tax
and Stamp Duty in respect of the
Company’s Lease Agreement. Withholding Tax is currently at 10% while Stamp Duty
is at 1%.
Therefore, for instance, Lease
Agreement purporting a rent payment of TZS 100, 000/- per month equals to TZS
1,200,000/- annually, in that regard, 10% of the annual rent being Tax Withheld
equals TZS 120,000/- and when we derive an additional 1% from the 10% we find
the stamp duty to be paid at TZS 12,000/-
The Bottom line is, in order to obtain
corporate TIN and Tax Clearance Certificate one has to ensure payments are made
in respect of;
§ Quarterly
estimated Corporate Income Tax; and
§ Withholding
Tax and Stamp Duty in respect of Lease Agreement in relation to Company’s
Business Premises.
2nd
Step: Obtaining Business Licence
All Steps flow down on a hierarchy on
which a present step (Process) acts as a stepping stone of the next. In that
order, obtaining a Business Licence one must first obtain Company’s TIN and Tax
Clearance Certificate.
In light of the above, the following
are mandatory documents when applying for a Business Licence;
§ Company’s
Memorandum and Articles of Association;
§ Company’s
TIN Certificate;
§ Company’s
Tax Clearance Certificate;
§ Lease
Agreement regarding the Company’s place of business or any other proof of
ownership of Business Premises;
§ A
Letter from the Local Government recognizing the place of Business of the
Company on that particular area;
§ Directors
photographs and Passport or other form of Identification; and
§ Company’s
Certificate of Incorporation.
Upon Submission of the Business
Licence Application Forms together with all accompanying documents and upon
payment of relevant fees for the same depending on the Business Licence Class
applied for and depending on the issuing authority (i.e. Some Licences are
issued at the District’s Municipal Councils while others are issued by the
Ministry of Industries and Trade) one obtains a Business Licence.
A point of Note, TIN applications as
well as Business applications are done at Regional Level on a Particular
district on which the Company conducts its Business. For Instance, A Company
with Business Premises in Kinondoni District must apply for TIN at a TRA Branch
within Kinondoni Municipality, same as Business Licence at the Kinondoni
Municipal Council unless the Business Licence applied for is issued only by the
Ministry.
3rd
Step: Opening of Company’s Bank Account.
In today’s World, having a bank
account is not only inevitable but it is a reality that a Company cannot
survive without it. The Company Bank Account will enable all transactions
connected to the Company’s Business to go smoothly and it will enable the
Company to discharge its obligations towards its employees and staffs (For
Instance, Salary Payments).
In that sense, having a Bank account
is not only crucial in the Corporate World but is an essential requisite for
running the Company’s day to day Business affairs.
In order to open the Company’s Bank
Account the following are its requirements though they may vary depending on a
Bank (Financial Institution) involved, nevertheless these are the basics;
§ Company’s
Certificate of Incorporation;
§ Company’s
TIN;
§ Tax
Clearance Certificate;
§ Business
Licence(s) (If the Company does more than one Business/General Commercial
Company);
§ An
Introduction Letter with details of the Signatories of the Bank Account; and
§ Directors’
ID and Photographs.
4th
Step: Employment and Labour Relation Documents (Employment Contracts)
Every Employer must formulate
employment Contracts, this will guide its relation with its employees as well
as other Labour Statutorily Compliances. As one of the Final steps, Employment
Contracts are to be prepared in compliance with the Employment and Labour
Relation Laws of Tanzania.
In additional to that, The Company as an
Employer must formulate its Employment Policies and HIV/AIDs policy which must
be registered at the Labour Commission leave alone other Employment
requirements which are mandatory as per the Law (i.e. Social Security Funds,
for example the NSSF and the like)
5th
Step: Doing the Company’s Business
After the successful completion of all
steps above, the company can now conduct its business as permitted by its
Memorandum and Articles of Association.
This marks the end of Company’s Secretary to do List after
the successful incorporation of the Company. However other responsibilities
stipulated on the Company’s Memorandum and Articles of Association should not
be forgotten.
Amongst other duties of the Company
Secretary is the filing of Company’s Annual Returns (Form No 128), Renewing the
Company’s Business Licences, Attending Company’s Meetings and taking minutes of
the same, Filling in and Signing Forms of appointments and termination of
individuals for the Company and ensuring payments of all taxes and meeting all
legal compliances and any other are other duties/responsibilities of a Company
Secretary.
Prepared by:
Oscar Oswald M.
