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All you need to know as a foreign investor in Zanzibar

Zanzibar is a land of opportunities

Pristine white sand beaches, perfect tropical weather, rich culture and vibrant people are just a few reasons why Zanzibar is gaining so much popularity in the post-covid era.

This has led to an influx of hotel and restaurant businesses, making Zanzibar’s tourism industry the most lucrative opportunity for potential investors. Let’s answer some of the questions that you may have:

How can a foreigner buy property in Zanzibar

Foreigners can buy properties in Zanzibar, subject to certain regulations and requirements. The Zanzibar government has implemented laws and regulations that enable both locals and foreigners to have a leasehold on properties on the island.

Under the current regulations, foreigners can purchase properties such as
land, houses, apartments, and condominium units. The ownership is typically in the form of a leasehold, where the property is leased for a specific period, often 99 years. This leasehold arrangement grants the buyer both substantial rights and benefits similar to ownership.

Key points:

  • You will be the owner of the property, with a leasehold of 99 years, to be renewed every 33 years, as issued by the government itself, irrespective of the nationality.

  • An investor who purchases ZIPA designated real estate in the country with the property value of above USD $ 100,000 is eligible for the Golden Visa.

More about the Golden Visa:

  • The Golden Visa issued by the Government of Zanzibar is a residence permit Class C visa for a fee of USD 500.

  • The granted permit covers the investor(s), their spouse, and up to four children below 18 years of age.

Tax Benefits

The Visa comes with significant tax benefits, including a 50% reduction in capital gains taxes when reselling your property.

More than a residency permit

The Golden Visa comes with many exciting advantages such as preferential rates for residents on flights, ferries and at events in Zanzibar.

In Zanzibar, all land is owned by the government. The government of Zanzibar is responsible for the administration, allocation, and management of land across the islands. This means that anyone interested in acquiring land in Zanzibar needs to go
through the appropriate government channels and processes.

It’s crucial for foreigners interested in buying property in Zanzibar to work with a knowledgeable real estate agent or legal professional. Because they can guide them through the process and ensure compliance with all relevant laws and regulations. Furthermore, they can help navigate the legal requirements, assist with property due diligence, and ensure a smooth and secure transaction.

2. Buying an Apartment or a Villa in Zanzibar.

The steps and rules for buying residential villas or apartments in Zanzibar can be different depending on the type of investment you’re doing.

However, purchase in a registered condominium project is more straightforward for foreigners as it provides full ownership without the need of opening a company

3. Buying Land in Zanzibar

Investing in land requires opening a company and developing a project that must be sanctioned with a minimum investment of $2.5 million for ventures in real estate such as hotels, villas, or apartments.

The $2.5 million investment must align with your business strategy, eliminating the need for you to personally fund it.

Foreign investors can also choose to partner with a local entity, which necessitates a local partner owning at least 70% of the shares.

Investments in other sectors or businesses, such as farming or agriculture, have different financial requirements.

4. What are the investment opportunities in the hotel business in Zanzibar?

The hotel business in Zanzibar presents many opportunities for investors. You can build a new hotel or purchase a ready-made enterprise, as well as develop existing hotel complexes. The growing flow of tourists and attractive beaches create demand for new and modern hotels.

Alternatively, investment in condominium projects is an extremely lucrative option and is fairly popular in Zanzibar at the moment.

5. What are the prospects for the Zanzibar property market in the coming years?

Forecasts show that the Zanzibar property market will continue to grow in the coming years. This is due to the steady increase in tourist flow, infrastructure development and increased interest from foreign investors.

Buying Property in Zanzibar

Land and Legal Framework:

The Land Tenure Act of 1992 states that all land in Zanzibar, whether occupied or not, is public. The Minister, on behalf of the President, manages land within the islands. The Zanzibar Investment Promotion Authority (ZIPA) administers land in Free Economic Zones.

Both citizens and foreigners in Zanzibar can access land for investment. Land is classified as registered or unregistered, and the process of acquiring it depends on the chosen category.

Land Acquisition Process:

In Zanzibar, any citizen or Zanzibari can own land. Once granted this right, the landowner can freely sell, lease, give away, or gift their land, even to foreigners. So, if a foreigner wants to invest, they can buy land from a local. After buying, the investor needs to register the land in their name (lease system) for up to 99 years.

Important Steps During Land Acquisition:

To ensure a secure and enjoyable ownership experience for the land you acquire, follow these key steps:

1. Conduct an Official Search to Confirm Ownership:

  • Obtain an official search report to confirm the ownership.

  • This report ensures the buyer that the land is genuinely owned by the seller without any encumbrances.

  • For unregistered land, the Sheha within the land’s location provides the report. If registered, the Commissioner for Land provides it. Free economic zones details are from ZIPA.

2. Prepare, Sign, Attest, and Register Land Purchase Agreement:

  • Once it’s confirmed that the land is clean and free from encumbrances, prepare and sign a sale agreement.

  • This agreement must be attested and registered to have legal effect.

3. Land Survey - Site Plan and Beacon Placement:

  • If the land is unregistered, conduct a survey and prepare a site plan.

  • Fix demarcation points (beacons) to define the land boundaries.

4. Request Land Transfer Approval:

  • The land transfer process requires approval from the Land Transfer Board under the Land Transfer Act, 1994.

  • No permanent transfer or long-term lease occurs without the Board’s review and approval.

5. Apply for Government Lease:

  • Obtain a government lease from the Land Commission, certifying the buyer as the legal owner.

  • The lease is for 33 to 99 years and renewable. The developed property can be sold, assigned, sub-leased, subdivided, inherited, or mortgaged.

6. Apply for Relevant Building Permit:

  • Before any development, secure a building permit from the Development Control Unit (DCU) under the Building Regulation Act of 2015.

  • DCU oversees permit issuance and ensures compliance with construction regulations in Zanzibar.

ZIPA - Zanzibar Investment Promotion Authority

Application for Business License/Investment Certificate:

Once your project is registered with ZIPA, you don’t need a business license – just the Investment Certificate. Make sure to complete this process before applying for a building permit.

Procedures for Investment Certificate Application:

Submission of Intention to Invest:

  • Prepare and submit a concept note using the Investment Intention Form from ZIPA.

  • Once accepted, you’ll receive an Application Form.

Preparation and Submission of Business Plan:

  • Fill and sign the application form, submitting it to ZIPA with a detailed business plan.

  • Include proof of capital, passport copies, CVs of directors, police clearances, company documents, and other supporting documents.

  • Attach the receipt of the application form payment.

Minimum Capital Investment Required:

  • For hotels and real estate, foreign companies need USD 2,500,000, while domestic ones need USD 300,000.

  • For other businesses, foreign companies require USD 300,000, and local companies need USD 100,000.

Investment Certificate:

  • Once ZIPA approves your investment proposal, you’ll get the Investment Certificate.

  • Purchase an Investment Service License annually, paying the same fee until all approved capital is invested.

What if the Investor Doesn't Meet ZIPA's Capital Requirement?

  • If capital requirements aren’t met, the investor can still apply for a license from the Commission of Tourism.

  • The Commission, satisfied with the application, issues a letter of confirmation, allowing the investor to proceed with project activities under certain conditions, including at least 70 percent Tanzanian ownership.
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