CRJE Estate Limited, a construction company incorporated in Tanzania, entered into an agreement in 2008 with the Mwalimu Nyerere Foundation to construct a commercial building in Dar es Salaam. The project was registered with the Tanzania Investment Centre (TIC) in December 2008.
In January 2009, CRJE was issued a Certificate of Incentive under section 17 of the Tanzania Investment Act (TIA). The certificate entitled CRJE to investment benefits, including 100% exemption from import duty on deemed capital goods. The certificate was subsequently extended, including by a certificate issued in March 2013 and another in 2016, ultimately extending the project implementation period to November 2018.
At the time the original certificate was issued, section 19(1) of the TIA, read together with the Customs Tariff Act, provided for the relevant import-duty exemption. Section 19(2) further protected the benefits attached to a certificate from being amended or modified to the investor's detriment for five years, expressly to create a predictable investment climate.
However, the law subsequently changed:
Finance Act 2012 reduced the exemption for deemed capital goods to 90%; and
Finance Act 2013 further reduced it to 75%.
CRJE sought clarification from TIC in 2017. TIC advised that the amendments did not affect investors who were already implementing their projects. Nevertheless, TRA took the position that CRJE was required to pay 25% import duty and issued a demand for TZS 2,268,636,778.63.
CRJE challenged the demand before the tax authorities. The Board ruled in its favour, and the Tax Revenue Appeals Tribunal subsequently upheld that decision. TRA then appealed to the Court of Appeal.
The Court ultimately dealt with two principal issues:
The central question was whether the reduction of the import-duty exemption introduced by the Finance Act 2013 could apply to CRJE's imports made after the amendment came into force, notwithstanding the earlier Certificate of Incentive.
This required the Court to determine:
the legal effect of section 19(2) of the TIA;
whether the protection attached to the Certificate of Incentive;
whether the 2013 amendment could operate retrospectively; and
when the five-year protection period should be calculated, particularly in light of the subsequent certificates issued in 2013 and 2016.
TRA argued that the certificate was merely evidence of an investor's eligibility for tax incentives rather than an agreement with Government.
Alternatively, TRA argued that, if it constituted an agreement, it was invalid because the Attorney General had allegedly not been involved in its preparation as required by the Public Service Standing Orders.
A further issue arose concerning the interaction between the East African Community Customs Management Act, 2004 (EACCMA) and Tanzania's domestic customs legislation.
The Court affirmed the Tribunal's finding that a Certificate of Incentive issued under section 17 of the TIA constitutes an agreement between Government and the investor.
The Court relied particularly on its earlier decision in Vodacom Tanzania Public Limited Company v Commissioner General, TRA, Civil Appeal No. 107 of 2020, where it had treated the issuance of a Certificate of Incentive as creating an agreement between the parties.
The Court therefore rejected TRA's argument on this point.
The Court declined to determine whether the Attorney General had been involved in issuing the certificate because this was a new factual issue that had not been raised before the lower tribunals.
Importantly, section 25(2) of the Tax Revenue Appeals Act confines appeals in tax matters to points of law. The alleged non-compliance with the Public Service Standing Orders involved factual and administrative matters that could not properly be introduced for the first time before the Court of Appeal.
This was the principal holding.
The Court accepted that section 19(2) protected benefits granted under a Certificate of Incentive from being amended or modified to the detriment of the investor for five years.
The purpose of the provision was expressly stated to be creating a predictable investment climate necessary to promote capital investment.
The Court applied the established principle that legislation affecting substantive rights is presumed not to operate retrospectively unless a clear intention to that effect is expressed. The Court found no such intention in the Finance Act 2013.
Accordingly, the 2013 reduction of the import-duty exemption could not retrospectively take away benefits already protected under CRJE's Certificate of Incentive.
This was particularly important.
The Court examined the three certificates:
Original certificate — 8 January 2009;
Second certificate — 13 March 2013; and
Third certificate — September 2016.
The Court held that the March 2013 and September 2016 certificates were extensions/amendments of the original project, rather than entirely new investment agreements.
Because the March 2013 certificate was issued before the Finance Act 2013 came into force in July 2013, the benefits attached to that certificate were protected against the subsequent amendment.
The Court therefore held that CRJE was entitled to the 100% import-duty exemption under the old law during the protected period.
TRA also argued that the Customs Tariff Act had ceased to operate following Tanzania's adoption of the EAC customs regime.
The Court rejected this argument.
It noted that the relevant domestic customs legislation had not been repealed, and that EACCMA did not contain provisions specifically dealing with the import-duty exemption applicable to deemed capital goods held by an investor with a Certificate of Incentive under the TIA.
Therefore, the Certificate of Incentive was not invalid on that ground.
The Court concluded that the appeal had no merit and dismissed it, with no order as to costs.
The decision strongly reinforces the principle that investment incentives granted under the Tanzania Investment Act are not merely discretionary administrative concessions. Once embodied in a valid Certificate of Incentive, they acquire legal protection, particularly under section 19(2).
The Court linked this protection directly to the legislative objective of creating a predictable investment climate.
The case confirms that a subsequent tax amendment cannot automatically be applied to remove or reduce substantive investment benefits that were already legally secured.
The Court's reasoning is particularly significant for investors because it distinguishes between:
a new tax law applying prospectively to future transactions, and
a new law retrospectively interfering with an existing protected investment entitlement.
The latter requires clear legislative intention.
The Court's treatment of a Certificate of Incentive as an agreement between Government and an investor is commercially important.
It means that investors can potentially rely upon the legal terms and protections associated with their certificates when structuring long-term investments. The Court expressly adopted the reasoning in Vodacom Tanzania.
The decision provides an important distinction between an extension of an existing investment/project and an expansion constituting a new investment.
The Court held that where a later certificate merely extends the implementation period of the existing project, the original certificate remains relevant. By contrast, an expansion can constitute a new and separate investment agreement.
This distinction can be critical when determining which tax and investment regime applies to an investor.
The case demonstrates that TRA's statutory obligation to collect tax must be exercised consistently with other applicable legislation, including statutory investment protections.
The existence of a subsequent Finance Act does not, by itself, answer the question whether an existing investor's protected rights have been lawfully displaced.
For investors, the case underscores the importance of:
obtaining and preserving Certificates of Incentive;
carefully reviewing the precise wording of each certificate;
distinguishing an extension from an expansion of an investment;
documenting correspondence with TIC concerning investment incentives; and
examining the effective date and transitional provisions of subsequent Finance Acts.
In CRJE's case, the TIC correspondence confirming that the amendments did not affect investors already implementing their projects became particularly significant in the factual background.
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