Unlocking Paradise: A Guide to Hotel Registration in Zanzibar

Zanzibar, the ‘Spice Island,’ has become one of Africa’s most sought-after tourism destinations, offering a unique blend of historical Stone Town, pristine beaches, and vibrant culture. For investors looking to capitalize on this boom, understanding the hotel registration and licensing process is the critical first step.

The path to opening a hotel in Zanzibar is a multi-stage process that involves several key regulatory bodies.¹ It is an act of compliance that ensures the business meets local standards for safety, quality, and environmental stewardship.

1. The Foundation: Company and Tax Registration

Before applying for a tourism-specific license, a business must be legally established on the island. This foundation involves the following steps:

A. Business Registration (BPRA and ZIPA)

The primary corporate registration agency in Zanzibar is the Business and Property Registration Agency (BPRA). For a hotel project, the company is typically registered as a local company or a foreign company branch.

• Local Company: A company incorporated under the Zanzibar Companies Act, regardless of shareholder nationality.
  
• Foreign Company: A branch of a company incorporated outside of Zanzibar.
  

For major investments, particularly in the tourism sector, it is highly recommended to register with the Zanzibar Investment Promotion Authority (ZIPA). This is essential for:

• Investment Threshold: Foreign investors in the hotel and real estate sector often have a minimum capital requirement of US$2.5 million, while domestic investors’ minimum is typically around US$300,000 for hotel investments. Meeting this threshold qualifies the project for strategic benefits.
• Incentives: ZIPA registration can unlock various investment guarantees and fiscal incentives, such as tax and duty exemptions, depending on the project’s scale and nature.

B. Tax Registration (TRA and ZRA)

Once the company is incorporated, it must register for tax purposes with both Union and Zanzibar-specific authorities:

• TIN (Taxpayer Identification Number): Obtained from the Tanzania Revenue Authority (TRA) for Union taxes like Corporate Income Tax.
  
• ZRA Registration: Required for Zanzibar-specific taxes, including the VAT (currently 15%) and the Hotel Levy (or Tourism Tax).
  

2. The Core Permit: Zanzibar Tourism Commission (ZCT) License

The Zanzibar Commission for Tourism (ZCT) is the central regulatory body responsible for issuing the mandatory operating license for all accommodation facilities.This license confirms that the hotel meets the required service quality and safety standards.

A. The Application Process

The application is typically processed through the ZCT’s online portal and involves the following general steps:

1. Submission of Registration Request: The business submits an application and all required documents, often after receiving an initial approval letter from ZIPA (if applicable).
2. Physical Inspection: ZCT officers conduct a physical inspection of the premises to verify compliance with standards, safety regulations, and the star rating applied for.
3. Fee Payment: Upon a successful inspection, the ZCT issues a government bill, which is paid via a control number. The fees vary depending on the class and size of the establishment.
4. License Issuance: The ZCT issues the final Tourism License, which must be renewed periodically.
   

B. Key Document Checklist (Prior to ZCT Application)

The ZCT requires the business to secure several compliance certificates from other government agencies before issuing the final license. These include:

• Environmental Clearance Certificate (ECC): Issued by the Zanzibar Environmental Management Authority (ZEMA).This is a critical requirement, especially for new construction on beachfront or sensitive areas, and requires a full Environmental Impact Assessment (EIA) or Environmental and Social Impact Assessment (ESIA) for larger projects.
  
• Fire and Rescue Certificate: Issued by the Department of Fire and Rescue Services, certifying that the hotel premises meet required fire safety standards and have adequate equipment.
• Occupational Safety and Health Authority (OSHA) Certificate: Certifies that the workplace adheres to safe and healthy working conditions.
• Staff Health Certificates: Required from the Ministry of Health and Social Welfare to confirm that staff handling food and beverages meet public health standards.
• Business Plan / Feasibility Study: A detailed plan of the project and its viability.
• Proof of Land Tenure: A copy of the registered Title Deed or Lease Agreement for the business premises.

3. Post-Registration Compliance

Securing the ZCT license is the green light for operation, but it initiates a cycle of ongoing compliance essential for long-term sustainability.

A. Liquor License

If the hotel intends to sell alcoholic beverages, a separate Liquor License must be obtained from the relevant Municipal Council or local authority. This is often applied for after the main ZCT license is secured.

B. Employment and Immigration

Any non-citizen staff or directors must obtain the necessary permits:

• Work Permit: Issued to non-citizens allowing them to take up specified employment on the island.
  
• Residence Permit: Issued to non-citizens allowing them to legally reside on the island (Class A for investors/directors; Class B for employees).
  

C. Tax and Regulatory Obligations

Ongoing compliance is mandatory:

• ZSSF Registration: All employees must be registered with the Zanzibar Social Security Fund (ZSSF), where both the employer and employee make monthly contributions.
  
• Tax Filing: Hotels must regularly file and remit various taxes, including VAT, Corporate Income Tax, and the specific Hotel Levy, to avoid significant penalties.
  

Navigating the registration landscape in Zanzibar requires a structured approach and expertise in managing multiple regulatory touchpoints. Securing a professional legal and advisory service is often the most efficient way to ensure all requirements are met on time, allowing investors to focus on the business of hospitality.

Disclaimer

The content of this update is intended for general informational purposes only and does not constitute legal advice. It should not be relied upon without seeking specific legal counsel on any particular matter.

Author Details

The author is Sunday Ndamugoba , Partner, RIVE&Co he can be reached at sunday@rive.co.tz