Distribution Agreement Tanzania: Distributors, Agents, Tax and the GN 487A Limits

A distribution agreement in Tanzania is a supply contract. The foreign maker sells goods to a local company, and that company resells them in its own name and at its own risk. A commercial agent is different. The agent finds customers or signs contracts for the maker and earns a commission, while title and credit risk stay with the maker.

The label matters less than the facts: who buys, who holds stock and who carries the debt. This guide covers Mainland Tanzania, with a separate section on Zanzibar.

What the law says

We found no Tanzanian statute written for distribution or commercial agency contracts. There is no commercial agents act and no statutory goodwill indemnity; general contract law fills the gap.

The Law of Contract Act, Cap. 345 (TanzLII version as at 30 November 2019) is the main source. Section 134 defines an agent as "a person employed to do any act for another or to represent another in dealings with third persons". A distributor that buys and resells on its own account is not an agent in that sense.

Three other bodies of law shape the deal. The Fair Competition Act, 2003 controls exclusivity, territorial and price terms. The Business Licensing Act, Cap. 101 and the Business Licensing (Prohibition of Business Activities for Non-Citizens) Order, 2025, GN 487A decide who may trade.

Who should read this

This guide is for a foreign manufacturer or brand owner choosing a route into Tanzania: a Kenyan, Indian or European maker of consumer goods, medicines or cosmetics. It is also for a Tanzanian importer negotiating exclusivity, targets and exit terms with a foreign principal.

Distributor, agent, subsidiary or franchise: which structure fits?

A franchise is the right model when the brand owner licenses a business format and not only products. Our guide to franchising in Tanzania covers that route.

Which agency rules in the Law of Contract Act matter most?

If the Tanzanian party acts as agent, or a distributor also signs contracts for the maker, the agency part of Cap. 345 applies. We read these sections on TanzLII.

• Section 153. An agency ends when the principal revokes authority, the agent renounces the business, or the business is completed.
• Section 154. Where the agent has its own interest in the property that forms the subject of the agency, the agency cannot be ended to the prejudice of that interest, unless the contract says so.
• Section 155. Subject to section 154, the principal may revoke the agent's authority at any time before it has been exercised so as to bind the principal.
• Section 157. Where there is an express or implied contract that the agency should continue for a period, the principal must compensate the agent for revocation without sufficient cause. The rule runs both ways.
• Section 158. Reasonable notice must be given of revocation or renunciation. Otherwise the damage that results must be made good.

The practical effect is clear. A fixed-term agency ended early without sufficient cause invites a compensation claim, and any agency ended without reasonable notice invites a damages claim. The Act does not define "reasonable", so the contract should state the notice period and the events that count as sufficient cause.

Section 27 also matters for post-termination non-compete clauses. An agreement that restrains a lawful trade or business is void to that extent unless the restraint is reasonable between the parties and for the public. A two-year, nationwide ban on any competing product is hard to defend.

Can a foreign-owned company be the distributor after GN 487A?

GN 487A was published on 28 July 2025 under section 14A(2) of the Business Licensing Act. Paragraph 3(1) says the scheduled activities "shall not be carried out by non-citizens". Paragraph 3(2) stops licensing authorities from issuing or renewing a licence for a non-citizen in those activities. Zatra's fee register records the 15 activities as NEW-08-14.

Two items hit distribution directly. Item 1 is "the business of sale of goods on a wholesale and retail basis, excluding supermarkets, specialised product outlets, and wholesale centers for local producers". Item 11 is "brokerage or agency in businesses and real estate".

Under paragraph 3(3), a non-citizen who carries out a reserved activity faces a fine of not less than TZS 10,000,000 or up to six months in prison, plus loss of visa and residence permit. A citizen who aids a non-citizen faces TZS 5,000,000 or up to three months (register F0890).

Is a Tanzanian company with foreign shareholders a "non-citizen"? Paragraph 2 borrows the meaning from the Tanzania Citizenship Act, which deals with natural persons. Clyde & Co notes that a strict reading leaves companies outside the Order, but licensing practice may treat them as covered. For licence fees, Cap. 101 already treats a company with more than 50% non-citizen shareholding as foreign owned (register NEW-08-13). Plan on the cautious reading.

AllAfrica reported on 3 October 2025 that Kenya had received assurances that no Kenyan business would be affected. That is a diplomatic statement, not an amendment to the Order. Our guide to EAC citizens and Tanzania's business restrictions covers it. Before using a citizen shareholder, read BRELA's fronting checks and lawful ways to structure around ownership restrictions. An advocate should sign off any structure that relies on an exception.

