1.0 Introduction
On 26th June 2024, the Written Laws (Miscellaneous Amendments) Act No. 2 of 2024, hereinafter referred to as the ‘Bill,’ was published and ready to be tabled before the National Assembly. The Bill represents a significant shift in Tanzania’s land ownership and immigration policies by proposing to introduce significant changes in the Land Act [Cap. 113 R.E 2019] and the Immigration Act, [- Cap 54 R.E 2016]. The amendments aim to allow non-citizen individuals of Tanzanian origin or former citizens of Tanzania hereinafter to be referred to as “Diaspora” and corporate entities with shareholders of Tanzanian origin to own land in Tanzania without necessarily going through the Tanzania Investment Centre (TIC) or Export Processing Zones Authority (EPZA), where there are capital threshold requirements and other conditions imposed.
The bill appears to address the long cry and demands by Tanzanian-origin diasporas who wanted to invest and live in Tanzania by enabling Tanzanian non-citizen diaspora individuals and entities to own land directly by special derivatives. Further to facilitate diaspora stay and activities the bill proposes to introduce a Special Status for diaspora to be granted via the Diaspora Tanzanite Card. Below is a deep analysis of the proposed changes.
2.0 Current Land Ownership and Immigration Restrictions
Currently, under the Land Act, non-citizens are generally prohibited from owning land in Tanzania. The sole exception is through a derivative right granted by the Tanzania Investment Center (TIC) or Export Processing Zones Authority (EPZA), subject to the terms and conditions under the Tanzania Investment Act or Export Processing Zones Act. The Land Act explicitly states that non-citizens shall not be allocated or granted land unless it is for investment purposes. This restriction limits land ownership to Tanzanian citizens only, a policy that has for decades posed significant barriers to foreign investors of Tanzanian origin and foreign investments in the country.
3.0 Proposed Changes in the Land Act
The Bill proposes amendments to sections 2 and 19 of the Land Act, by adding a definition of “Special Derivative Right” in the interpretation section. According to the Bill, Special Derivative Right is defined to mean; the “right to occupy and use land granted by the commission pursuant to section 19(1A) and includes a lease, sublease, licence, usufructuary right and any interest analogous to those interests.
On the other hand, the Land Act defines “Derivative Right” as a right to occupy and use land created from a right of occupancy, including leases, sub-leases, licenses, usufructuary rights, and analogous interests. It is through derivative rights, that foreign investors can occupy land in Tanzania, granted under the Tanzania Investment Act after the Commissioner for Lands designates the land for investment.
The Bill outlines the essence and operation of the Special Derivative Right under section 19(1A), which significantly allows non-citizen diaspora individuals holding a Diaspora Tanzanite Card granted under the Immigration Act, or companies with majority shareholders of Tanzanian origin holding such a Card, to obtain the right. This grant is subject to an application process and the conditions stated in the Land Act. The grant applies to both General and Village land.
4.0 Current Land Ownership and Immigration Restrictions
On the other hand, the Immigration Act, the principal legislation providing for control of immigration into Tanzania and Immigration (Amendment) Regulations GN No. 428 of 2023 allow the stay of non-citizens in the country through resident permits, visas or special passes. Under the current law, Tanzania Diaspora were treated as pure foreigners.
5.0 Proposed Changes in the Immigration Act
The Bill proposes significant amendments to the Immigration Act, introducing special permits and statuses to facilitate stay and various transactions of Tanzania’s non-citizen diaspora in Tanzania. Key additions include the “Diaspora Tanzanite Card or Card,” “Special Status,” and the classification of Tanzanian non-citizen diaspora.
Notably, Section 16 of the Bill amends section 3 of the Immigration Act to include the definition of;
“Diaspora Tanzanite Card or Card,” which refers to “a valid card issued under this Act to a Tanzania non-citizen diaspora after being granted a special status.” Whereas the amended section 3 of the Immigration Act defines
“Special Status” is “a status granted to Tanzanian non-citizen diaspora, allowing them to enter and exit Tanzania.”
A Tanzanian non-citizen diaspora is defined as a person who was formerly a citizen of Tanzania (other than by naturalization), or whose parent, grandparent, or other ancestor was a Tanzanian citizen.
To qualify for Special Status, an applicant must meet several criteria:
- Be a Tanzanian non-citizen diaspora
- Observe national ethos, traditions, customs, and cultural values
- Not be a fugitive or convicted of offences related to money laundering, economic and organized crimes, or other transnational crimes
- Hold a valid passport or travel document
- Exhibit good moral character
- Comply with other regulatory requirements
It is worth noting that, in exceptional circumstances, Special Status may also be granted to individuals with rare, unique, or noble professions, talents, or skills deemed significant to Tanzania. Those granted Special Status will receive a Diaspora Tanzanite Card or Card, which is valid for ten years and renewable.
6.0 Critical analysis of the proposed amendments.
The proposed amendments, upon critical analysis, do not eliminate the general restrictions on land ownership by foreigners in both the Land Act and the Immigration Act. Instead, they specifically cater to the interests of Tanzanian non-citizens in the diaspora who have familial ties and are of Tanzanian origin. It is imperative to note that Tanzanian non-citizens are legally classified as foreigners under the Citizenship Act, meaning they are not recognized as citizens, as the acquisition of Tanzanian citizenship through naturalization requires renouncing previous nationalities.
