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Tanzania’s New Foreign Exchange Regulations: What You Need to Know

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The Tanzanian government has introduced new regulations aimed at governing foreign exchange transactions, capital and financial account transactions, and outward remittances. The Foreign Exchange Regulations, G.N. No. 294 of 2022, were published under section 6 (1) of the Foreign Exchange Act, Cap 217 R.E. 2002, as amended.

Key Definitions

The regulations provide important definitions to ensure compliance:

  • Capital Account Transactions: Refers to transactions involving financial securities, coupon or participatory rights in a collective investment scheme.
  • Financial Account Transactions: Includes transactions related to credit accommodation from non-residents.
  • Outward Remittances: Covers remittances made by residents for various purposes such as purchasing securities, acquiring real estate, or engaging in outward direct investment.

Key Provisions

The regulations outline the following key provisions:

  • Resident’s Right to Purchase and Sell Securities: A resident can purchase, issue, sell, or transfer financial securities to a resident of a prescribed territory.
  • Non-Resident’s Right to Purchase Government Securities: Non-residents are prohibited from purchasing government securities unless they are residents of a prescribed territory or citizens of Tanzania in the diaspora.
  • Securities Settlement Accounts: Non-residents must maintain a securities settlement account with a bank or financial institution or appoint a custodian in Tanzania through which all payments and proceeds can be made and received respectively.
  • Credit Accommodation from Non-Residents: Residents may access credit accommodation from non-residents through banks or financial institutions, but FCA agreements exceeding 365 days must be registered with the Bank of Tanzania (BoT) within 14 days of execution.

Enforcement

The BoT will monitor and enforce compliance with the regulations in collaboration with law enforcement agencies. Non-compliance may result in fines and penalties as outlined in the Act.

Repeal of Previous Regulations

The new regulations revoke the Foreign Exchange Regulations of 1998 and the Foreign Exchange (Listed Securities) Regulations of 2003.

For further information, please contact: Tenda Msinjili Amreen Ayub