Which business licences does the distributor need?

A distributor that imports and sells wholesale usually needs an importation licence and a licence for its wholesale activity, with a subsidiary licence for each extra branch.

• Importation of merchandise: TZS 400,000 for the principal place and TZS 200,000 for each branch (register F0864).
• General merchandising, wholesale: TZS 300,000 and TZS 200,000; sub-wholesale TZS 200,000 and TZS 150,000 (register F0868). Closed to non-citizens.

Class A licences are paid against a GePG control number after approval (register NEW-08-05). Renewal needs a TRA tax clearance certificate (register NEW-08-02). A late renewal after 21 days attracts a 25% penalty on the unpaid fee, rising for later periods (register F0881). Zatra's business licensing service handles these filings.

Who must hold the product registrations?

The agreement must say who applies for each product registration, who pays and who keeps it when the deal ends.

Medicines and medical devices. The Tanzania Medicines and Medical Devices Authority registers medicines, assesses medical devices and diagnostics, licenses premises and issues import permits. TMDA also publishes a list of recognised local technical representatives, current as at 26 September 2025. A foreign maker should hold the marketing authorisation itself where it can, and appoint the distributor or a separate firm as local technical representative.

Food and cosmetics. Since the Finance Act, 2019, pre-packaged food and cosmetics are registered by the Tanzania Bureau of Standards. TBS states that no one may deal in these products unless they are registered, and that premises where they are made, stored or sold must be registered too. TBS gives product registration a five-year validity and premises registration one year. Our cosmetics registration guide covers the TBS file.

What does competition law allow on exclusivity and pricing?

We read the 2003 text of the Fair Competition Act on TanzLII. The 2024 amendments are summarised from secondary sources because we could not obtain the amending Act.

• Section 8(1). Agreements whose object, effect or likely effect is to appreciably prevent, restrict or distort competition are prohibited.
• Section 8(2). A prohibited agreement is unenforceable.
• Section 8(3). In the 2003 text, an agreement is presumed lawful where no party is dominant and the parties' combined market share is 35% or less, or where they are not competitors.
• Section 9(1). Price fixing, collective boycotts, output restrictions and collusive bidding between competitors are prohibited outright.

Clyde & Co reports that the Fair Competition (Amendments) Act, 2024, passed on 3 September 2024, added a new section 10A on vertical agreements. It also defined "re-sale price or condition maintenance" as an agreement fixing a minimum resale price or condition. Clyde & Co also reports a 40% dominance starting point under GN 244 of 2026, against 35% in section 5(6) of the 2003 text.

For drafting: use recommended or maximum resale prices, never a minimum. Do not ban passive sales from neighbouring markets without advice. If the maker or distributor may be dominant, take competition advice before adding loyalty rebates or refusals to supply. The Fair Competition Commission enforces the Act.

How are payments to the foreign principal or agent taxed?

• Price of goods. No income tax withholding applies to the purchase price of imported goods. Import VAT at 18% is collected at customs on the customs value plus duty (register F0312). A registered distributor claims it as input tax.
• Commission and service fees. The Income Tax Act, Cap. 332 R.E. 2023 defines a service fee as a payment reasonably attributable to services rendered through a business. Withholding is 5% for a resident and 15% for a non-resident (register F0212, section 106).
• Trade mark licence fees. The Act's definition of royalty covers payment for "the use of, or the right to use" a trademark. Withholding is 15% (register F0210).
• VAT on imported services. Under section 4(c) of the Value Added Tax Act, Cap. 148 R.E. 2023, the purchaser pays VAT on a taxable supply of imported services. Under the section 2 definition, such a supply is taxable only where the purchaser could not have claimed credit for 90% or more of the VAT. A fully taxable distributor therefore accounts for nothing. A distributor of mainly exempt goods pays 18% and cannot recover it.

If the maker and distributor are associates, section 33 of the Income Tax Act requires arm's length pricing for purchases, rebates and fees. Our guide to transfer pricing for related parties sets out the file TRA expects. A foreign maker should also check whether a dependent agent who signs contracts creates a permanent establishment. A tax treaty may reduce the 15% rates; see Tanzania's double tax treaties.

The agreement itself is an instrument for stamp duty. The register shows TZS 2,000 for each agreement (register F0267). See our stamp duty guide.