Furthermore, the Bill does not clarify whether the special derivative right granted to non-citizen diaspora individuals must be for which purpose either investment purposes only or residential purposes or both. Specifying this condition in the Bill could significantly influence the scale of investments, rather than leaving ownership conditions ambiguous or unknown. Additionally, Tanzanian diaspora individuals are classified as foreigners under Tanzanian law, necessitating that their land ownership be strictly for investment purposes in accordance with Tanzanian land policies and laws.
Moreover, the Bill states that applications for the special derivative right on both Village and General land will be processed by the Commissioner for Land. However, under the Village Land Act [Cap. 114 R.E 2019], the responsibility for managing village land lies with the Village Council, with the Commissioner for Lands serving as an advisor on land matters. The Bill also states that an application for a special derivative right shall be in a prescribed form, which is currently not provided but may be addressed in forthcoming regulations. Presently, the Land Regulations (GN. No. 71 of 2001) provide application forms for “Right of Occupancy” (Form 19 under Section 25) and “Derivative Right” (Form 56 under Section 20 granted by the TIC. Should the application process align with existing Land Regulations, particularly Form 25, then applicants must comply with Section 25 conditions, which require non-citizens or foreign companies to obtain a “Certificate of Approval” from the TIC. The certificate confirms that the derivative right is intended for investment purposes, even if the application is for residential use.
Furthermore, despite addressing several issues, the Bill leaves many critical matters unresolved, particularly concerning inheritance and succession. For example, if a Tanzanian non-citizen diaspora dies, can their land granted through a Special Derivative Right be inherited directly by heirs who are not Tanzanian non-citizen diaspora? Alternatively, could such heirs qualify for the Special Derivative Right upon applying for special status? Should the transfer be classified as a transmission, and would it involve taxes?
Similarly, if a Tanzanian dies leaving heirs with special status, would the heirs be entitled to inherit the Granted Right of Occupancy (GRO) through normal transmission procedures, or would they need to apply for a Special Derivative Right to the property? These uncertainties need clarification in the Bill to avoid confusion, similar to the case of Emmanuel Marangakisi as Attorney of Anastasious Anagnostou v. Administrator General, Civ Case No. 1 of 2011, where the court ruled that section 20 of the Land Act may not restrict sales and transfers of existing rights of occupancy to non-citizens, as they are not considered grants (GRO) or allocations under the law.
Another anticipated challenge with the Regulations pertains to the transfer of the special derivative right by Tanzanian diaspora non-citizens to Tanzanians. Would the receiving Tanzanian own the property as a Granted Right of Occupancy or a special derivative right, considering that Tanzanians typically own land through Granted Right of Occupancy (GRO) or Customary Right of Occupancy (CRO)?
Additionally, when a Tanzanian diaspora non-citizen disposes of the special derivative right, would such an individual be treated as realizing an asset under Section 39 of the Income Tax Act, thereby subjecting them to payment of Capital Gains Tax (CGT) to the Tanzania Revenue Authority (TRA)? The forthcoming regulations should address these issues.
6.0 Recommendation
In the forthcoming Regulations mentioned under section 31 of the Bill, as well as the addition of section 19(1B) (b) to the Land Act, the Regulations that will be made by the Commissioner.” Should there be any delay in the formulation of these Regulations, the applicability of the amendments and proposed changes will likely remain novel and controversial. In anticipation of challenges and potential confusion as highlighted in the previous text, we recommend the following amendments and clarifications be included in the forthcoming Regulations as follows:
- The Regulations should streamline the process for obtaining Special Derivative Rights, ensuring it does not require the lengthy procedures of surrender, designation, and allocation to the Tanzania Investment Centre (TIC).
- We propose that the Commissioner for Land be designated as the issuing authority and should properly highlight the procedures for obtaining a Special Derivative Right.
- It should be expressly provided that heirs of the holder of a Special Derivative Right, who are Tanzanian citizens or qualified Diaspora (with Tanzanite Card), may inherit the property through transmission.
- The law should expressly permit the transfer of Special Derivative Titles from one Diaspora member to another and from Diaspora members to Tanzanian citizens.
- Amendments to tax laws, especially concerning Capital Gains Tax, should clearly define whether Diaspora members with Tanzanite Cards will be treated as Tanzanian or foreign, and if they will receive any tax relief compared to non-citizen foreigners.
- The Immigration Act should be amended to harmonize with other relevant laws to ensure smooth application of the forthcoming amendments if the Bill is passed.
6.0 Conclusion
It is undeniable the Bill If passed successfully, the Bill will have a profound impact on current land ownership restrictions and structures, potentially providing a long-awaited boost to investment in the country. Therefore, the proposed amendment should highlight the complex interplay between land ownership regulations, immigration policies, and the legal status of the Tanzanian non-citizen diaspora by underscoring the need for precise legal definitions and clear procedural guidelines in forthcoming regulations. The long-awaited changes are expected to create a more inclusive and dynamic investment environment, potentially transforming Tanzania’s economic landscape.
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