Worked example: a USD 600,000 a year distributor in Dar es Salaam

A Nairobi maker of building chemicals appoints a citizen-owned Dar es Salaam company as exclusive distributor for Mainland Tanzania. The distributor buys USD 600,000 of goods a year. The maker pays 5% marketing support, which is USD 30,000. The maker also appoints a separate Tanzanian agent for government and project tenders at 3% commission. The distributor is VAT-registered and its sales are standard-rated.

The marketing support needs one decision. As a rebate on price, it lowers the distributor's cost of goods and may affect customs value. As a fee for marketing services performed in Tanzania, the distributor invoices the maker, and whether that invoice carries 18% VAT (USD 5,400) or is zero-rated as an exported service must be settled before the first invoice.

The 3% agent carries two further risks. A non-citizen agent falls under item 11 of GN 487A. An agent who habitually signs tenders in the maker's name may give the maker a taxable presence in Tanzania.

Which currency, law and forum should the contract use?

Currency. The Bank of Tanzania press release of 2 May 2025 states that pricing and payment for goods and services within the country must be in Tanzanian shillings. It refers to the Regulations on the Use of Foreign Currency, 2025, in Government Gazette No. 198 of 28 March 2025. The distributor's local price lists, invoices and tender quotes should therefore be in TZS. The import purchase from a foreign maker is a cross-border payment; confirm with the distributor's bank how it treats a USD invoice under the 2025 rules.

Governing law. Parties may choose a foreign law, but GN 487A, competition law, licensing, product registration and tax still apply in Tanzania.

Disputes. Arbitration suits most cross-border distribution deals, because an award is easier to enforce in the maker's home country. Name the seat, the rules and the language. Our guide on arbitration or litigation for commercial contracts compares the options. A claim for compensation, a seizure of stock or an injunction over a trade mark belongs with an advocate.

Trade marks. Register the mark at BRELA in the maker's name before the distributor starts trading. Clyde & Co reports that a licensee can be recorded as a registered user under sections 42 to 47 of the Trade and Service Marks Act, through a joint application by proprietor and user. The registered user may not assign or sub-license. A Mainland registration does not cover Zanzibar.

How should termination, notice and stock buy-back work?

A terminated agent can claim under sections 157 and 158. A distributor without an agency role relies on the contract and general damages. Draft the exit before the start.

• Term and renewal. State a fixed initial term and renewal by written agreement only.
• Notice. Set a notice period that matches the distributor's investment. Under section 158, missing reasonable notice is the clearest route to a damages claim.
• Sufficient cause. List the events that allow immediate termination: missed minimum purchases, unpaid invoices, counterfeit sales, loss of a licence or registration, and a breach of GN 487A by either side.
• Stock buy-back. Give the maker an option, not a duty, to buy back saleable stock at landed cost less a handling discount. Exclude expired or damaged goods.
• Registrations. Require transfer of product registrations and marketing materials within a set period.
• Non-compete. Keep any restraint short and product-specific, so it survives section 27.

Key clauses checklist

What about Zanzibar?

Zanzibar is a separate jurisdiction for business registration, licensing, VAT and product control. Assume a Mainland approval does not extend there unless confirmed.

• Licensing. Registration sits with BPRA and investment approval with ZIPA, with trading licences issued in Zanzibar. We did not verify the Zanzibar licence schedule; fees are assessed on application.
• Product approvals. TradeMark Africa reported in 2018 that the Zanzibar Food and Drug Agency's e-portal handles registration of foods, drugs, cosmetics and medical devices, plus import permits. SGS states that the Zanzibar Bureau of Standards runs a pre-shipment verification of conformity programme for goods exported to Zanzibar.
• VAT. Zanzibar VAT is 15%, with a registration threshold of TZS 100 million a year, administered by the Zanzibar Revenue Authority (register F0246).
• GN 487A. The Order was made under the Mainland Business Licensing Act. We could not confirm whether Zanzibar has an equivalent reservation.
• Trade marks. Zanzibar keeps its own registry. Register the mark there too if the distributor will trade on the islands.

What to do now

1. Choose the structure. Decide whether the Tanzanian party buys and resells or only finds customers, and write the agreement to match the facts.
2. Test GN 487A. Map every shareholder of the proposed distributor and agent, and take an advocate's view on any exception relied on.
3. Register the trade mark. File at BRELA in the maker's name, and in Zanzibar where relevant, before launch.
4. Allocate product registrations. Decide who holds TMDA or TBS registrations and how they transfer.
5. Model the tax. Classify each payment as goods, service fee or royalty, and agree withholding, gross-up and VAT before the first invoice.
6. Fix the currency mechanics. Price local resale in TZS and confirm the import payment route with the bank.
7. Draft the exit. Set notice, cause events, stock buy-back and registration transfer.

Key dates and deadlines

• 3 September 2024. Fair Competition amendments passed (Clyde & Co).
• 28 March 2025. Foreign currency regulations in Gazette No. 198.
• 28 July 2025. GN 487A published; existing non-citizen licences run only to expiry.
• 14 August 2026. GN 244 of 2026 on abuse of dominance published (Clyde & Co).
• Monthly, by the 20th. VAT return, including any VAT on imported services (register F0245).
• Each licence anniversary. Business licence renewal with a tax clearance certificate; penalty after 21 days (register F0881).
• Every year and every five years. TBS premises registration and product registration renewals.

How Zatra helps

Zatra prepares the market entry plan, checks ownership against GN 487A, files business licences, TIN, VAT and trade mark applications, and models withholding, VAT and transfer pricing on each payment. See our market entry strategy service and import and export compliance service.

Government fees are paid at the official rate to the authority against its GePG control number and are kept separate from Zatra's professional fee. Disputed contract terms, compensation claims, stock seizures and legal opinions go to an advocate; Zatra has one on the team. Zatra prepares and files; it does not decide or guarantee any authority's outcome. Fees are listed in our government fees guide.

Sources and status

Accurate as at 14 November 2026.

• Law of Contract Act, Cap. 345. TanzLII, version as at 30 November 2019. Accessed 14 Nov 2026.
• Fair Competition Act, 2003 (Act No. 8 of 2003). TanzLII, version as at 31 December 2003. Accessed 14 Nov 2026.
• GN 487A of 2025, Business Licensing Order. Gazette copy hosted by FB Attorneys, 28 July 2025. Accessed 14 Nov 2026.
• Income Tax Act, Cap. 332 R.E. 2023. Tanzania Revenue Authority, 2025 copy. Accessed 14 Nov 2026.
• Value Added Tax Act, Cap. 148 R.E. 2023. Tax Revenue Appeals Board, 2026 upload. Accessed 14 Nov 2026.
• Prohibition on the use of foreign currency for local transactions. Bank of Tanzania, 2 May 2025. Accessed 14 Nov 2026.
• Product and premise registration. Tanzania Bureau of Standards, 2026 page. Accessed 14 Nov 2026.
• List of Local Technical Representatives recognized by TMDA. TMDA, list as at 26 September 2025. Accessed 14 Nov 2026.
• Notable amendments to the Fair Competition Act of 2003. Clyde & Co, 25 November 2024. Accessed 14 Nov 2026.
• Tanzania's new regulations on abuse of dominant position, 2026. Clyde & Co, 4 September 2026. Accessed 14 Nov 2026.
• Practical implications of the GN 487A Order. Clyde & Co, 29 July 2025. Accessed 14 Nov 2026.
• Understanding registered users of trade and service marks in Mainland Tanzania. Clyde & Co, 15 January 2024. Accessed 14 Nov 2026.
• Tanzania exempts Kenyans from law that bars foreigners in certain sectors. AllAfrica, 3 October 2025. Accessed 14 Nov 2026.

Figures to confirm before you act

• The text of the Fair Competition (Amendments) Act, 2024 and GN 244 of 2026, including section 10A and the 40% dominance figure, read only in law firm summaries.
• Whether licensing authorities treat a Tanzanian company with non-citizen shareholders as a "non-citizen" under GN 487A, and what counts as a "specialised product outlet".
• The text of section 106(1) on who must withhold, and the source rule for service fees paid to a non-resident for work done outside Tanzania.
• VAT treatment of marketing support paid by a non-resident maker, and its effect on customs value.
• Whether a USD import invoice from a foreign maker falls outside the 2025 foreign currency rules.
• Whether TMDA requires a foreign applicant to appoint a local technical representative, and the BRELA fee for recording a registered user.
• Zanzibar licence fees and any Zanzibar equivalent of GN 487A.

This article is general information based on official sources available at the date of publication. It is not legal, tax or financial advice. Laws and notices change. Verify with the issuing authority or consult Zatra before acting.